The first quarter of 2016 has continued to promote both a Buyer’s and Seller’s market. Low interest rates drive both of these markets from a price and interest rate standpoint for the seller and from both an affordability standpoint interest rate wise for the buyer. Prices rising due to lack of supply, especially in downtown Boston, combined with the lower interest rates increase the buyer’s “buying power” for a home.
Recently, the Federal Reserve Bank increased the funds rate, dropping 30-year fixed mortgage rates to a near all-time low in Q1 of 2016. So what does this mean for the average homeowner in Boston and the surrounding area? Simple: the time to consider home ownership is now while interest rates are low. In addition, if you are thinking about selling your home, your future buyer has greater buying power today so the time to sell may also be now for you.
It isn’t a coincidence that mortgage companies and banks are experiencing record high volumes for both purchases and refinances. The Boston market in particular is currently undersupplied to meet the high demand for new inventory in several of Boston’s most exciting neighborhoods. Fenway and the South End that are development hot spots for luxury-style condos including Pierce in Fenway and Siena, the sister project to Sepia, in the South End. A number of other new developments that are in the planning stages in Boston.
The bullish mindset of buyers in Massachusetts has led to the development of other suburban neighborhoods that have not traditionally seen a high volume of sales transactions for new homeowners. New properties in the MetroWest area namely Framingham, Natick, and Wayland, are also seeing higher rates of ownership for new construction. For example, Montage in Framingham has sold over 80 homes in the past year alone for both attached and detached condo product.
This is not coincidence. With rates for 30-year fixed rate loans at 3.72% and 15-year fixed rate loans floating around 3.05%, it only helps fuel the trend. National Housing Starts, a critical indicator of economic strength, were up 5.2%, much higher than expected for February 2016. Year-over-year, Housing Starts are up 30.9%, per the U.S. Census Bureau. In addition, with the stock market volatility continuing to cause investors a high level of discomfort, more and more investors are looking to put their money into something “tangible,” further fueling the real estate market in a positive direction.