We’re a decade removed from the depths of the Great Recession, and Boston’s housing boom shows little sign of slowing down. Median home prices in six Boston neighborhoods have soared 70 percent or more since 2013, and a dozen surrounding communities saw single-family home values increase by 50 percent or better.
But with economic clouds gathering — more than half of economists surveyed recently by the National Association for Business Economics expect the United States to suffer a downturn by 2020, and another 25 percent by 2021 — should we be worried about another real estate bubble bursting?
There are some key differences to our current housing hot streak, says Timothy Warren, chief executive of real estate market watcher The Warren Group. As much as home prices have risen in the past five years, he says, they haven’t climbed as ferociously statewide as they did from 1999 to 2005, when median prices rose 10 percent or more each year in the reckless run-up to the housing crisis. “That’s the kind of runaway train we don’t seem to be on right now,” says Warren.
Higher home prices are also supported in part by rising incomes as Boston’s flourishing economy creates new, high-paying jobs. “So much of the real estate market is tied to jobs,” Warren says. “We had the crash in 2006 to 2008 because the prices had gotten so high, nobody’s income could support that anymore.” Median household income in metro Boston is up to $85,691, according to census data, about 1.4 times the national average.
Still, as any home buyer can tell you, prices in and around Boston are hardly what most would call affordable. The median sale price of a single-family home in the Boston area hit $610,000 in 2018, according to the Greater Boston Association of Realtors, and the typical condo wasn’t much cheaper, at $565,000. And while the real estate market tapped its brakes last summer and fall, there are still fewer homes on the market than buyers who want them, which Warren expects will translate into continued, if more modest, price increases.
Rising rents will keep pressure on home prices, too, says Barry Bluestone, professor emeritus of public policy at Northeastern University, particularly as swelling numbers of grad students, young professionals, and medical interns stuff themselves into the city’s three-deckers. “It makes it even more difficult for working-class families who do not already own a unit in Boston, Cambridge, or Somerville to afford one, and therefore where we’re seeing the fastest increase in prices and rents is actually outside of Boston,” says Bluestone, longtime lead author of the biannual Greater Boston Housing Report Card.
As more people are priced out of the city and its immediate neighbors, what was once a reliable price curve — the farther from Boston, the cheaper the house — has been flattening out. It’s also contributing to our regional traffic trauma as people extend their commutes. “We’re not solving our housing problem, and it’s exacerbating our transportation problem,” says Bluestone.
Our annual look at the hottest housing markets around Boston seems to bear this out, with newcomers such as Hudson and Hanover joining perennial hot spots like Somerville and Needham. This year our list focuses on the community seeing the fastest price growth across four price tiers in each region of Greater Boston — North, West, South, and Boston/Cambridge. The results for the suburbs are based on median single-family home sales in 2013 and 2018, using data from The Warren Group (and excluding cities or towns with fewer than 75 single-family sales in either year).
To better reflect the city of Boston’s housing market, which is almost entirely condo-driven in most neighborhoods, but still single-family heavy in others (West Roxbury, Hyde Park), we used median home price data — which includes both condo and single-family sales — from real estate brokerage Redfin (we excluded areas with fewer than 100 total condo and single-family sales in 2013 or 2018).
EXPLORE THE TOP SPOTS TO LIVE PACKAGE BY REGION
Click on the links below to see which Greater Boston communities are seeing the biggest price jumps.
Worried about buying a house only to see the market plummet? These places in Greater Boston saw single-family prices increase between 2005’s market peak and 2011’s bottom.
■ Downtown Boston — up 41.5 percent
■ Cambridge — 10.2 percent
■ Manchester-by-the-Sea — 5.2 percent
■ Somerville — 5.0 percent
■ Brookline — 3.0 percent
■ Charlestown — 2.2 percent
■ Winchester — 0.6 percent
Source: The Warren Group
Jon Gorey is a regular contributor to the Globe Magazine. Additional reporting by Lilly Milman. Send comments to [email protected]