Boston’s Condo Market Stalled This Fall as Rates Jumped

The fall market is usually one of my favorites.

Around Boston, Cambridge, and Somerville, the stretch from Labor Day to Thanksgiving is typically when buyers are back in town, the kids are in school, the foliage is out, and a healthy amount of business gets done.

This year, at least on the condo side, it’s not unfolding the way we are used to. Buyers have pulled back noticeably since the end of summer, and a few forces are behind it.

Rates jumped back up, and that is the biggest factor. Earlier this year we were close to the 5% to 6% range we had been hoping for, sitting in the high 5s. Since then, economic pressures have pushed things the other way. The Fed raised rates at its last meeting, inflation has stayed in the picture, and buyers are now seeing roughly seven and a half percent on a 30-year fixed. An adjustable-rate option like a seven-year ARM might come in a little under seven, but rates are the highest they have been all year.

Uncertainty is keeping buyers cautious. Beyond the rate itself, the broader economic picture and the uncertainty around the coming midterm elections have people waiting to see how things settle. Markets, and real estate in particular, do not love uncertainty. When someone is making the biggest financial decision of their life and spending $500,000 or $1,000,000 on a property, they want to feel that there’s firm ground under their feet first. Right now, many condo buyers don’t feel that yet, so they are staying on the sidelines.

We are seeing it firsthand across our listings. We have condos on the market in Fenway, Kenmore, and the North End, with more coming in Belmont and Brighton. For our Fenway property, which even includes a deeded parking spot, only neighbors who noticed the sign on their walk attended the opening-weekend open house. No one made an intentional trip to see it, which is extremely unusual for a first weekend on the market.

Showing activity on our other condo listings has dropped to almost nothing. Those are real alarm bells, and they are exactly why condos here are taking longer to sell.

Price is one lever, but not the only one. Condo buyers are still in Boston, and always will be. Sometimes a specific unit at a specific price just is not catching them, so for some sellers we are testing price reductions to see what draws the buyers who are out there. For others, the better move is to be patient.

Several of our clients don’t actually have to sell this year, so instead of spending $2,000 or $3,000 on physical staging, we have shifted the advice toward virtual staging, listing for sale and for rent at the same time, and seeing what comes back first. We are careful with our clients’ out-of-pocket costs, and if the numbers don’t line up, the smarter play is often to rent in the meantime and revisit next year.

If you own a condo and are weighing whether to sell, rent, or hold, the right answer really depends on your situation. Reach out anytime through a DM on our socials, or a text and call at (857) 210-9925, or an email at lou@c21revolution.com. You may also visit lousellscambridge.com. We’ll set up a consultation in person, by phone, or over Zoom to figure out what makes the most sense for you.