The region’s housing market surged in August, with prices for single-family homes both statewide and in Greater Boston leaping by double digits compared with the same month last year.
Fueled by strong demand — despite the pandemic-induced recession — coupled with a severe shortage of properties for sale, prices for single-family homes jumped 14 percent to a record-high median of $480,000, according to Boston real estate data firm The Warren Group. Condominium prices climbed 5.9 percent, to $425,000.
The dramatic increases came as the number of homes listed for sale in Greater Boston dropped by 23 percent compared with last August, according to data from the Greater Boston Association of Realtors. Many would-be sellers have decided to stay put this spring and summer, real estate agents say, even as cooped-up renters are looking for places to buy and spread out a bit.
That supply-and-demand imbalance, along with a delayed selling season after spring lockdowns, is prompting a ferocious run-up in the market now, said Warren Group chief executive Tim Warren. While home prices have generally risen in recent years, and accelerated this summer, August’s 14 percent jump is something Massachusetts hasn’t seen since the bubble days of the mid-2000s, he said.
“It’s a little scary,” Warren said. “But you’ve got low inventory, and this somewhat frenzied buying experience.”
How long it might last is unclear. New listings jumped by 46 percent in August, according to the Greater Boston Association of Realtors, though that also may simply be a sign of people choosing to sell in the fall after holding off in the spring. There’s also growing concern that the economic damage from the pandemic could spread to middle-class buyers if Boston-area universities, hospitals, and local governments have to cut jobs.
For now, Warren said, demand remains quite strong.
“The high-paying jobs are still here. The stock market is giving plenty of enthusiasm,” he said. “There’s a lot of strength in the economy despite our high level of unemployment.”
Still, there are divides emerging in Massachusetts’s housing market.
Year over year, prices are climbing fastest in counties with lots of second homes, up roughly 50 percent in both Nantucket and Martha’s Vineyard in August, and up by about one-fifth on Cape Cod and in Berkshire County — growing at twice the pace of the more urban Suffolk, Middlesex, and Norfolk counties. And condo prices, while still climbing, are doing so at a much slower rate than single-family homes — up a modest 3 percent in Greater Boston — while inventory is significantly higher.
Those trends are likely influenced by the fact that many companies in Boston and Cambridge are still operating largely by work-from-home, reducing the premium people are willing to pay to be close to the core of the city while making a distant getaway more attractive — at least for those who can afford it. Again, Warren said, it’s unclear how long this dynamic will last. But six months after the coronavirus pandemic shut down the region’s economy and housing market, he said, it does appear people are finding their footing again.
“It’s safe to say that the Massachusetts real estate market is adapting to a COVID-19 world,” Warren said.
Tim Logan can be reached at firstname.lastname@example.org. Follow him on Twitter at @bytimlogan.