Luxury homes in Cambridge and the surrounding communities command some of the best home prices in Greater Boston. From housing inventory to mortgage rates, here are several key factors that can affect the affordability of homes in the area.
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Supply and demand
There’s high demand for housing in Greater Boston due to the strong economy, robust job market, prestigious universities, and local attractions. However, housing inventory and new home construction have not kept up with demand, which has driven up home prices. Buyers who are looking for homes in the mid-range and luxury segment of the market will still find an excellent selection of homes if they work with a well-connected agent.
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Cost of living
Greater Boston has a relatively high cost of living compared to many other places in the United States. The higher cost of living translates to housing. According to Realtor, the median price of single-family homes in the Boston area was $849,000 as of February 2023, though home prices vary with property size, features, and location. Living costs in Greater Boston also include utilities, repairs, maintenance, property taxes, groceries, transportation, and other expenses that can affect household spending.
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Land use regulations
Local zoning and land use regulations can restrict the construction of new housing developments, which can affect housing inventory and increase the price of existing homes. However, zoning reforms can potentially infuse the real estate market with new housing stock in the form of multi-family properties.
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Property taxes
According to the Tax Foundation, the average property tax rate in the state of Massachusetts is 1.14% as of March 2023. However, property tax rates vary by location and are based on home values. Property taxes in Greater Boston are relatively high, which can affect the affordability of homes in the area. Homeowners who meet certain eligibility criteria may qualify for local property tax exemptions.
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Interest rates
Mortgage interest rates can certainly impact the affordability of homeownership. Soaring interest rates can make some buyers more hesitant to apply for a mortgage. According to Bankrate, interest rates in Massachusetts are 5.88% and 6.60% for a 15-year and 30-year fixed mortgage, respectively, as of March 2023.
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Inflation
Inflation can affect the price of both mid-range and luxury homes. The increased costs of building materials, labor, and construction costs can drive up the cost of new luxury homes. This can lead to higher prices in the high end of the real estate market. Inflation can also impact the perceived value of luxury real estate – if buyers perceive that the value of luxury homes is rising due to inflation, they may find it easier to justify higher home prices.
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Transportation costs
Transportation costs, including the cost of gas and public transport, have an effect on the affordability of housing in Greater Boston. Buyers may need to decide between higher home prices for properties closer to job centers and the lower cost of properties located farther away from employment hubs, but with longer commute times and potentially higher transportation costs.
Work with a local expert for guidance and advice on current market conditions. As a luxury real estate specialist, I’m here to help you find the best luxury homes in Weston, MA as well as provide property investment tips in Greater Boston. Feel free to contact me, Seydyss Barreto, at 978.590.8918. You can also send me a message via email or fill out our contact form for questions on home prices in the area.