The Boston real estate market is experiencing some sort of relief as housing prices cool down. What can investors expect over the next few months?
A recent report from Axios.com states that the real estate market in Boston is cooling down as prices continue to decline. It follows the crazy roller coaster ride seen in median property prices in Boston in the past twelve months.
According to Redfin’s latest data, price drops took place monthly starting June 2022. Redfin shows a month-over-month median sale price growth of -3.9% in September 2022.
We verified the price drop using Mashvisor’s data from the last four months. Here are Mashvisor’s numbers:
- June 2022: $897,116
- July 2022: $891,972
- August 2022: $846,171
- September 2022: $818,607
Based on the numbers above, the month-over-month difference between August 2022 and September 2022 is -3.31%, which isn’t that far from Redfin’s data.
However, even as housing prices drop, you will still need to deal with high mortgage rates at the moment. The rate for a 30-year fixed-rate mortgage is above 6%, according to Forbes. It makes homeownership a challenge to a lot of regular folks.
But what does this mean for real estate investors?
Does This Mean Boston Real Estate Market Is Good for Investing?
For people who are into real estate investing or are seriously considering it, Boston’s lower housing prices may be welcome news. For the past couple of years, the Boston real estate market was a wild ride of price increases and decreases. Based on Axios’s recent report, it started to cool down in June this year.
It can be a good time for real estate investors to take advantage of such an opportunity and invest in the Boston real estate market as property prices are cooling down. Closed sales are down 22.1% in September, compared to the same period last year.
Before mortgage rates soared in May, a little over 74% of properties were sold over asking prices. Last month, the number went down to only 51.6%. On the other hand, only 13.2% of listings dropped their prices to below asking in May. The figure went up to 29.6% in September.
Given the significant differences in the numbers, sellers are now forced to bend and open themselves to negotiating below their asking prices. The shift in power works to the advantage of homebuyers and real estate investors, as both groups can now aggressively negotiate rates according to what works best for them.
Of course, there’s still the issue of high mortgage rates currently. However, if you do your homework and get the best possible loan, you can still end up with a decent profit and positive cash flow on your investment property.
Boston by the Numbers
As a real estate market, Boston is one of the better places to invest in rental properties. Here are Boston’s numbers, according to Mashvisor’s October 2022 data:
- Median Property Price: $891,740
- Average Price per Square Foot: $748
- Days on Market: 255
- Number of Long Term Rental Listings: 466
- Monthly Long Term Rental Income: $2,987
- Long Term Rental Cash on Cash Return: 1.85%
- Long Term Rental Cap Rate: 1.88%
- Price to Rent Ratio: 25
- Number of Short Term Rental Listings: 1,331
- Monthly Short Term Rental Income: $3,888
- Short Term Rental Cash on Cash Return: 2.00%
- Short Term Rental Cap Rate: 2.03%
- Short Term Rental Daily Rate: $225
- Short Term Rental Occupancy Rate: 53%
- Walk Score: 80
Given the current numbers for Boston’s housing market, investing in rental property in Beantown can be a good decision. But before making any final decisions, you need to do your homework, too. Due diligence should never be neglected just because you hear such news.
If you need relevant information and accurate market data for Boston real estate or any location in the US, you can always turn to Mashvisor. In addition to a massive database that covers almost every market in the US, Mashvisor also provides valuable tools to help you with your investment property analysis.
To learn about your options for signing up for our services, click here.
5 Top Neighborhoods in the Boston Real Estate Market for Rental Investing
Based on Mashvisor’s October 2022 location report, we list below five locations that are ideal for rental property investing. The criteria for choosing the locations are as follows:
- Each neighborhood should have a median property price of no more than $1,000,000
- Each neighborhood should have a monthly rental income average of at least $2,000
- Each neighborhood should have a 2.00% minimum cash on cash return
- Long term rental properties should have a price to rent ratio of 20 and above
- The number of short term rental listings in a neighborhood should be at least 100
- Short term rental occupancy rate should not go below 50%
Each list has been ranked according to cash on cash return, starting with the highest down to the lowest.
2 Best Neighborhoods in Boston for Long Term Rental Investments
Based on Mashvisor’s data for Boston neighborhoods, here are the two best real estate markets for long term rental properties:
1. South End
- Median Property Price: $915,594
- Average Price per Square Foot: $5,066
- Days on Market: 408
- Monthly Long Term Rental Income: $3,656
- Long Term Rental Cash on Cash Return: 2.64%
- Long Term Rental Cap Rate: 2.67%
- Price to Rent Ratio: 21
- Walk Score: 97
Click here to search for investment properties for sale in the South End.
2. Back Bay
- Median Property Price: $900,352
- Average Price per Square Foot: $2,872
- Days on Market: 79
- Monthly Long Term Rental Income: $3,341
- Long Term Rental Cash on Cash Return: 2.01%
- Long Term Rental Cap Rate: 2.03%
- Price to Rent Ratio: 22
- Walk Score: 100
To find the best locations for long term rentals in any location of your choice, click here.
Top 3 Neighborhoods in Boston for Short Term Rental Investments
The following three neighborhoods in the Boston real estate market are ideal for short term rental investing:
- Median Property Price: $480,058
- Average Price per Square Foot: $2,113
- Days on Market: 143
- Number of Short Term Rental Listings: 185
- Monthly Short Term Rental Income: $3,636
- Short Term Rental Cash on Cash Return: 4.13%
- Short Term Rental Cap Rate: 4.18%
- Short Term Rental Daily Rate: $200
- Short Term Rental Occupancy Rate: 63%
- Walk Score: 93
- Median Property Price: $510,000
- Average Price per Square Foot: $2,120
- Days on Market: 160
- Number of Short Term Rental Listings: 362
- Monthly Short Term Rental Income: $3,892
- Short Term Rental Cash on Cash Return: 3.90%
- Short Term Rental Cap Rate: 3.94%
- Short Term Rental Daily Rate: $224
- Short Term Rental Occupancy Rate: 52%
- Walk Score: 93
- Median Property Price: $744,112
- Average Price per Square Foot: $3,691
- Days on Market: 20
- Number of Short Term Rental Listings: 350
- Monthly Short Term Rental Income: $4,131
- Short Term Rental Cash on Cash Return: 2.27%
- Short Term Rental Cap Rate: 2.29%
- Short Term Rental Daily Rate: $206
- Short Term Rental Occupancy Rate: 66%
- Walk Score: 83
To find the best locations for short term rentals in any location of your choice, click here.
Wrapping It Up
The cooling down of the Boston real estate market may bring a sigh of relief to investors for now. However, you should also consider factors like mortgage rates. Investing in Boston can be a wise decision if you do your due diligence and work with the right tools.
The good news is that Mashvisor provides all the vital information and tools you will need to make that decision.
To access Mashvisor’s real estate investment tools, sign up for a 7-day free trial today, followed by 15% off for life.