Economists Forecast Strong 2017 In Greater Boston

Melrose Named Hottest Market In Massachusetts

By Jim Morrison | Banker & Tradesman

BT_Logo_400x400The Greater Boston real estate market is on track for a strong finish this year and next year will bring more of the same, Jonathan Smoke, chief economist at Realtor.com, told an audience of hundreds of real estate professionals at the Federal Reserve Bank in Boston earlier this month.

“The fundamentals of Boston are strong,” Smoke said. “It’s one of the healthiest markets in the U.S. There are no signs that would point toward a slowing down of anything. You’re working in one of the best markets in the country, certainly the strongest in the eastern half of the country.”

Northeastern University economist and professor Alan Clayton-Matthews agreed, but pointed out that the view from the rest of the state isn’t quite as rosy.

“The economy is great in Greater Boston, but much less so in the rest of the state,” Clayton-Matthews said. “Boomers are retiring, but Millennials entering the workforce are offsetting the loss somewhat.”

Smoke cited strong consumer confidence – buoyed by low unemployment – as one of the factors contributing to a strong 2017. Unemployment in the Bay State is down to 3.3 percent, well below the national average of 4.9 percent, and it’s likely to continue, said Clayton-Matthews.

“Globalization trends favor Massachusetts employment due to its highly educated population,” he said.

Millennials And Interest Rates Will Play A Role

Greater Boston also has a higher concentration of Millennials than most other markets, and they are expected to enter the real estate market in big numbers in 2017.

“The pipeline of buyers has never been higher,” Smoke said “There are 84 million Millennials in this country who are poised to enter the market at a time when consumer confidence is near an all-time high.”

Millennials are a very distinct cohort of buyers, Smoke said, and to be successful, real estate agents and other professionals are going to have to get to know what they’re looking for and how these high-earning young professionals prefer to communicate. Their spending and saving priorities also differ from previous generations of buyers.

“The biggest obstacle for Millennials is not going to be their income,” Smoke said. “It’s going to be the down payment. The average down payment in Greater Boston is $73,000.”

Home prices in most Greater Boston communities have exceeded their pre-crash highs, by a wide margin in many cases. The high cost of housing is concerning, but Smoke doesn’t expect the lack of affordability to dampen the strong 2017 market, despite expected rate hikes that will make current home sale prices even less affordable.

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