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America's housing crisis rattles families in historic suburb as property prices hit 'sobering' level... and here is why it is only going to get worse
House prices are only going to go up, experts have warned, with Boston set to be the next city where buyers will need $1 million for an average family home.
A perfect storm of spiraling construction costs, desperate buyers, and existing owners sitting tight in their homes has seen house prices double in 68 of America's 100 largest cities in less than ten years.
The median sale price for a single-family home reached a record $950,000 in Greater Boston last month and local realtors have said it is likely to reach seven figures this summer.
'I don't think there's any clearer signal to the legislature that they need to be working on all fronts to alleviate these price pressures,' said Luc Schuster of The Boston Foundation.
'There is no question that this is a crisis.'
Pictured: $1 million is now needed to buy this average single family home in East Boston
A whopping $1.2million is needed for this four story home with a semi-finished basement and a tiny backyard in the city's Brighton suburb
The average rate on a 30-year fixed-rate mortgage is now seven percent – a 23-year-high – as policymakers attempt to squeeze inflation out of the economy.
High interest rates have traditionally dented house prices as buyers factor in the cost of mortgage payments.
But Jared Wilk of the Greater Boston Association of Realtors warned that a decade of ultra-low interest rates has left existing homeowners unwilling to move house and take on new mortgages at the much higher rates.
And that has left buyers desperately competing for the few homes that do come to market, with more than a third of houses being paid for in cash.
The White House has announced plans to give $25,000 to first-generation homebuyers toward their down payment.
But it still leaves those who cannot pay cash needing to find nearly $200,000 just for the down payment on a $1 million home.
'The reality is that if rates go up or down, if more homes come on the market or fewer, prices are going to go up,' Wilk told the Boston Globe.
'There is a lot of pent-up demand, and a supply imbalance that is going to keep pushing them up.'
Professor Adam Guren of Boston University, left, has said only an unlikely surge in production is likely to dent soaring prices, while Luc Schuster of the Boston Foundation, right, has warned that high prices will continue to hollow out local communities
The construction of new homes has picked up after a dip during the pandemic but surging building costs have meant the new supply has done little to cut prices.
House sales in Boston fell each month for nearly two years as the market contracted.
And April's record price came despite a sudden 30 percent surge in new listings.
The picture is not much better away in rural areas with the median price across the state jumping 10 percent to $610,000 in the last year.
House prices have doubled in Detroit in just five years, data from real estate marketplace Point2 revealed last month.
Home prices in Miami and Tampa, Florida, have doubled since 2018, as they have in Baltimore, Maryland, and Spokane, Washington.
And buyers in Irvine, California - the most expensive housing market in the study - have seen average home prices double from an already steep $750,000 to $1.5 million in just seven years.
The surge in demand has pushed the total value of US housing stock up by $2 trillion in the last year alone.
'We're stuck in a strange situation where prices are going up,' said economist Adam Guren of Boston University.
'I don't really see an end to it until a lot more inventory comes on the market. And I don't see new inventory coming anytime soon because of construction costs.'
A report last month by Realtor.com noted signs that the logjam in the housing market was finally loosening up with a 12 percent rise in homes for sale in April 2023, with Southern states accounting for more than half.
Listings rose 18.4 percent in the Midwest and 7.5 percent in the West but just 2.9 percent in the Northeast where fears are growing of a population exodus and a hollowing out of local communities as young people look elsewhere for affordable homes.
Even this single-story home in Boston's leafy Brook Farm suburb will cost you nearly $800,000 after being valued at less than $600,000 just last year
More than 22,000 people between the ages of 25 and 44 moved away from Massachusetts in the 15 years to 2022.
'It's certainly a sobering statistic,' said Schuster.
'I don't think the importance of solving this problem, and solving it quickly and efficiently, can be overstated,' he added.
'These are trends that take a long time to reverse, and the health of our region and the people who live in it is at stake.'