Home Buying in Massachusetts
Massachusetts has something for everyone. Whether you're seeking a historic home, a family-friendly community, or outdoor adventures, you can find it in The Bay State. Its diverse economy, excellent education system, and rich cultural heritage make it a great place to live, work, and play.
However, like so many other states, Massachusetts has struggled to keep up with a steady demand for housing. It has been plagued by an acute shortage of homes for sale, with the inventory of available homes at an all-time low. This has created a challenge for home buyers.
High demand, low inventory, and high prices have proven the perfect storm with conditions ripe for a highly-competitive seller's market. In Massachusetts, there isn't just a high demand for single-family homes, but also for condominiums. Condo prices have risen at a rate of about 7.8 percent since last year.
Fewer homes are entering the market in Massachusetts thanks to seller apprehension and high interest rates. As of March 2024, there was only a 1.1-month inventory supply. To put this into perspective, a balanced market requires a 5-6 months' supply.
Maura Healey, the current Governor of Massachusetts, has made boosting housing inventory an integral part of her administration. She has also introduced a bill meant to spur the development of single-family homes and accessory residential units.
If you are considering buying a home in Massachusetts, you'll want to take several steps, including determining your housing needs, finding a good realtor, and getting your credit in order. Be sure to consider property taxes will also play a role. The first step, however, is conducting your research to get to know the current housing market.
Current Massachusetts Housing Trends
Understanding current housing market trends in Massachusetts is critical to getting a complete picture of home buying in the state.
Here are some key statistics:
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Massachusetts Median Home Price
The median home price in Massachusetts tends to be significantly higher than the national average, typically hovering around $400,000. In comparison, the median home price in Massachusetts was $595,700, making it one of the most expensive housing markets in the country. This figure is considerably higher than in most neighboring states, though parts of Rhode Island and Connecticut are approaching similar medians. In certain areas of Massachusetts, particularly in Boston, home prices can be much higher, with median home prices often reaching around $774,500.
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Number of Homes Sold
In Massachusetts, around 3,000 homes are sold monthly, with a typical yearly increase of about 2%.
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Median Days on Market
Due to the state's competitive seller's market, homes generally sell in under a month. On average, the median DOM (days on the market) was 28 days.
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Supply Statistics
Limited inventory has been a concern throughout the United States. Although the housing supply in Massachusetts is on the rise, it is not increasing as quickly as in other states. In 2021, on average, there were roughly 2.84 new residential construction permits for every 1,000 people in the state. Still, the rate of increase in inventory will have to be much higher than that to achieve a balanced market.
How to Find the Right Home to Buy in Massachusetts
You'll want to consult a real estate agent before embarking on your quest to find the right home in Massachusetts. Whether you're looking for a rental property as an investment, a home where you can raise a family, or a place to downsize, a real estate agent can help you find a property that fits your needs.
The key is ensuring you and the realtor are on the same page. The real estate agent should also understand your personal finances, lifestyle details, goals, and aspirations. This helps ensure they show you the best options to meet your needs.
Finding the Right Home
Here are some things to consider when looking to buy a home in Massachusetts:
Location
When investing in and buying Massachusetts real estate, location is everything. Location determines the price range, commute time, school district where your kids will be enrolled, and many other quality-of-life issues.
Consider the following factors:
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Urban areas vs. the Suburbs: In Massachusetts, you'll find a distinct contrast between its urban centers and its suburban neighborhoods. Urban areas like Boston, Cambridge, and Somerville provide easy access to public transit, top-notch hospitals, and popular cultural institutions. However, in suburban communities like Lexington, Newton, and Wellesley, residents enjoy family-friendly neighborhoods, more outdoor space, and quieter living environments, while still remaining within a reasonable commuting distance to the city.
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Proximity to your workplace: In Massachusetts, employment opportunities are concentrated in and around Boston, which significantly influences housing decisions. With nearly 15 percent of the state's workforce commuting to Boston, proximity to the city is a key factor for Massachusetts home buyers. Towns like Brookline, Quincy, and Medford are all popular because they offer short commutes and access to major highways.
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Access to public transportation: Public transportation plays an important role in the Massachusetts housing market. With the Massachusetts Bay Transit Authority (MBTA) serving as a lifeline for many commuters, residents often prioritize living near T stations, bus stops, or commuter rail lines. Towns like Arlington, Revere, and Malden are especially attractive to home buyers seeking a location that offers quick access to Boston without needing a car. Even those who work from home value proximity to public transit for running errands or participating in leisure activities.
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Property tax rate: Massachusetts boasts an average property tax rate of 1.14%, ranking it the 18th highest in the country. However, property taxes vary widely based on county and home value, so be sure to do your research and find a home with a property tax rate you can afford.
Type of Home
There are so many types of residential homes to choose from there is a lot to consider. Even if you have your heart set on a single-family home, they, too, offer many options.
Here are some types of homes you may encounter while buying a home in Massachusetts.
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Single-Family homes: When it comes to home buying in Massachusetts, single-family homes are the most popular. That's because they offer privacy and space. Single-family homes also come with many responsibilities, including handling all maintenance and care for the house and the property. The single-family homeowner is solely responsible for day-to-day upkeep, from raking leaves and mowing the lawn to maintaining fixtures and paying utility bills.
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Condominiums: Condominiums, usually in urban settings, can provide a balanced level of peace and quiet. Condos rarely have immediate neighbors and often offer many great amenities, such as swimming pools and gyms. Usually, restaurants, retail stores, and public transportation are within walking distance of a condo complex. Remember, amenity and maintenance fees are often a standard monthly expense for condo owners, and there may be additional homeowners' association rules that you will have to follow.
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Free-standing townhomes: Townhomes in Massachusetts are typically less expensive than single-family homes, which is why many first-time homebuyers consider them a viable option. In a townhome setting, there is little to no outdoor maintenance that an owner needs to think about. Most townhomes have strong communities that feature parks and playgrounds, making them a perfect home-buying alternative. The lower cost, however, means less space, and depending on your lifestyle, you may want to consider few townhomes offer single-floor living. You'll also compromise a certain level of privacy.
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Factory-built, manufactured, and modular homes: Manufactured houses are like traditional homes, featuring permanent foundations, garages, and porches. Although people often use the terms "modular home," "manufactured home," and "mobile home" interchangeably, a mobile home is assembled at a factory while modular homes, though built in a factory, are assembled on site. Anyone on a tight budget will want to consider one of these options when buying a home in Massachusetts.
The Typical Home Buying Process in Massachusetts
Here is an outline of the typical home-buying process in Massachusetts:
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Request prequalification: To buy a home in Massachusetts, you'll first need a prequalification letter, essentially a statement from a mortgage lender estimating the amount of money you may be qualified to borrow to purchase the home. This letter usually reflects your current financial situation, but does not represent a guaranteed loan offer. It is simply a tool to verify financing so you can make an offer on a home. The state's competitive market, especially in cities like Boston and Cambridge, often requires buyers to secure this letter early to stand out.
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Make an offer: Once you have chosen the home you want to purchase, make an offer to the seller. In Massachusetts, offers are typically made using a standard form that includes the property's description, price, deposit requirements, location, and closing date. The fast-paced nature of the Massachusetts real estate market requires buyers to act quickly, especially in sought-after areas. Towns like Newton and Brookline, for instance, frequently see bidding wars. Therefore, submitting a strong offer right away is crucial.
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Apply for a loan: After your offer is accepted, you'll need to complete a formal loan application, either through your bank, credit union, mortgage lender, or mortgage broker. Depending on market conditions, you can lock in an interest rate or let it float. Since Massachusetts homes are often priced above the national average, securing a favorable loan with a competitive interest rate is essential. Working closely with a lender familiar with the Massachusetts housing market is important.
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Hire an attorney: Massachusetts law requires a real estate attorney to oversee the closing. This is a critical step in the home-buying process, as the attorney will help ensure all legal documents are in order and the transaction proceeds smoothly. The attorney will review the Purchase and Sale Agreement (P&S), which is a more detailed contract signed after an offer is accepted, and assist with title searches, among other tasks.
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Sign on the dotted line: At closing, you'll sign several legal documents, including the "note", a contract between the borrower and lender. The note includes the total amount borrowed, the annual percentage rate (APR) charged on the loan, the repayment schedule, the date the loan must be fully repaid, and any prepayment penalties. Because Massachusetts homes tend to sell quickly, home buyers should be prepared for a fast-paced closing process.
Once these steps are complete, you will be an official homeowner.
Financing Your Home Purchase
Here are some common ways to finance a home purchase in Massachusetts:
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Traditional Mortgages
There are generally two types of traditional mortgage options available to those buying a home in Massachusetts:
- Fixed-rate mortgages: The most common type of mortgage is a fixed-rate mortgage, which maintains the same interest rate for the life of the loan.
- Adjustable-rate mortgage (ARM): The interest rate on an adjustable-rate mortgage fluctuates based on market conditions. This is a good option if interest rates are expected to drop.
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Government-Backed Loans
There are several government-backed home loans available to Massachusetts home buyers, including:
- Federal Housing Administration (FHA) loans: These loans are insured by the FHA, which allows for lower down payments and more lenient credit requirements.
- Veterans Assistance (VA) loans: Veterans and certain military members can access VA loans, which offer no down payment and competitive interest rates.
- U.S. Department of Agriculture (USDA) loans: USDAloans are available to homebuyers in certain areas.
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Down Payment Assistance Programs
- MassHousing: The state's Housing Finance Agency (MassHousing) offers down payment assistance programs to eligible first-time homebuyers. In fact, first-time homebuyers in Massachusetts may be eligible for up to $30,000 in down payment assistance.
- Local programs: Many cities and towns in Massachusetts have their own down payment assistance programs. Check with your local government office to find out what is available.
Home Insurance
Massachusetts does not require homeowners to carry home insurance. However, it is strongly recommended. Home insurance is essential to protect you in the event of an unforeseen financial loss due to natural disasters, fires, frozen pipes, and burglaries. If you are financing your home, your lender will most likely require a home insurance policy.
In Massachusetts, home insurance costs an average of $1,309 annually, 20 percent lower than the national average. However, rates may vary depending on the value of your home, the type of coverage you choose, and your claims history.
Home Buying Challenges
Some of the most common challenges faced by homebuyers in Massachusetts are as follows:
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High prices: The Massachusetts housing market is a competitive seller's market, driving home prices to levels much higher than the national average.
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Limited inventory: There is a high demand for homes in Massachusetts, but only a limited number are available.
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Seasonal markets: The Massachusetts real estate market fluctuates throughout the year. Fall and winter are the best times to buy a home in the state.
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Mortgage options: Finding a mortgage that fits your financial circumstances can often be challenging.
Massachusetts: A Competitive Seller's Market
Massachusetts, a state renowned for its rich history, diverse economy, and top-tier educational institutions, has become a highly competitive seller's market thanks to high demand, limited inventory, and rising prices. The state's growing population and strong economy are the primary factors driving the market. As more people move to Massachusetts, the demand for housing has outpaced the supply, leading to a significant jump in home prices, particularly in urban areas like Boston.
Compounding the issue is the limited availability of homes in Massachusetts. Many sellers hesitate to list their properties due to concerns about finding a new home and the potential for a lower selling price in a declining market. As a result, the inventory of available homes has remained low, further fueling buyer competition.
Another factor that makes it difficult for families to secure a home is the increasing prevalence of all-cash offers. In Massachusetts, approximately 25 percent are all-cash, with some indications of an even higher percentage in highly competitive areas like Boston. Many of these cash offers are made without contingencies, giving them a significant edge over offers requiring financing. For families relying on a mortgage to purchase a home, this makes it harder to complete, especially because sellers prefer the certainty and simplicity of a cash transaction.
Rising interest rates have also contributed to these challenges. As borrowing costs increase, some potential buyers may be unable to afford their desired home or may choose to delay their purchase. While this can sometimes reduce demand and put downward pressure on prices, it has not been enough to offset the overall tightness of the market, particularly with the added competition from cash buyers.
Despite these challenges, there are still many opportunities for homebuyers in Massachusetts. By understanding the current market conditions, being prepared, and working with a knowledgeable real estate agent, buyers can increase their chances of successfully navigating the competitive landscape and finding their dream home.
Instant Access to Massachusetts Property Records
- Owner(s)
- Deed Records
- Loans & Liens
- Values
- Taxes
- Building Permits
- Purchase History
- Property Details
- And More!
Instant Access to Massachusetts Property Records
- Owner(s)
- Deed Records
- Loans & Liens
- Values
- Taxes
- Building Permits
- Purchase History
- Property Details
- And More!