Home Buying

Intense competition for Massachusetts homes drives prices past their 2005 peak

Houses on Sherman Street in Cambridge on June 10, 2016. Jim Tuttle

July 26, 2016

2 minutes to read

Home prices in Massachusetts are once again soaring into record territory, with June’s median sale price closing in on the $400,000 mark, blowing past peaks set a decade ago during the height of the real estate bubble.

The statewide median home price hit $380,000 in June, the highest ever, the Massachusetts Association of Realtors reports.

Market tracker The Warren Group, publisher of Banker & Tradesman, pegged June’s median at a slightly lower but still record $372,000. That’s $2,000 above the last peak of $370,000, reached in August 2005.

Condo prices also broke records, reaching $345,000, a good 4.5 percent over the last peak of $330,000 set in June 2015, Warren Group stats show.

“The competition to buy a home in Massachusetts right now is very intense,” said 2016 MAR President Annie Blatz, branch executive at Kinlin Grover Real Estate in Brewster, in a press statement. “Buyers are having to use every additional dollar worth of purchasing power they are getting from these historically-low interest rates to close a deal.”

While this is the first time the statewide median home price has entered record territory in more than a decade, several cities, towns and suburbs have long since raced past their previous peaks.

This list is dominated by some of the wealthiest and most coveted communities, including Cambridge, Wellesley, Newton, and Needham. By contrast, outer suburbs along Interstate 495 and beyond are more likely to still be struggling to reach their last peak.

Home sales also continued their torrid pace. Sales of single-family homes rose nearly 15 percent in June, totaling 7,387. That marks the third-highest number of sales since it began its current method of tracking real estate activity back in 1987, The Warren Group notes. Condo sales rose 2.3 percent.

“Sales in Massachusetts are starting to hit their peak,” said Timothy M. Warren Jr., CEO of The Warren Group, in a press statement. “There have been double-digit percent gains every month for 13 straight months. The summer months are always the strongest for closings with July usually the biggest month. Even with prices at record highs, homebuyers will still be out closing deals at a high rate.”

However, as sales rose, the number of homes on the market continued to fall, posting its 53^rd year-over-year decline. New listings hitting the market also fell 8.3 percent. While anemic new home construction in the Boston area is a major factor, homeowners aren’t opting to sell at a fast enough rate to keep up with current demand.

“While we need more than just homeowners to list their homes for sale to meet our inventory shortage, it is the most immediate thing we can do to help boost supply,” Blatz noted.