Few U.S. cities have as rich a history as Boston. In addition to the events we learned about in school, including the Boston Tea Party and the Boston Massacre, the city has also had its share of unusual historical events, such as the great molasses flood of 1919. Along with its cobblestone streets and historic buildings, Boston offers a rich intellectual environment as the home of 35 colleges and universities.
The housing market in Boston is expensive. The median price for an existing home was $277,700 nationwide in May, according to the National Association of Realtors. In Boston, detached single-family homes sold for $618,000 in April, and condos sold for $559,500, according to the Greater Boston Association of Realtors. Single-family home prices have increased by 1.2% year-over-year, but condo prices have actually dropped by 5.8% from a record-high set last April.
Inventory of single-family homes has dropped over the past year, while condo inventory has risen by 22.7%. The year-over-year increase may be due to the number of recent condo developments; however, inventory did decline by 10% between March and April. Both types of homes have less than three months of inventory, which is below the national average of 4.3 months, according to the Greater Boston Association of Realtors.
The number of days on the market (from the date the property is listed to the date an offer is accepted) increased by 2.9%, to 36 in April, for single-family homes and by 31%, to 38, for condos. Relatively low inventory and high prices still make Boston a seller’s market, and homes are selling at close to the asking price (98.4% for single-family homes and 99.5% for condos). If you see a home you love, it’s best to move quickly and offer a bid that’s close to the asking price, if possible.
Massachusetts has laws in place to protect Boston homebuyers and sellers, but it’s best to do your due diligence when buying a home and have it professionally inspected. Here is what you should know if you are considering buying a home in Beantown.
Massachusetts is a caveat emptor state, which means “buyer beware.” In practical terms, this translates to few required state disclosure forms. The burden is on you as a buyer to ask questions and have your home inspected. If the home was built before 1978, sellers must complete a lead poisoning prevention program notification form, and if the home has a septic system, the seller must have it inspected before selling the home. Massachusetts also requires an attorney to be present at closing.
Massachusetts allows nonjudicial foreclosures, which means your lender is not required to go to court to foreclose on your home. The state allows judicial foreclosures, too, but those are less common. Your lender must give you notice and allow you at least 90 days to bring your mortgage up to date before moving forward.
In the event of a divorce, Massachusetts is an equitable distribution state. This means property is divided equitably between the two parties. This doesn’t mean it will be a 50/50 split, however. The court takes several factors into consideration, including each partner’s earning potential, which spouse is caring for any children and how each spouse contributed financially to the marriage.
Despite Boston’s rather famous resistance to taxes (see: Boston Tea Party), real estate taxes are a reality for city residents. The state of Massachusetts imposes a transfer tax, called an excise tax, any time property is transferred. This tax is paid by the seller and is $2.28 for each $500 of the purchase price in most parts of Massachusetts, including Boston.
The City of Boston’s 2019 residential property tax rate is $10.54 per $1,000 of value. There are several property tax exemptions that could lower your property tax bill, though. These include:
You can find more details on these exemptions here.
Suffolk County, where Boston is located, has a median tax rate of 0.78%, which translates to $3,009 for a home valued at $384,500, according to Tax-Rates.org. This is below the median statewide tax of $3,511 and well below the highest county in the state, Middlesex, which collects an average of $4,356.
Fannie Mae and Freddie Mac are two government-sponsored enterprises that help stabilize the U.S. real estate market. There are limits on the size of the loans they will back. Each year, the Federal Housing Finance Agency (FHFA) sets the conforming loan limits. The overall conforming loan limit is $484,350, but there are higher limits in pricey areas, such as Boston. Suffolk County, which includes the Greater Boston area, has a conforming loan limit of $688,850.
Purchasing a home in Boston can be a challenge, but there are homebuyer assistance programs available that may help make the process a bit easier.
This program offers down payment and closing cost assistance in the form of a no-interest loan with deferred payments until the property is sold or transferred.
Who qualifies:
Borrowers who:
MassHousing Mortgage offers affordable, fixed-interest-rate mortgages to buy one- to four-unit properties and condos. You may also qualify for the mortgage payment protection program MI Plus, which helps pay the principal and interest on your mortgage if you lose your job.
Who qualifies:
Borrowers who:
This program offers down payment assistance of up to 3% of the purchase price, or $12,000, whichever is less. The loan has a 15-year term and a 1% interest rate.
Who qualifies:
Borrowers who:
This program offers mortgage financing and closing cost and down payment assistance for military families.
Who qualifies:
Borrowers who:
Considering Boston’s high housing prices, it pays to shop around for your best interest rates. Here are a few tips to help you save on your mortgage costs.
Contact at least three lenders on the same day
The more lender quotes you can compare, the better your chances of finding your best interest rate. Even a small difference can save you thousands over the life of your mortgage. Because rates change daily, it’s best to contact all three lenders on the same market day, in order to get a fair comparison.
Give each lender the same information
Ask for the same type of quote from each lender and provide each lender with the same information about yourself and your financial situation. This ensures that, once you have the quotes in hand, you can make a true apples-to-apples comparison.
Add up all the lender fees to confirm the costs
The interest rate is just the beginning when it comes to comparing mortgage costs. Lenders may also have origination fees, or offer discounts. Look carefully and understand all the costs associated with your mortgage before moving forward.
Know when to lock in the rate
A rate lock allows you to lock in the interest rate quoted by your lender, so it will still be in place at the end of the homebuying process, even if interest rates rise. Some lenders lock in the rate when they send you a quote, but others don’t, so be sure to ask when talking to prospective lenders. Typically, rates are locked for 30 to 60 days, although you may be able to file for an extension past the expiration date, sometimes for a fee. Some lenders may offer a float-down provision that allows you to adjust your rate if interest rates go down after you lock in a rate.
The information in this article is accurate as of the date of publishing.