Looking Into the Crystal Ball: 5 Trends and Predictions Set to Rock South Boston’s Real Estate Market In 2018

2018 is here, and aspiring homebuyers and existing homeowners alike will be wondering what they can expect in the coming months from the real estate market. Though there are some generalizations we can make across the whole U.S. market, but many major real estate reports for 2018 are too generic because real estate is hyperlocal at its core, what is happening in South Boston is very different than many older American neighborhoods once dependent on manufacturing, for example.

Southie has proven time and again to be an outlier to many of the broader trends throughout not only the country, but the city of Boston as a whole, meaning its real estate market warrants its own set of predictions. 

That’s why I’ve compiled a list of five trends and predictions to look out for in the 2018 real estate market for South Boston.

1. South Boston Home Sales Set a Record

If you’ve been following the Condo Tracker on SouthieMap, then you won’t be surprised at the notion that home sales in Southie are likely to rise. In fact, I predict they’ll even set a record for the number of homes sold in a calendar year for 2018.

Along with pre-existing homes for sale, where inventory still remains tight, there are also around 1500 new condo units under construction now. According to recent data, there are 1474 units currently under construction, and 282 units planned. While many of these units are targeting luxury price points the absorption rates will slow because there are only so many buyers in this buyer class. I still suspect the increase in new construction condo inventory will result in an increase in sales. 

Of course, we won’t be setting any residential sales price records for Boston as a whole because the downtown markets have been breaking records, but all signs point to Southie being a hot place to buy and sell in the coming months.

2. South Boston Rents Plateau and Drop Sharply. (Maybe.)

As investors have been catching on to what an ideal neighborhood Southie is, it’s no surprise that they’ve been rushing to jump on the bandwagon for years. Like condos, we’ve been seeing a huge jump in the number of apartments being added to the area especially the high end variety. And, as can be expected, the significant increase in available apartments is causing rents to finally start stagnating in the neighborhood at certain price points. 

These new developments have added and continue to add hundreds of rental units to the area, which will help assuage the demand for apartments in the coming year at the luxury apartment demographic, most notably. While rental prices have edged up slightly from 2016 the average number of days an apartment stays on market has also increased which will makes things interesting for 2018.

If you’re a homeowner looking to rent out an existing property, know that you might not be able to price the rent as high as you expect and this could be an opportune time to take equity off the table and sell.

3. The Housing Market Slows at Certain Price Points

The new tax plan could have a profound impact on the real estate market in Southie for 2018. 

Currently, the average ask price for units on market in the neighborhood is about ~$1.1M, which is a hefty jump up from the average price of real estate in neighborhood, of about $750,000. That’s because, with Southie quickly becoming home to more and more young professionals, the cost of homes has been rising drastically mainly because of new construction hitting the market. 

However, the new tax plan’s effect on mortgage interest deductions could finally be the thing that cools off the hot South Boston real estate market, and stops the rapidly increasing real estate prices, but it could also be seen as an opportunity for the neighborhood. Why? Because the new bill will definitely have more of an impact in other core Boston neighborhoods like Back Bay, Beacon Hill, and downtown where pricing trends higher and mortgages balances are higher.

Also, the proposed tax bill would require people to have lived in the home for last five of eight years instead of two of last five years to exclude $500k in capital gains from sale which could slow the market by delaying homeowners from trading up and holding onto their locked in mortgages.

How everything will shake out is still unknown, there is also the $10k cap on your ability to deduct state and local taxes from federal returns which is also likely to impact home sales, since prospective homebuyers might have to make changes to their budgets.

Like the apartment market, luxury properties, which will see the biggest impact as a result of the tax plan, are going to be hit the hardest, thanks to these market changes, but I feel the continued supply of luxury properties will be more so the culprit in South Boston than the tax impact.

4. The Neighborhood Gets a Makeover in Areas

As stated above, there are close to 1500 new condos in development in South Boston, with more to come. However, it’s not just the condos that are shaping the neighborhood. We are talking massive mixed use projects from the Dot Ave corridor to the waterfront, rapid retail changes along E and W Broadway I'm sure you have noticed, and a heck of a lot more outdoor spaces.

The city’s been doing a lot to reinvigorate Southie’s Waterfront, and the results have been showing. Seaport Square, a project that promises to create millions of square feet of retail and office space, is a huge change to the landscape of the neighborhood. Not to mention, GE’s recent move to the will certainly bring more businesses to the area.

Southie’s been on the road to becoming on par with the rest of Boston’s core neighborhoods in many categories, and the many new developments planned for the area seem to be encouraging this path.

And that brings me to my final prediction.

5. Boston lands Amazon’s headquarters

While I’m not sure if Southie's Widett Circle can win the coveted Amazon HQ2, I wouldn’t bet against the city of Boston itself getting the grand prize. The Wall Street Journal has stated they think Boston is one of the three best candidates, and a lot of sources have pointed out that the city has some prime locations for the headquarters to go.

Of course, the greater ramifications on the real estate market, should this actually come to pass, are hard to say now, but the city will, without a doubt, need to compensate for the alleged 50,000 workers Amazon has promised to employ.

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While real estate predictions are exactly that—predictions, there’s a lot we can deduce about the upcoming market by analyzing the existing data. Of course, the real estate market is always changing, so be sure to stay tuned to see what changes might occur over the upcoming months.

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Have any questions? As an owner, is now a right time to sell and take equity off the table? As a buyer, does Southie still make sense for you? For a free consultation or if you have further questions, please post them in the comments below, or message me directly.

Schedule a meeting or chat with me here

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Chris Fitzpatrick is a licensed real estate broker in South Boston. Chris prides himself on his knowledge of South Boston nuances, off-market listings and new development projects that are rapidly shaping the neighborhood. He focuses on adding value in the form of creating proprietary real estate market data, predictive analytics, and technology helping sellers, buyers, and developers. Chris can talk your ear off about the benefits of yoga, loves to travel, is passionate about entrepreneurship, and loves rooting for the underdog.