Boston North Shore real estate prices are rising. And that’s both good news and bad news, depending on whether you’re a home seller or a home buyer. According to the National Association of Realtors the median home price in the United States was up over 8% in the second quarter of this year compared to the same period a year ago. The median sales price was $229,400.
Boston North Shore Real Estate Prices Rising: Good News and Bad News
The good news. Higher prices mean increased home equity and hire individual net worths. That equity can be used to purchase additional investment property or a larger home or a small business. Therefore, higher real estate prices are good for stimulating the economy.
The bad news. Incomes have not kept the pace with higher prices. Although the national unemployment rate has dropped from 10% in October 2009 to a current level of 5.1%, income growth has been sluggish. In addition, there are still millions of Americans unemployed. And when wages aren’t increasing it makes it more difficult for buyers to trade up or refinance — and it especially impacts first-time home buyers.
Zillow reports that lower-income households spend 26% of their income on a home mortgage payment. Conversely, higher-income households spend an average of 12% on their mortgage. Industry experts point to that fact as a confirmation that lower incomes are flat and stagnant and higher incomes are slowly rising. The sad truth is despite low mortgage rates making mortgage payments more affordable, for lower-income families allocating more towards a monthly payment means trimming the budget in other areas.
Boston North Shore real estate prices, although on the upswing, will have a longer road to return to their pre-recession levels. The question remains, however, as to how rising prices will affect those in the lower-income and middle-income range. Lenders and borrowers alike will keep a watchful eye on prices to ensure history doesn’t repeat itself in the loose credit, overextended market that led to the most recent housing collapse.
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