If you’re selling a single-family or multi-family home in Newton, the odds are that you’re now a millionaire. Planning on buying a single-family home in the one of the city’s 13 villages? A very large bank account is almost mandatory.
Newton’s housing market has soared to heights unreachable for many, especially with so many cash purchases keeping borrowers out of the game entirely.
The meteoric rise
The median price for one of the 536 single-family homes sold in Newton in 2023 was $1,670,000, a 7.2 percent increase over the previous year, according to James E. Shaughnessy, Newton’s assessor.
Purchasing other residential properties was also costly. Median price for 62 two family homes sold was $1,275,000, seven three-families for $1,625,000, and 261 condominium units for $835,0000.
The top price paid for a home in Newton last year was $6,250,000. Shaughnessy said 33 percent of the homes in 2023 sold for more than $2 million and 57.2 percent cost over $1.5 million. However, the number of sales was down by 7.2 percent compared to the previous year.
The prices of single-family homes in Newton have gone up for 14 consecutive years. In 2010 the median price of a home in the city was $737,250. In the first two months of this year, 54 single-family homes sold for a median price of $2 million. Some 21 condominiums sold for a median price of $945,000, and two- and three- family homes sold for median prices of $1,050,000 and $830,000, respectively.
The Greater Boston Association of Realtors (GBAR) reports that the median sales prices of a single-family home in Newton last February was $2,065,000, a 21.5 percent increase in a 12-month period. The homes were on the market for an average of 19 days and were sold, on average, $106,000 above the list prices, the GBAR reported.
Piquing the Treasury’s interest
List prices in Newton, according to Richard C Dore, a senior broker with Hammond Residential in Newton, are typically 20 percent above the assessed price.
“Any house under $2 million is extremely coveted,” Dore said.
Despite the high prices, about 70 percent of the real estate transactions in Newton were paid in cash, he added.
The large cash transactions in Newton and other targeted regions in the country have caught the attention of the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury,
Since 2018, FinCEN has required U.S. title insurance companies in Middlesex County to identify real people behind shell companies used in certain non-financed purchases of residential real estate because of the potential for money laundering and other illicit activities, according to the agency.
The primary reason behind the large number of cash transactions, according to Dore, is the amount of available funds.
“There is considerable intergenerational wealth through inheritances, the stock market has gone up 30 percent in the last year, and some of the high-tech and pharma companies are providing bonuses of $300,000 and more,” he pointed out.
More inventory will come
It appears that this spring will be exceptionally active in the real estate market, as there were 62 new listings in February alone, a 34.8 percent increase compared to February 2023, according to the GBAR.
The number of homes for sale are expected to increase dramatically in the coming years because of the number of baby boomers who downsize or die.
Zillow, an online real estate marketing company that provides information relating to selling and buying homes, released a report saying that some 20 million homes could hit the market within the next 13 years.
The real estate industry’s term for what it predicts will be an explosion of for sales signs is a “silver tsunami.” The value of homes will probably not be impacted, as the demand will “far exceed” the supply of new properties, according to Dore.