remmes and company logo

Search Boston Real Estate

Back To Blog

Is the Boston Real Estate Market Going to Crash?

Is the Boston Real Estate Market Going to Crash?


If you have been paying attention to the real estate market, you'll know that prices have increased at astronomical rates. Driven by inflation, high savings amounts, and low interest rates, home prices have experienced robust and consistent growth across most of the country, including Boston.


According to the S&P CoreLogic Case-Shriller National Home Price Index, which measures the average U.S. price in major metropolitan, home prices rose 18.8% in 2021, hitting a record high. As a result, many potential buyers and even sellers have been sitting on the sidelines, wondering when this real estate bubble will burst.


Well, here's some news for you, there really isn't a crash in sight. Even with the Federal Reserve quickly rising interest rates, home values shouldn't be significantly impacted. Price growth may slow down, but there is no reason for a crash like 2008.


The crash of 2008 resulted from layers of systematic problems and subprime lending criteria that made a crash inevitable. Today, lending conditions are far more restrictive. For example, buyers must meet significant income requirements, prove their income, and are required to provide a higher deposit than they once were.


Supply and demand are out of balance.


Unlike in 2008, there are not enough homes to meet the growing demand today. After the crash of 2008, many builders went out of business and never returned to the market. The lack of new units and single-family homes in Boston stretches back to 2010. Ultimately, there has not been enough new construction in the past decade, creating a severe housing shortage in Boston and nationwide.


Homeowners have high equity ratios.


Owners today have far more equity than they had in 2008. Because they have more equity, they will be far less likely to go "underwater." Even if there is a market correction and property values dip, homeowners will have far more incentive to continue making their payments until the market turns around. When the crash of 2008 took place, many owners had minimal to no down payment in their homes and, therefore, no equity to lose in a short sale or foreclosure.


Rents are increasing.


With the pressure of inflation and the end of pandemic restrictions, residential rental rates are increasing. As a result, homeowners and investors are no longer turned off by increasing interest rates because the rental equivalent is rising in tandem.



Red flags for a crash in the market would be high debt to equity ratios, investors buying on speculation, and a rise in default rates, none of which the Boston market is currently experiencing.


Buyers and homeowners should have confidence in our current market conditions. While the rise of interest rates will slow down price growth, a market crash is not imminent.

    Add Comment

    Comments are moderated. Please be patient if your comment does not appear immediately. Thank you.

    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.


    1. No comments. Be the first to comment.