There’s no question that the explosion in home-buying has hit New England. A combination of historically low interest rates and a lack of housing supply has meant Massachusetts has seen its median sales price for single-family homes rise by over 15% every month in Q1 2021. While inventory has increased, new listings are still at record lows according to the Massachusetts Association of Realtors .
But the home-buying boom has had an even greater impact on the second home market. Nationally, the number of buyers who locked in mortgage rates for second homes shot up a record 128% year over year in March, compared to 34% for primary residences .
We’re seeing that trend impact popular vacation home markets such as the Cape & Islands, where 43% of all transactions that closed in March of 2021 closed above their asking price, compared to 11% in March 2019. Towns such as Barnstable have seen their median sales price for single-family homes rise by nearly 50% year-over-year, with little sign of a cooldown on the horizon.
It’s also unlikely that the Federal Reserve will take steps to cool the market any time soon: theFederal Reserve indicated that historically low interest rates are here to stay for the next three years. New tax policies are also expected to drive many would-be buyers to take advantage of current tax deductions on mortgage interest.