The 5 types of buyers in the Boston-area housing market now

The Boston area’s housing market shows few signs in 2020 of moderating, at least in terms of prices. Recent data from research firm the Warren Group and the Greater Boston Association of Realtors showed that prices rose in January compared with the same month in 2019, both regionally and in Boston proper.

In the city, the median sales price for detached single-families—a.k.a. houses—was up 6.4 percent, to $655,000, and the median for condos was up 9.4 percent, to $700,000. Taking in 64 municipalities region-wide, including Boston, the median for houses was up 2.7 percent, to $605,000, and the median for condos rose 2.2 percent, to $577,500.

The likelihood of another year of another run of grim statistics for buyers and prospective buyers invites speculation about just what kind of buyers are out there in the first place. Because they are out there: Sales were up too in January—in the case of condos, regionally and citywide, they were up over January 2019 by double-digit percentages.

Here goes then: The types of buyers you’re likeliest to encounter should you take the homebuying plunge in 2020. (And, if you are taking that plunge, consider these seven areas for the most potential bang for your buck.)

The Usual Suspects. One of the reasons Boston housing is as expensive as it is is that there are a relatively high number of residents able to afford it. The region’s economy hinges on fields that generally pay pretty well, in other words. Take the life sciences industry. It employs around 90,000 locals and had an average salary of $123,600 as of early 2019.

The Usual Suspects can afford the downpayments and the monthly costs, including mortgage payments; might likely have homebuying help from their employers; and can take their time looking, too, as they can also float more effortlessly than most in the region’s notoriously expensive rental market.

Rental Expats. Given the costs of both, a careful calculation often goes into whether renting or buying is better for residents’ bottom lines.

When tenants in said notoriously expensive Greater Boston rental market reach their tipping point—which usually comes years in, when the costs of renting outweigh the costs of buying longer term—they tend to enter the sales market particularly well-armed with data and financing as well as with a healthy jadedness about just how expensive things can get. They’ve rented for years in the Boston area, after all.

Downsizers. The baby boomers are retiring in droves and living longer than any previous generation in American history. The number of Americans over age 80 will double, to 12 million, during the next 20 years, and, by 2035, 1 out of 3 U.S. households will be headed by someone north of 65, according to Harvard’s Joint Center for Housing Studies.

And guess where a goodly proportion of these aging boomers wants to live? Urban areas such as the Boston region, with lots to offer and proximity to resources such as hospitals and public transit.

This shift inevitably entails a lot of downsizing, ensuring that one of the most active buying cohorts in the Boston-area market is older people looking for that urban access but without the responsibility of a larger place. Downsizers—who are invariably also empty-nesters—are one of the big reasons there aren’t as many families with kids in Boston proper anymore.

Mystery Buyers. Due largely to the boom in luxury condo construction, Boston real estate in particular has become a favorite parking spot for global wealth. A 2018 study of 1,805 Boston condos with an average price of $3 million found that a large share were held under limited liability companies and shell corporations—the sorts of entities that make tracing buyers’ true identities difficult, if not impossible.

The report also found that many of these condos were likely unoccupied, and their buyers had instead purchased them as what’s sometimes called “wealth storage”—which is exactly what it sounds like. And why not? We refer you to the aforementioned escalating housing prices in the region.

The trend might be waning a bit amid global economic uncertainty and greater scrutiny. But those seeking wealth storage—a lot of them foreign investors—likely remain a major part of the homebuying picture in the Boston-area market.

Moneybags. Once upon a time, bidding wars were common in the Boston-area housing market. Prospective buyers vied to one up each other at crowded open houses, leading to closing prices well over the originals that buyers and their brokers had put out there. Tips for winning bidding wars abounded. Come with cash seemed to top most lists.

Over-askings are not as common as they used to be in Greater Boston, but you will still encounter the odd Moneybags in the competitive hunt for housing (and lucky you if you're one of those). These buyers, incidentally, are different than the Usual Suspects. The money for the big buy is usually not tied to income and never entails a mortgage.