More million-dollar cities than ever and hot, hot housing markets come to mind when trying to describe the current residential real estate world. But the frosty climates of Boston and its (widespread) commuter area are some of the hottest housing markets out there, Realtor.com says.
The Manchester-Nashua metropolitan area of New Hampshire was the country’s hottest housing market in February, according to the site’s index, which considers demand (measured by unique views per property) and pace (measured by the number of days a listing is active). In other words, a ton of people are either snapping up homes quickly or looking at homes in this area, around the southeastern tip of New Hampshire, long famous as a tax-friendly haven for wealthy Bostonians who could afford a second home.
Home prices nationwide rose less than half a percent in February, but the Manchester-Nashua area saw home prices rise 3.8%, substantially higher than the norm. But it is not the only New England market to make the top 10. A whopping seven out of the 10 hottest markets are a two-hour drive from Boston, or less, including the Boston/Cambridge area itself. These are either commuter or super-commuter towns as Boston adjusts to the era of hybrid work.
Beyond Manchester, there’s the central-Massachusetts city of Worcester, third on the list; immediately followed by the westerly city of Springfield in fourth. Boston itself is sixth on the list. Hartford, which is equidistant to Boston from Springfield, follows at No. 7, tied with Providence, which is moderately closer. And then there’s Concord, N.H., at ninth on the list, just 20 minutes farther than Manchester.
None of these markets are exactly alike, though they all share cheaper home prices and substantially lower populations than you’d find in Boston, which has been something of a “remote-work hub” for years now, per Axios. Remote work peaked in 2021, with almost 27% of people in the Boston metropolitan area working from home, and the latest available Census data shows it hasn’t fallen significantly, with more than 20% of people still working from home in 2022. Some major Boston employers, such as Square and PwC, have offices in the city and employ hybrid and remote work models. Just look at the drop in office values to see remote work’s permanence: One analysis found declining office values could lead to a 10% drop in city revenue, according to CommonWealth Beacon. “The rise of remote work, and the corresponding decline in office values, is eroding the tax system in a way that seems likely to last a long time,” a report from the Center for State Policy Analysis at Tufts University for the Boston Policy Institute said.
Secondary cities
To be sure, these hot housing markets could be second-home purchases by wealthy Boston residents or primary-home purchases by locals—there’s no way to tell for certain. But the fifth of Boston workers who are remote could just as easily be working from Manchester, Worcester, or even Springfield. Nevertheless, Boston is still the big economy within the region, despite what seems to be remote work’s lasting effects.
“While the number of residents employed in Boston establishments is nearing pre-pandemic levels, commutes into the city in December 2022 remained 41.4% below their level in the same month in 2019,” the Boston Planning & Development Agency wrote in a report last year. “The number of commuters in the second half of 2022 saw only a modest increase over the second half of 2021, confirming that remote and hybrid work arrangements established during the pandemic are remaining in place.”
And if you are a hybrid or remote worker around the Boston area, consider the home price arbitrage. The average home value in Boston is close to $720,000, but in Manchester and Worcester it’s around $390,000. Providence’s average home value is nearly $373,000; and Hartford’s is only $162,000, per Zillow. Just last year, Jeffrey Thompson, vice president and economist at the Federal Reserve Bank of Boston, said housing affordability was a concern; not enough homes were being built in New England to push prices lower. Thompson made this statement during a meeting about the state of the economy hosted by the central bank itself, where housing took the center stage, but remote work was discussed relative to demand. “If people continue to work more from their homes … then housing demand could be different,” an associate professor emeritus at Northeastern University said.
None of the six housing markets mentioned earlier really compare with Boston’s in terms of cost. So it could be that hybrid or remote workers, previously or currently based in Boston, are choosing to move to these surrounding metropolitan areas because of cheaper home prices, particularly in a time when affordability is so strained—when you need to make $30,000 more to afford a median-priced home, or when the salary needed to buy a starter home has almost doubled since the pandemic.
Additionally, an interactive tool included in a renter-migration report from Apartment List shows 5.6% of its users living and renting in Boston are looking for homes in Manchester, 7.4% in Worcester, and 11.3% in Providence.
As Fortune previously reported, what seems to be a new kind of remote work city drove a $2 trillion gain in the housing market over the past year, as more affordable metropolitan areas saw the largest jumps, while “pricey metros and pandemic boomtowns” either saw declines or very little gains, a Redfin analysis found. For instance, two towns in New Jersey saw their home prices increase more than 10% each, “in part because they’re attracting demand from people who are priced out of New York and can now work remotely,” the analysis read. More so, similar metropolitan areas experienced such gains because “they’re affordable, and when mortgage rates and home prices are elevated, demand for affordable homes goes up,” Redfin said at the time.
These cities resemble what the World Bank has called a “secondary city.” They’re sort of “secondary hubs” for much larger metropolitan areas, or where people go after leaving high-priced cities such as Boston. Not to mention, each of those secondary cities, or sub-cities, or remote-work cities (whatever you want to call them) saw their home prices jump by slightly less or more than 10% in the past year. Boston itself, on the other hand, saw its home values rise just 2.6% during the same period, according to Zillow.
