Overall, about two-thirds of home purchases in the state are single-family homes.
Wealthy buyers often prefer these properties for their space and privacy.
Upscale suburbs around Boston (e.g.
Shutterstock
Weston, Wellesley, Newton) offer expansive single-family homes that remained in high demand among affluent families.
Upscale condo towers in areas like Back Bay, Beacon Hill, and the Seaport (e.g.
), and city lifestyle.
Second Home Purchases
Wealthy households also showed a penchant for vacation and second homes during 20182023.
These second-home purchases were boosted by the pandemic, which made owning a getaway more attractive.
In early 2021, demand for vacation homes was up 91% compared to pre-pandemic levels.
Nationally, homebuyers preferences shifted toward larger homes in 2020, and Massachusetts was no exception.
Downsizing Patterns
However, not all affluent buyers upsized some downsized or right-sized during this period.
This was especially true for baby boomers and older Gen X homeowners reaching retirement or empty-nest life stages.
One might expect a silver wave of downsizing, but in Massachusetts, it materialized slowly.
Those who did move often opted for smaller luxury homes or condos that offered less maintenance.
These affluent downsizers prioritized convenience and lifestyle (walkable locations, concierge services) over space.
The Second-Home Surge
Perhaps the biggest trend was the surge in second-home purchases among the rich.
Massachusetts saw a wave of wealthy buyers acquiring vacation homes during the pandemic.
With remote work and travel restrictions, owning a private getaway became very attractive.
Massachusetts second-home hot spots (Cape Cod, Nantucket, Marthas Vineyard, the Berkshires) experienced unprecedented demand.
This second-home boom drove prices to new highs.
Many high-income households who bought second homes kept them as long-term investments or retreats.
Remote/hybrid work persisted, allowing continued frequent use of vacation properties.
During 20182023, all-cash purchases became increasingly common in the luxury market, especially as interest rates rose.
This trend illustrates how affluent buyers sidestepped high mortgage rates entirely, giving them a competitive edge.
In contrast, among non-luxury buyers only ~28% were cash in that same period, highlighting the divide.
Mortgage lenders also courted high earners with jumbo loans and flexible underwriting.
The Shift to Cash Purchases
However, financing patterns shifted in 20222023 when interest rates spiked.
The Federal Reserves inflation-fighting raised mortgage rates above 67%, making even jumbo loans pricey.
Affluent buyers reacted by increasing their use of cash.
This insulated the high-end market from the rate shock that hit average buyers.
Who Are the High-Income Buyers?
Their long-held housing equity and wealth allowed them to purchase even in a competitive market.
These are often corporate executives, doctors, lawyers, and tech entrepreneurs.
A few younger finance and tech professionals or startup founders who cashed out joined the ranks of luxury homebuyers.
Household Composition
In terms of household composition, the vast majority of high-income buyers were married couples.
These couples often both hold well-paid jobs (for example, two physicians or a finance/legal professional pair).
A smaller share were single individuals some high-earning singles (e.g.
a successful young tech worker or an older divorced executive) did buy luxury properties, but theyre fewer.
Massachusetts has a strong economy and top universities/hospitals attracting talent worldwide.
The state also occasionally sees international luxury buyers e.g.
wealthy parents buying Boston condos for their college student children or investors from abroad buying in Bostons Back Bay.
Boston and Cambridge
In Boston and Cambridge, high earners targeted neighborhoods known for luxury housing.
These included Back Bay, Beacon Hill, the South End, Seaport, and Newton/Brookline just outside Boston.
Properties in these areas regularly sold for well above $1 million.
Bostons desirability (jobs, culture, education) and limited inventory kept competition stiff.
These communities boast top-ranked schools, spacious homes, and safe neighborhoods, making them magnets for affluent families.
Homes commonly sell for $13 million in these towns.
One trend amplified by remote work was affluent buyers pushing even into exurban areas previously less in demand.
Cape Cod and the Islands
Cape Cod and the Islands experienced a sharp influx of high-income purchasers.
The pandemic spurred some urban affluent families to buy retreats in the mountains or countryside.
The Interest Rate Rollercoaster
Interest rates underwent a rollercoaster ride.
However, by mid-2022, inflation led to rapidly rising interest rates north of 6-7% by 2023.
Wealthy buyers reacted by pivoting to cash or simply absorbing higher rates.
single-family sales fell 21% in 2023), but prices at the high end held strong.
Tax Policies and Wealth Effects
Tax policies and costs also played a role.
Massachusetts has a high concentration of knowledge-economy jobs, many of which went remote during the pandemic.
This flexibility fundamentally changed housing choices for high earners.
Buyers who previously tolerated a small city condo for the sake of a short commute suddenly reconsidered their priorities.
Renovation and luxury amenities became selling points.
