Massachusetts’ housing market from 2018 through 2023 saw affluent households (earning $500,000 or more annually) play an outsized role. This elite segment – roughly the top 1-2% of earners – had the financial muscle to shape trends in the state’s real estate. During this period, home prices across Massachusetts surged (the statewide median single-family price jumped 51% from 2018 to 2023), and high-income buyers both capitalized on and contributed to these gains.
Property Types and Preferences of Affluent Buyers
High-income homebuyers in Massachusetts predominantly purchased single-family houses, but they also heavily influenced the luxury condominium market and showed interest in vacation properties. 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. Weston, Wellesley, Newton) offer expansive single-family homes that remained in high demand among affluent families. In Greater Boston, the median single-family price reached $845,000 in 2023 (up 6% from 2022), reflecting the premium that well-heeled buyers paid for desirable neighborhoods. Many such homes feature amenities like large lots, home offices, pools, and other luxuries that high earners seek.
The Luxury Condo Market
At the same time, Massachusetts’ affluent have sustained a robust luxury condo market in urban centers. In downtown Boston, it is not uncommon for condos to sell for $1–5 million+, and the median Boston condo price hit about $700,000 in 2023. Upscale condo towers in areas like Back Bay, Beacon Hill, and the Seaport (e.g. Millennium Tower, One Dalton) attracted high-income professionals and downsizing empty-nesters with their turnkey convenience, top-tier amenities (concierge, gyms, etc.), and city lifestyle.
By 2023, Boston’s condo market was so expensive that even a “median” downtown condo topped $1 million, underscoring how “luxury” has become mainstream in the city’s core. Affluent buyers often snapped up new luxury developments in Boston and Cambridge, keeping that segment strong even when overall sales slowed.
Second Home Purchases
Wealthy households also showed a penchant for vacation and second homes during 2018–2023. Many purchased coastal properties on Cape Cod and the Islands (Martha’s Vineyard, Nantucket), as well as lakefront or country estates in the Berkshires and other parts of Western MA. 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. Massachusetts’ seaside communities benefited from this trend, seeing record sales and price increases in 2020-2021 as affluent Bostonians and out-of-state buyers competed for limited inventory. For example, Cape Cod had a “record-breaking year” in 2020, with single-family home sales up nearly 20% and median prices up ~18%.
Overall, property preferences among $500k+ earners skewed toward large, high-quality homes – whether a sprawling suburban house with land or a full-service luxury condo – and many leveraged their resources to own multiple properties (primary residence plus vacation home).
Upsizing, Downsizing, and Second-Home Trends
The Upsizing Phenomenon
One notable trend in 2018–2023 was affluent households upsizing to larger homes. With rising incomes and, during 2020–2021, the newfound freedom of remote work, many high earners sought more square footage, bigger yards, and additional rooms.
Such upsizing was a common response to the pandemic’s stay-at-home orders – families with means wanted comfort and privacy, fueling bidding wars for luxury single-family homes. Nationally, homebuyers’ preferences shifted toward larger homes in 2020, and Massachusetts was no exception. The result was fierce competition and rapid price gains for high-end properties: the median price of a “luxury” home in the U.S. jumped ~26% year-over-year by mid-2021, illustrating how upscale buyers bid up larger homes. Massachusetts mirrored this, with its overall median home price rising 15% in 2021 alone – much of that driven by high-end market activity.
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.
Surveys found 78% of boomers plan to age in place, and indeed many wealthy longtime homeowners stayed put rather than sell. Those who did move often opted for smaller luxury homes or condos that offered less maintenance. For instance, a 60-something entrepreneur might sell a large suburban house and buy a high-end condo in Boston or a newer single-story home on Cape Cod. 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.
Nationally, vacation-home sales jumped 16% in 2020, far outpacing overall home sales growth, and in early 2021 second-home mortgage applications nearly doubled from a year prior. On Cape Cod, brokers reported an “influx of new Cape residents” in 2020 as city-dwellers bought summer houses to use as semi-permanent homes.
Massachusetts’ second-home hot spots (Cape Cod, Nantucket, Martha’s Vineyard, the Berkshires) experienced unprecedented demand. Cape Cod’s inventory was depleted – by end of 2021, Cape home listings were down 55% year-over-year because affluent out-of-towners snapped up properties. This second-home boom drove prices to new highs. For instance, Barnstable County’s median price jumped ~18% in 2020, and Nantucket saw multiple sales above $10M as wealthy buyers sought safe havens.
As the pandemic eased, the second-home craze cooled slightly (by 2022–2023, vacation home sales fell from their peak), but remained above pre-2020 norms. 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.
Financing: Cash Is King vs. Cheap Debt
Financing methods among $500k+ earners differed markedly from typical buyers. These wealthy households often had substantial savings, stock windfalls, or proceeds from a prior home, enabling them to pay in cash or make large down payments.
During 2018–2023, all-cash purchases became increasingly common in the luxury market, especially as interest rates rose. By late 2023, nearly half (46.5%) of luxury home purchases were made in cash – a record high, up from ~40% a year earlier. 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.
Taking Advantage of Low Rates
When not paying outright, high-income buyers tended to leverage large down payments and favorable loan terms. In the low-rate years (2018–2021), even rich buyers took advantage of cheap mortgages – often taking a loan for a portion of the purchase despite having assets to cover more.
This was a time of historically low interest costs (the 30-year fixed rate hit 2.65% in early 2021), so many affluent buyers locked in big mortgages at low rates, sometimes to invest their cash elsewhere. Mortgage lenders also courted high earners with jumbo loans and flexible underwriting. As a result, through 2021 the majority of buyers (including wealthy) still financed at least part of their home purchase – nationally about 74% of all buyers used a mortgage in 2021.
The Shift to Cash Purchases
However, financing patterns shifted in 2022–2023 when interest rates spiked. The Federal Reserve’s inflation-fighting raised mortgage rates above 6–7%, making even jumbo loans pricey. Affluent buyers reacted by increasing their use of cash.
Redfin reported 42.5% of luxury homes were bought all-cash in Q3 2023, up from 34.6% a year prior. Those who did finance sometimes chose adjustable-rate or interest-only mortgages as temporary measures, planning to refinance if rates drop later. Essentially, rich buyers had “more tools to weather” high-rate storms – they could pay cash or swallow a higher rate loan knowing they could refinance or simply afford the larger payments.
This insulated the high-end market from the rate shock that hit average buyers. Indeed, luxury home prices kept rising (~9% YOY in late 2023) even as overall market price growth slowed, thanks in part to affluent cash buyers propping up demand.
Another financing aspect is that high-income households sometimes bypassed traditional mortgages altogether by using stock portfolio lines of credit, cash-out refinancing on other properties, or corporate relocation benefits.
Who Are the High-Income Buyers? Demographic Profile
The households earning $500,000+ that drove Massachusetts’ homebuying at the top tier tended to be older, often dual-income couples, and usually not first-time buyers.
The Rise of Baby Boomer Buyers
A major demographic shift in this period was the rising influence of Baby Boomers. By 2022, Baby Boomers (ages ~58–76) made up 39% of U.S. home buyers, up from 29% the year before, overtaking millennials as the largest buyer group. This was a stark change – boomers went from mostly sellers/downsizers in the 2010s to the dominant buying force by the early 2020s.
In Massachusetts, many high-income boomers seized opportunities to buy new homes: some bought retirement dream homes (e.g. a coastal cottage or a luxury condo near cultural amenities), others bought investment properties or moved closer to family. Their long-held housing equity and wealth allowed them to purchase even in a competitive market.
Gen X Buyers
Gen X (roughly ages 43–58 in 2023) also represented a significant share of high-income buyers. Many Gen Xers are in their peak earning years (40s and 50s) – in fact, Gen X had the highest median household income of any generation at ~$114,300 in 2022. These are often corporate executives, doctors, lawyers, and tech entrepreneurs.
In Massachusetts, a typical high-income Gen X buyer might be a pair of 45-year-old professionals (dual income pushing them into the $500k+ range) moving to a larger home in a top-tier school district. Gen X buyers were about 24% of buyers nationally, and given their income profile a good number of them fall into our $500k+ segment.
Millennials and Gen Z
Millennials and Gen Z constituted a smaller fraction of the $500k+ earners club, simply because reaching a half-million income usually takes time (and often two incomes). By the late 2010s, some elder Millennials (now in their 30s-40s) did break into the high-income bracket, especially in Greater Boston’s booming tech/finance/biotech sectors.
A few younger finance and tech professionals – or startup founders who cashed out – joined the ranks of luxury homebuyers. But overall, Millennials’ share of home purchases actually fell by 2022 (from 43% to 28% nationally) as high prices sidelined many first-time buyers. Those millennials who remained active at the top-end were typically dual high-income couples without kids, who could devote substantial resources to housing.
Household Composition
In terms of household composition, the vast majority of high-income buyers were married couples. Nationwide data shows 62% of recent home buyers were married couples, and this figure is likely higher in the $500k+ income bracket (since combining two incomes is a common way to reach that level).
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 they’re fewer.
Household size for these buyers is often just 2 people; interestingly, 73% of U.S. buyers in 2022 had no minor children at home, reflecting many empty-nesters and child-free professionals in the buyer pool.
Out-of-State and International Buyers
Another notable aspect is that a number of high-income Massachusetts buyers in 2018–2023 were out-of-state movers or foreign buyers. Massachusetts has a strong economy and top universities/hospitals attracting talent worldwide.
Some executives relocating from elsewhere (New York, California, even overseas) with big salaries entered the local market at the high end. For example, remote work enabled some wealthy professionals from NYC or San Francisco to move to Massachusetts for more space while keeping their jobs. 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 Boston’s Back Bay.
Where the Wealthy Are Buying: Massachusetts Hotspots
Geographically, high-income homebuying in Massachusetts from 2018–2023 was concentrated in specific areas. Greater Boston (especially the city’s upscale neighborhoods and affluent suburbs) remained the primary locus, but other regions like Cape Cod, the Islands, and parts of Western Massachusetts also saw significant activity from wealthy buyers.
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. Back Bay and Beacon Hill offer historic brownstones and high-end condos; the Seaport and downtown have new luxury high-rises. Properties in these areas regularly sold for well above $1 million.
Boston’s desirability (jobs, culture, education) and limited inventory kept competition stiff. It’s telling that Boston’s housing prices rose 43% from 2020 to 2023, among the fastest growth in the nation, partly because affluent buyers continued bidding up limited stock. Even as some families left the city during COVID, many high-income individuals stayed or later returned, drawn by urban amenities. By 2023, Boston had some of its priciest real estate ever – March 2023 was the city’s “priciest March on record” according to reports.
The Affluent Suburbs
The suburbs west and north of Boston – often nicknamed the “Route 128/495 belt” – have long been wealthy enclaves, and this continued. Towns such as Wellesley, Weston, Lexington, Concord, Winchester, Lincoln, and Needham saw steady high-end sales. These communities boast top-ranked schools, spacious homes, and safe neighborhoods, making them magnets for affluent families. Homes commonly sell for $1–3 million in these towns.
Even south of Boston, areas like Brookline (Chestnut Hill) and Newton, and further out Cohasset or Hingham on the South Shore, attracted wealthy buyers (including some relocating from the city for more space).
One trend amplified by remote work was affluent buyers pushing even into exurban areas previously less in demand. The fastest percentage price growth from 2018 to 2023 actually occurred in towns outside the immediate Boston metro – Spencer (Worcester County) saw its median price jump 81%, from $225k to $407k, and nearby Charlton’s median climbed 75% (to ~$500k).
Cape Cod and the Islands
Cape Cod and the Islands experienced a sharp influx of high-income purchasers. Traditionally, these areas had a mix of local retirees and summer vacationers, but 2020–2021 saw more full-time or extended-stay affluent residents.
Towns like Chatham, Orleans, Osterville, Falmouth on Cape Cod, and of course Nantucket and Martha’s Vineyard, saw bidding wars for luxury listings. Nantucket and Dukes County (Vineyard) actually have median home prices above $1 million, making them outliers in the state and indicating the dominance of wealthy buyers in those markets.
These coastal markets boomed as the well-off sought refuge during the pandemic – some reports noted record numbers of sales and price appreciation on Cape Cod by late 2020. Even after the initial rush, wealthy interest remained: a beachfront property in 2022 was just as likely to draw multiple cash offers as in 2019, thanks to limited supply. By 2023, inventory shortages were acute; e.g., Cape Cod had only ~1 month of home supply in late 2023, extremely low, which kept prices high and largely accessible only to affluent buyers.
Western Massachusetts
In Western Massachusetts, the influence of $500k+ earners was smaller in absolute terms but still notable in specific niches. The Berkshire County region (towns like Lenox, Great Barrington, Williamstown) saw an uptick in purchases of country estates and second homes by wealthy individuals, some from Boston/New York and some locals.
The pandemic spurred some urban affluent families to buy retreats in the mountains or countryside. While Western MA is generally lower-cost, the luxury segment there (historic farmhouses, mansions, or modern lakefront homes) did see increased demand. For example, a realtor in the Berkshires noted “buyer demand still [strong] despite rising prices” in the high end, with inventory the main constraint.
Macroeconomic Influences on High-Income Homebuying
Several macroeconomic factors between 2018 and 2023 significantly shaped the behaviors of high-income homebuyers in Massachusetts: interest rates, tax policy, stock market/wealth trends, and the rise of remote work.
The Interest Rate Rollercoaster
Interest rates underwent a rollercoaster ride. In 2018, mortgage rates were around 4-5% and rising, which tempered the market a bit at that time. But by 2019 the Federal Reserve cut rates, and then the pandemic response in 2020 pushed rates to historic lows (30-year fixed at ~2.7% in late 2020).
These ultra-low rates were a boon to high-end buyers – even though they could often afford higher payments, the cheap money greatly expanded what they could buy or freed up cash for multiple purchases. Low rates “unleashed” high-income buyers by making borrowing almost free, encouraging them to upgrade homes or buy second properties.
However, by mid-2022, inflation led to rapidly rising interest rates – north of 6-7% by 2023. This macro shift cooled the overall housing market considerably, but the effect on the affluent was muted relative to others. Wealthy buyers reacted by pivoting to cash or simply absorbing higher rates.
Some did pause buying plans in 2022 when rates spiked suddenly, contributing to a drop in sales volume (Mass. 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. In 2018, the federal tax overhaul imposed a $10,000 cap on state and local tax (SALT) deductions and lowered the mortgage interest deduction limit – these changes disproportionately affected high earners in high-tax states like Massachusetts.
Moreover, in 2023 Massachusetts implemented a new “Fair Share” millionaire’s tax (an extra 4% on income over $1M), which could influence some $500k+ households as they approach that threshold. Additionally, Massachusetts lawmakers discussed a possible “mansion tax” (real estate transfer fee on $1M+ sales) to fund affordable housing.
The booming stock market and strong economy through much of this period greatly increased the wealth of top earners, enabling their real estate moves. From 2018 until late 2021, the S&P 500 roughly doubled, IPOs and tech growth minted new millionaires, and bonuses on Wall Street and in biotech were large.
This wealth effect translated into more demand for luxury homes: for instance, a successful biotech startup founder in Cambridge could suddenly afford a $5 million townhouse in Beacon Hill after their company’s stock soared.
The Remote Work Revolution
Remote work and COVID-19’s lifestyle shifts were perhaps the most distinctive macro factors of this era. 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.
In 2020, as offices closed, remote work “stoked a frenzy” of vacation-home buying and allowed families to relocate to larger homes farther from city centers. Buyers who previously tolerated a small city condo for the sake of a short commute suddenly reconsidered their priorities.
We saw affluent young families leave Boston or Cambridge condos and purchase suburban mini-estates where they could comfortably work from home and have their children remote-school. Some went even beyond suburbs – moving to pastoral New England towns (Vermont, New Hampshire, or the Cape) while keeping Boston jobs.
Conversely, remote work also allowed out-of-state affluent buyers to move into Massachusetts (e.g., a Silicon Valley worker moving to Boston to be nearer to East Coast family while working remotely for a California firm).
COVID-19 also placed new emphasis on home features: high-end buyers started valuing dedicated offices, home gyms, larger yards, pools, and gourmet kitchens more than before (since they were spending more time at home). Renovation and luxury amenities became selling points.
References
- Luxury Home Prices Hit All-Time High As Record Share of High-End Buyers Pay Cash – Redfin
- Cash Is King: Luxury Home Prices Are Outperforming as Affluent Buyers Dodge High Mortgage Rates – Redfin
- Housing Market Roundup Dec. 24, 2020: Luxury Home Sales Surge a Record 61%, Quadrupling Pre-Pandemic Growth – Mortgage Bankers Association
- 10 housing market records were broken in 2021 – Boston.com
- Massachusetts Home Prices Rise Modestly, Sales Plummet in 2023 (MAR Data) – Buyers Brokers Only
- “Median home sale prices have risen across Mass. since 2018” – Boston Globe via Franklin Matters
- Highlights From the Profile of Home Buyers and Sellers – NAR Research
- US second home sales slide in pandemic-era vacation hot spots – Reuters
- Massachusetts Weighs Mansion Tax on $1 Million-Plus Homes – Mansion Global
