This summer, brace for another red hot housing market in Mass.

Not even higher interest rates have been enough to bring Massachusetts real estate out of the stratosphere.

This summer, competition among buyers will only heat up, according to David McCarthy, president of the Massachusetts Association of Realtors.

"We have such limited inventory and still a significant buyer pool," he said, which means prices are likely to remain high.

To illustrate just how depleted the state's housing stock has gotten over the past 15 years, McCarthy said at the end of March, there were 4,157 single family homes on the market. In February 2008, there were around 33,000.

"I'm not sure that people are fully understanding the gravity of it," said McCarthy. "We've got to build more homes."

On top of that, higher interest rates have discouraged some potential sellers from putting their homes on the market, exacerbating the inventory problem.

Even if price increases slow down, buyers fortunate enough to close a deal are looking at much higher monthly payments than just year ago, if they take out a mortgage under the current interest rates. For example, a family buying a single family home in Massachusetts at the median price of $570,000 would pay roughly $1,500 more per month with a 30-year mortgage compared to this time last year.

Another factor driving low inventory is that new home construction in the U.S. never fully recovered after the 2008 financial crisis, according to federal data. To make matters worse, McCarthy argues too many Massachusetts communities have adopted rules that either deny or slow down new construction.

The state is making a move to ease the housing crunch. Earlier this year, 175 communities submitted plans detailing how they will make it easier to build multi-unit housing near public transit stops. The plans are required by a new state law adopted under former Gov. Charlie Baker's administration.

Housing advocates expect it will take years to see the mandate's impact on the housing market, but McCarthy sees it as a positive step. He wants Gov. Maura Healey's administration to further encourage cities and towns to build, possibly through financial incentives.

Commercial real estate is 'not doom and gloom'

On the commercial side of real estate, vacancy rates still haven't fully recovered from the pandemic. According to Charity Edwards, president of the Realtors Commercial Alliance of Massachusetts, Boston's office and retail vacancy rate is a little under 13%, compared to 7% before the pandemic.

"We have areas of our commercial real estate that are going to need some help, but I do feel like we're not doom and gloom," Edwards said.

The biggest bright spot in the commercial real estate market right now is industrial space — including large warehouses, athletic facilities and manufacturing plants.

"Amazon and other large companies are bringing that vacancy rate way down," she said. "So we're seeing a big surge with industrial that we hadn't seen before, pre-pandemic." 

In addition to large large companies, Edwards said cannabis businesses are also expanding their real estate footprints.

Some politicians and housing advocates have floated the idea of turning vacant office buildings into much-needed housing. Edwards said some of that is already happening. Although, she added, it's a much more difficult and expensive process than people think.

"It's very hard to retro-fit some of those buildings for many reasons, including building codes and safety and just the functionality of the space," she said.