The Boston Globe ran an article in the Sunday Homes section yesterday about the "Midrange squeeze in Back Bay". Ted Siefer writes:
You would think it would be easy to get a condo right now in Boston. After all, sales are way down, a ton of new construction has hit the market over the past few years, and it is supposed to be a buyer's market.But for young professionals looking for in-town options, the pickings are slim. The flood of new luxury properties has steadily driven prices across the board up, so that young professionals are finding it harder to get a condo under a half-million dollars.
"The top of the market is getting higher than ever before," said Michael DiMella, managing partner with Charlesgate Realty Group, which specializes in the downtown market. "A lot of the luxury developments are pulling the median sales price up."
I just had to put that last quote in here (obviously!)....but it's true. There are more high end properties than ever both on the market and actually being sold. Back to the article:
Meanwhile, sales of downtown area properties under $500,000 are down 20 percent from last year at this time. The number of properties under $500,000 in the downtown market is down to 53 percent, down from 78 percent in 2000. Properties over $1.5 million now comprise 15 percent of the market, up from 2 percent eight years ago.
A couple of things could be happening: price inflation, even in this soft market, may be pushing borderline properties above the half-million mark. Also, judging by the declining inventory numbers, prospective sellers are holding back, keeping their properties off the market, maybe choosing to rent rather than testing the direction of a soft market. And if they do choose to sell, real estate brokers said, they are still pricing high based on the perceived cachet of being close to downtown.
There is a big issue with inventory, especially in the sub $1 million price range unfortunately. While there certainly is more hesitancy by buyers in most price ranges now given the economic conditions, I am still finding that properties in good condition and priced reasonably are selling very quickly. But properties perceived as "overpriced" or that have some sort of defect are staying longer on the market over the past couple months. A clear example of that is this - sold properties in the last month have an average days on market of 94 days (and most actually sold quicker, there are a couple of high outliers with 200+ days), while properties actively on the market have an average of 208 days - more than double.
For a glimpse at the Back Bay condo market right now, there are 164 active listings for sale, ranging from $166,900 all the way to $16,990,000. Here's a quick snapshot of condos for sale in the Back Bay:
| Average List Price |
$2,160,500 |
| Median List Price |
$1,424,500 |
| Average Price per Square Foot |
$1,203 |
| Average Days on Market |
208 |
| # Listed under $500K |
25 |
| # Listed $500K - $1M |
47 |
| # Listed $1M - $2M |
26 |
# Listed $2M - $3M |
33 |
| # Listed $3M - $4M |
12 |
| # Listed $4M - $5M |
8 |
| # Listed $5M - $10M | 9 |
| # Listed $10M+ |
4 |
As you can see, properties above $1 million comprise 66% of the market right now while those under $500,000 only make up 15% of the market.
FYI: For sold properties in the last month, the average price is $1,014,694 and median is $755,000.