There is a lot of buzz around the current downtown Boston real estate market. You’ve probably read that the Boston condo market is very hot, that inventory is very low, that multiple offers are driving up prices – to, at, or above the asking price (and in some cases well above), and that cash offers are trumping those with financing contingencies. This is all true, based on my experience with clients.
Sellers are pricing their properties strategically to generate multiple offers in the hope of yielding the highest price possible. The strategy is working! For example, I recently had a client bid on a Back Bay condo. There were four competing offers and the one that was accepted was a cash offer above asking price with no inspection contingency (which I would not recommend to my clients). This scenario is leaving buyers frustrated, to say the least, and resigned to putting out their best offer FIRST in terms of price and terms with the knowledge that they may not get a second shot. However, if they do, they will probably need to strengthen their offer further by increasing the price, limiting contingencies and offering flexibility with timing to better their chances signing on the dotted line. Buyers are learning this the hard way, having lost out to other buyers with more compelling offers. I always tell my clients that something better will come along and it always does!!
So, one might ask, “Is it a good time to buy?”. Although it’s challenging to find the right place given the limited inventory, I believe it’s still a good time to buy because prices are rising and will continue to do so until the inventory picks up. Interest rates are relatively low as well, albeit rising slowly.
Year to date, the downtown Boston condominium market shows transactions are up 3.8 percent and sales are up 11.9 percent versus a year ago. While transactions are up 8.2 percent since the peak 2008 period, reflecting a strong rebound, dollar volume is up even more dramatically – 17.1 percent above the level achieved in 2008 (and basically flat versus 2007), which was predominantly driven by sales at two high-end luxury high-rise buildings, the Mandarin and Battery Wharf.
The average selling price is up a solid 7.8 percent versus a year ago and 8.2 percent versus the peak 2008 period; the median selling price is up 7.2 percent versus a year ago and 10.9 percent versus the 2008 peak. Condominium values in downtown Boston show a consistent upward trend line (despite the housing bubble, Financial Crisis, Great Recession and other macro negative events affecting the U.S. and global economies) and are at an all time high! Current market conditions, low inventory, relatively low mortgage rates, high rental occupancy, multiple buyer profiles, as well as a strong and diverse local economy have helped to support values.
So, is it a good time to sell? Unequivocally, the answer is yes. It’s a very strong sellers’ market. The current supply of available units in the downtown Boston condominium market is under two months, compared to a balanced market (five to six months) and a buyers market (seven plus months) of inventory. The effect of a sellers’ market is what we are seeing now – multiple bids and sales prices that are at or above asking price. Sellers have a window of opportunity now, given this scenario, to be in the driver’s seat and capture the highest price. As new inventory comes into play, the rules of supply and demand will go into effect.
In nutshell, whether you’re looking to buy or sell a condo in Boston, now is a good time to act.
Click here to read my my first quarter update on the Boston real estate market.