As a residential real estate broker in Boston, the most frequent questions I am asked from clients and friends are: “How is the Boston real estate market? Are things picking up? Is it a good time to buy?”. For the past few years, I admit, I hesitated before answering. The market numbers were down and the story was not particularly a good one. Sellers were wary of selling below their own perceived values. Buyers were wary too, of overpaying, thinking prices are going to come down. This left buyers and sellers at a standstill. Well, it’s 2012 and what a difference a year makes! Now, when asked about the Boston real estate market, I can’t wait to spill it out. The Downtown Boston Condominium market has turned around and it’s going gangbusters. The proof is in the numbers.
Year to date, transactions and sales are up roughly 31% versus a year ago. While transactions are up 10% since the peak 2008 period, reflecting a rebound, dollar volume is up as well, 3.7% above the level achieved in 2008 which was predominantly driven by sales at two high-end luxury high-rise buildings, the Mandarin and Battery Wharf. While average selling price is up slightly (1.5%%) versus a year ago and down 6% versus the peak 2008 period, the median selling price is up 6% versus a year ago and the 2008 peak respectively. Despite the housing bubble, Financial Crisis, Great Recession and other macro events impacting the US and global economies, condominium values in downtown Boston have held a consistent upward trend line.
Prices have increased (average/median). Current market conditions, low inventory, low mortgage rates, high rental occupancy, multiple buyer profiles, as well as a strong and diverse local economy have helped to underpin values. Nationally, five to six months of supply of available units is considered a tight or seller’s market, six months supply of available units is considered a balanced market, and seven or more months supply is considered a buyer’s market. The current supply of available units in the downtown Boston condominium market is under 2 months, so by definition, it’s a strong seller’s market. Buyers are seeing the effects for themselves. As a result of limited supply, well-priced properties are generating multiple offers, causing bidding wars, which is driving prices up and in some cases, well above the asking price.
So, is now a good time to buy? If you are ready to move to Boston for a change in lifestyle from the suburbs or trade up to larger space than you currently have now, the answer is yes. With low interests rates, low supply and prices being driven up, if you find the property that feels right, that you can envision yourself in, act on it. It’s likely to be more expensive to buy a condo in Boston next year!