Boston condo living is more popular than ever. Buyers are giving up backyards and privacy for less maintenance, more amenities, convenience and access to all the city has to offer. Along with this trend, the price gap between condos and stand-alone homes in Greater Boston has narrowed dramatically; today their median prices are nearly identical. Between 2011 and 2014, condos across this region sold for about 89 percent of the cost of single-family home prices and the figure is now at 99 percent, according to a recent study published in Banker & Tradesman. The virtual merging of these price points is due to an unprecedented shift in demand.
Much of this demand comes from two groups: young professionals entering the market and empty nesters who have sold suburban homes and are using the proceeds to buy a new place in the city and with that, a more dynamic lifestyle. Yet, Boston condos are now attracting more people with young children, too. More and more people want to live in the city, walk to work, be surrounded by the energy of busy urban neighborhoods, and play where they work and live. The market remains attractive to investors, too.
Coupled with the high demand is the fact that condo seekers are looking in a market with an extremely limited supply. This confluence of tight supply and pent up demand is driving the price of Boston condos to levels we’ve not seen before. Until there’s a greater balance of supply and demand, condo prices here will continue to rise. While price points of $1,500 per square foot or higher comprised less than three percent of the market share in 2008, today, that’s what you can expect to pay for luxury condos in the city. And the new wave of ultra-luxury condos is pushing the boundary to $2,000 per square foot and well beyond. That’s not stopping buyers, though. The lack of inventory is prompting buyers, my clients among them, to buy new construction units a year or two before construction is even complete.
Though the market recently saw the opening of some highly touted buildings like the super-luxe, 256-unit Millennium Place in 2014 and the hip Sepia condos (83 units) at the South End’s InkBlock complex this year, many of the city’s notable new, luxury construction projects—like Millennium Tower and the Four Seasons Private Residences One Dalton Street—won’t be ready for occupancy until late this year or into 2017 and beyond.
Looking ahead to the New Year, overall, I expect the strong market to continue in 2016, despite the increase in interest rates. For the most part, educated buyers coming into market in this year will be making a smart decision. With the abundance of universities, hospitals, culture and industry that Boston offers, condo values here hold strong.