Condo sales in Boston drop off
Prices are also down in a market formerly seen as bulletproof
The once-invincible condominium market in downtown Boston is weakening.
Sales of condos in the 12 core markets of Boston, from the North End to the Back Bay, the South End to South Boston, plunged 22.3 percent in the first quarter of this year, while median prices declined nearly 1 percent, to $475,000, according to the Listing Information Network Inc., a real estate firm.
"It's a huge decline" in sales, said Debra Taylor Blair, president of Listing Information Network. "Downtown is slowing down," she said.
A variety of factors have made it more difficult for buyers in the high-end downtown market to relocate or trade up, including tighter limits on jumbo loans, investment portfolios that are losing value, and a tough market for selling other properties
"People aren't as liquid," Blair said. "They're not as easily able to move or refinance."
New lending rules that require larger down payments of as much as 20 percent are particularly hurting sales of units priced from $600,000 to $1 million, the so-called middle market where young professionals are the largest buying group, said Anthony Longo Jr. of Condodomain.com, an online buyers' brokerage firm.
Even at the low end of that range, buyers would have to come up with $120,000 or more for down payments.
"Most of these young people don't have the 20 percent to put down," Longo said.
Uncertainty about the market's direction and the general economy, as well as events such as the collapse of the investment bank Bear Stearns, also kept buyers on the sidelines, said Boston real estate agent John Neale.
"People were slow to make decisions," he said. "People weren't questioning prices so much but they were waiting to see what else might come and if it might change their opinion."
For much of the real estate downturn, beginning in 2006, the Boston condo market seemed to defy economic gravity. While sales prices plunged in suburban markets and properties sat on the market, condos in downtown Boston sold quickly and at ever higher prices. But after an erratic performance last year, the Boston condo market has now quickly begun to worsen.
Neale added that newly constructed, highly finished condos are selling faster than condos in need of interior renovations, even if they're less expensive.
"We have more and more people whose jobs are more demanding of their time, and they aren't willing to supervise a renovation even if it makes financial sense," he said.
Just 513 condos sold in the first quarter this year, well below the 700-unit quarterly pace during the peak years, 2004 through 2006.
City neighborhoods posted wildly different results.
Prices slid nearly 33 percent on Beacon Hill and 21 percent in the North End, but were up nearly 12 percent in South Boston and more than 10 percent in the South End.
The South End has retained its value, Blair said, because it "has matured and gentrified" and is an attractive neighborhood, yet more affordable than the Back Bay and midtown, where median prices exceed $1 million. The South End's median price is about $600,000.
Kimberly Blanton can be reached at blanton@globe.com.
