Two tales told about luxury condominium sales
The downtown Boston luxury condominium market is, to paraphrase Charles Dickens, a city of two tales.
Condos in general are experiencing the same softness as the wider real estate market; prices in central Boston neighborhoods were flat or down almost 5 percent compared to last summer, and inventories were up.
On the other hand, brokers of $1 million-plus pads in Boston, especially those on the waterfront, insist they are seeing signs of continued resilience in the upper-tier market, even as they acknowledge a slowdown in sales and a leveling off of prices.
For now the Boston condo market is paying the price for its popularity with suburban empty-nesters. Several brokers noted an ``equity logjam" in which affluent baby boomers looking to move to the city can't get the prices they want for their existing homes and so are unable to close on their dream pads in town.
``There's a bit of brinkmanship now between buyers and sellers," said Michael Cohen , a research strategist at Property & Portfolio Research in Boston. ``Each is waiting to see who blinks first. But it affects the downtown market because the boomers represent an important part of the demand story, and they're having trouble selling their single-family homes."
White-glove buildings that got in before the market slowed, including One Charles in the Back Bay, Atelier 505 in the South End, and Strada 234 in the North End, sold out quickly in 2004 and 2005. Contrast this with 360 Newbury , the former Tower Records Building at the corner of Massachusetts Avenue and Newbury Street, which still has about half of its units unsold, and Folio Boston in the Financial District, which is taking the unusual step of auctioning its remaining 34 apartments on Oct. 7. But at Folio, don't go looking for fire-sale prices.
``The auction will have strict guidelines and minimum prices," said Jon Gollinger , principal of the Collaborative Companies, the marketing agent for the building. ``But we will be at price points that are well below replacement costs, less than $500 per square foot. For buyers from the suburbs, we're saying, `You may be taking a hit on your home, but you get to tell us how much of a hit we will take.' We're really letting the market set the price."
Not so in the market for waterfront properties, where Jeffrey Goldman , president of Premier Properties of Boston , said prices and interest have held steady so far.
``But people need to realize that there is not going to be the stratospheric year-to-year appreciation that we've seen in the recent past," Goldman said. ``Some properties have been priced too high, and now they're being priced more realistically to the market."
For example, a two-bedroom unit in one of Rowes Wharf's iconic ``finger" buildings is listed at $1.69 million, recently re priced from $1.99 million. Goldman is showing the place to North Reading residents Paul and Giulia Nazzaro , who have been looking at Boston apartments for about a year and a half. Softness that they've perceived in other urban markets is less pronounced on the harbor, the Nazzaros said.
In addition to Rowes Wharf, the couple is looking at apartments at Battery Wharf off of Commercial Street in the North End, which resembles Rowes Wharf in its pier configuration, at the Residences at the InterContinental at 500 Atlantic Ave .
``I think the psychology of the market has shifted everywhere except for the waterfront," said Paul Nazzaro, a consultant in the bio diesel fuel industry . ``You can find buys in the South End and Back Bay, but not here. We own waterfront property in Boca Raton, and we've noticed, there too, that it hasn't buckled under the market pressure."
Still a report published in April by the Listing Information Network had waterfront properties in Boston plunging by as much as 40 percent . However, according to Kevin Ahearn , president of Otis & Ahearn Real Estate , which is handling the marketing at the InterContinental, the report compared dissimilar properties in the market and ignored very hearty indicators at the upper reaches. In fact, Ahearn was so skeptical that he hired the Listing Information Network for his own survey, which he published in July.
Ahearn said the number of transactions and dollar volume of waterfront condominium sales are ahead of the pace set in 2004 and 2005, both considered record years. Furthermore, he said, in the pricey $3 million-plus category, the number of transactions for 2006 is holding steady at the 2005 rate and is well above the 2004 rate.
``The numbers don't lie. It's the DNA of the market," said Ahearn.
Pre sales at the InterContinental, which is slated to open this fall, are at about 60 percent , Ahearn said. Meanwhile Battery Wharf has sold nearly half of its units.
Waterfront property or not, Cohen, the Property & Portfolio Research analyst, said that, along with the revised market psychology, buyers and sellers both need to adjust their expectations about wealth from real estate.
``During the boom you had people buying condos who never intended living in them, only flipping them for profit," he said. ``People need to start thinking about buying homes as homes again."
