Midrange squeeze in Back Bay

You would think it would be easy to get a condo right now in Boston.

After all, sales are way down, a ton of new construction has hit the market over the past few years, and it is supposed to be a buyer's market.

But for young professionals looking for in-town options, the pickings are slim. The flood of new luxury properties has steadily driven prices across the board up, so that young professionals are finding it harder to get a condo under a half-million dollars.

"The top of the market is getting higher than ever before," said Michael DiMella, managing partner with Charlesgate Realty Group, which specializes in the downtown market. "A lot of the luxury developments are pulling the median sales price up."

According to data compiled by Otis & Ahearn, a residential brokerage that specializes in Back Bay and surrounding neighborhoods, sales of properties priced above $1.5 million - many in new luxury buildings such as the Mandarin Oriental or resales in full-service buildings such as the Ritz Millennium, have jumped - sales in the $3 million-plus category have nearly tripled, from 38 at this time in 2007 to 86 this year.

Meanwhile, sales of downtown area properties under $500,000 are down 20 percent from last year at this time. The number of properties under $500,000 in the downtown market is down to 53 percent, down from 78 percent in 2000. Properties over $1.5 million now comprise 15 percent of the market, up from 2 percent eight years ago.

A couple of things could be happening: price inflation, even in this soft market, may be pushing borderline properties above the half-million mark. Also, judging by the declining inventory numbers, prospective sellers are holding back, keeping their properties off the market, maybe choosing to rent rather than testing the direction of a soft market. And if they do choose to sell, real estate brokers said, they are still pricing high based on the perceived cachet of being close to downtown.

"Location is the most critical thing, but a dump in a great location is still a dump," said buyer's agent April Bradshaw. She cited as one example a property in the South End whose owner wouldn't allow a prospective buyer to have an inspector check exterior water damage. He was asking nearly $750,000.

One thing is clear, though: when a property comes down in price, the target audience expands considerably. Roberta Orlandino, vice president of Coldwell Banker Residential Brokerage in the Back Bay, said that a $10,000 reduction off a property in the below-$500,000 range, instantly brings it within reach of hundreds more prospective buyers.

"What that tells me is there are a lot of people who want to get into the city," Orlandino said. "A lot of people are looking for deals and hoping this might be the time to find one."

Not that lowering the price immediately seals the deal for sellers. As with other groups, young professionals, especially with Boston having such a huge concentration of jobs in the wobbly financial sector, are wracked by the same anxieties about the economy, dealing with the same credit issues as everyone else.

So there's the rub: not a lot to choose from, but when some buyers do find something in their range, some are tentative, indecisive.

Nate Amory is experiencing the challenges of the downtown market from both sides - as a buyer and a seller.

The 29-year-old was recently married, and he and his wife are trying to sell their condo in Bay Village to buy a larger unit in the downtown area, but haven't much nearby to chase. "A lot of the stuff that's within our range has been on the market for a while," said Amory of properties in the Back Bay and South End. They have expanded their search to Charlestown, although Amory, a law school student, still hopes to be within walking distance of work when he starts at a downtown firm next year.

Meanwhile, the couple recently dropped the price on their Bay Village condo, for the second time since putting it on the market in September, to $399,000.

The response was immediate. "We've had a lot more people come through," he said. "But still not a lot of offers."

As prices in and around Back Bay have climbed, those looking under the half-million price threshold have had to cast their sights further afield. "This type of product is being pushed further to the edges of the neighborhoods, so there's a little pioneering going on, or unit size is going down or the condition is not as good," said Kevin Ahearn, president of Otis & Ahearn. "What we're seeing, unfortunately, is less and less of this product in the downtown neighborhoods."