Downtown's big sales slowdown
The downtown condo market is certainly down, but it’s far from being out.
That’s the sense I came away with after working last week on a story for the Globe on luxury condo sales in Boston.
A new report by PrimeTime Communities, a real estate research and marketing firm, found that, on average, new condo developments in Boston are averaging about one sale per month.
That’s definitely down from the boom times, when many of these projects sold out before they even opened. At the least, trendy new luxury condo and loft complexes were averaging three to four sales a month, not one.
Yet while sales activity is down dramatically, it has hardly fallen off the map altogether. That’s in contrast to the suburbs, where the report found most new condo projects were barely selling a unit every other month.
While sales activity has slowed, pricing has held steady, according to the report, which looked at 10 projects ranging from the glitzy InterContinental overlooking the harbor to loft style complexes in the South End.
As they grapple with a much more challenging market, downtown condo developers are balancing the need to move inventory with the desire to get the highest price.
The posh new Battery Wharf project on the waterfront in the North End struggled to keep pace with one sale a month, but the average price – north of $1,100 per square foot – would make many other developers envious.
By contrast, Boston Residential was able to sell nearly four units a month at 285 Columbus, which straddles the South End and Back Bay, by offering prices significantly below $1,000 a square foot.
These may be tough times in the real estate market, but in downtown Boston, luxury condos are still selling. Still, just don’t count on anybody breaking any sales records for the next couple of years.
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Scott - I think you are misunderstanding and misstating the situation. In the big picture , these developments are losing money . BIG MONEY .The current sales rate does not cover the carrying , staff,and marketing costs. The tactic of dealing from strength has run out of gas. Look for significant price reductions in the near future.
maybe Sunshine and Lollipops can shed some light on this ghastly report. Or maybe she'll pitch the old broker/realtor line, how downtown is special, and how everyone wants to live here, their not making any more land, how it is immune etc. Just like Marin County, Dade County, London, New York, and Dubai.
Scott, once again you take a very one-sided biased view on a topic. Yes, the pace has slowed. But, if things were selling at the rate during the peak of the market, we might be even more worried. But they are still selling and they are selling at insanely high prices and that's not even factoring in the cost of owning these "luxury" properties with their insanely high HOA fees. Furthermore, the "luxury" market is in much worse shape then the "traditional" market in central Boston/Cambridge. You leave out a financial analysis of the situation. Are they expecting to make or lose money at the current rate?
The "luxury" buildings in the suburbs are another market and I doubt there's anything positive to say about their sales.
Again, I'm not bullish about real estate or the economy. I have no idea why anyone would buy one of these "luxury" units. Paul Krugman has a great doom and gloom column that today that makes a lot of sense to me. But, you tend to take data that looks good and bend it to fit your own personal biases.
Its simply not fair to say Scott's view is one sided. If I, or a fair number of others on here, had written that post, it would be substantially more negative.
I think Scott tends toward the center of current opinion - ie mildly pessimistic. I'm rather strongly pessimistic myself
These units, and most of the real estate downtown are simply overpriced. Without the subprime pump up of neighboring areas, and overvalued loans to minority developers, the real price would have corrected two years ago. It will happen, it is only a matter of time! Real estate futures short is the way to go for at least two more years! Downtown is nice for the empty nester, but outside of the back bay, beacon hill, the near south end and right on the waterfront, the rest is at best ordinary! A loft on Albany st? A tower near chinatown, please, I'll stay in metro west, and take a car in on the weekends!
A substantially slowing sales volume with flat prices is what happened across many other US cirties recently . . . and then prices dropped markedly.
Home sellers are always slow to adjust their prices downward, but obviously few buyers are interested at current levels. Once asking prices drop 20% or 30%, then we will see substantial numbers of buyers re-enter the market. A new price equilibrium needs to be established that acknowledges the fundamentally charged financial landscape.
If I could afford it I would love to live in one of those condos. Why would someone not want to live in a gorgeous condo right in the middle of Boston? As a renter, I would rather put off buying for many years than move somewhere into the suburbs, with no amenities and long commutes, just to buy for the sake of buying. To each his own.
Instead of being envious, and wanting others to have less, we should instead aspire to have more through hard work and financial diligence.
I'm not saying its not nice to live in a nice place downtown. I do, and it is.
I'm just saying it is not something I'd buy at these prices. It is something I have bought before at other prices. And sold in turn.
The rent I pay is probably half the carrying cost to own the place I live in. Why spend twice as much in order to be locked in to lose money?
If the rent was over the carrying cost, I'd re-assess
People still owe what thay did when they paid these inflated prices for their homes so I don"t see them taking huge hits trying to sell. Most people will just hold on to their properties until they can break even. So everyone looking for that big half off sale are just fooling yourselfs.
People still owe what thay did when they paid these inflated prices for their homes so I don"t see them taking huge hits trying to sell. Most people will just hold on to their properties until they can break even. So everyone looking for that big half off sale are just fooling yourselfs.
Well said Ralston. I've been looking at condos and keep hearing the developer is well funded, won't lower price, and I say "see ya." I don't understand why we keep hearing that sellers with overpriced inventory are waiting. Waiting for what? I have to sell to buy and in order to sell I have to be realistic about the changed market. We're back to 2003/2004 prices. But the market will continue to be in gridlock if overpriced condos are the only thing available.
This blogger might want to review your comment before posting it.
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