Here one thing the downtown Boston condo market is seeing more of – cash buyers
This may be the Great Recession, but apparently not everyone is broke out there.
Buyers paying all cash accounted for nearly a third of all sales in the downtown Boston condo market last year.
More than 29 percent of buyers bought condos exclusively with greenbacks last year, ranging from a Beacon Hill penthouse that fetched $9.3 million to a one bedroom in Fenway that sold for $185,000, the Boston Courant reports, citing a study by condo marketing and research firm Otis & Ahearn.
It's an intriguing number, even taking into account the fact that it is being driven in part by ever tighter - to the point of nonsensical - lending standards, especially for borrowers of outsized jumbo mortgages.
But it's also one of those stats that raises as many questions as it answers.
For starters, who's out there with that kind of cash stashed in the bank to spend on downtown Boston condos?
Downtown brokers, who say they are seeing this trend firsthand, quickly point to suburban empty nesters cashing out of the colonial in Wellesley or Newton and rolling it into a downtown Boston condo.
And despite the mini-Depression we are suffering through, there are still lots of rich executives and business owners out there, some of whom simply like living downtown.
But there's also clearly some speculation going on here as well. John Ford is a downtown broker - and local market blogger - who I cited in yesterday?s post.
He points, for example, to a local doctor who has pulled money out of the stock market to buy condos in the West End and the Bay Bay, and then rents them out for a solid, though unspectacular profit.
Whatever the case is, for buyers, the power to pay cash up front can be an advantage in a market where others are struggling to line up bank loans.
Among other things, a seller is likely to take a cash offer over a competing bid based on a mortgage that has yet to close, maybe even for less money.
Some of these cash buyers are then turning around and financing part of the purchase, dealing with any loan hassles on the back end.
In the end, it may be more of a testament to our still messed up banking system than anything else.
