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Condos Losing Their Affordability

Posted by Scott Van Voorhis May 13, 2014 08:59 AM

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As the spring market takes off, home prices are showing signs of slowing down.

But not so with condo prices, which have pulled almost even with single-family homes, long the more expensive option in Massachusetts.

The median price of condos put under agreement in April was $319,000, the Massachusetts Association of Realtors reports this morning.

That's just a shade below the median price for homes put under agreement last month, which weighed in at $320,000.

Here's a 1,058-square-foot condo for sale for $315,000 in Roslindale on Aldrich Street - the two bed, one bath unit is on the first floor. Looks nice, but too bad you can't simply have the whole house!

Aldrich Street.jpg

Interesting enough, but just look at where this trend is headed. Condos are appreciating at a much faster rate right now - 11.7 percent in April compared to the same period a year before compared with 2.3 percent for single family homes, MAR finds.

Another month like that and condo prices will easily surpass home prices.

Overall, pending sales of both homes and condos were up markedly in April. The number of homes put under agreement set a new record last month and more condos are now poised to change hands since before the Great Recession, according to the state Realtors group.

And while condos remain popular among first-time buyers, they face new competition as well.

Baby boomers entering retirement are helping drive up condo sales and prices, with most older couples looking to downsize in their golden years. Given the scarcity of entry-level homes, buying a smaller single-family home just isn't a practical retirement move in many suburbs.

Of course, some of the big condo price increases stem from the overheated Boston market, which is packed with multimillion-dollar units.

Still, that doesn't account for everything. And as condos get pricier, that's bad news for already overstretched buyers.
This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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