Boston’s housing crunch has gone from bad to worse during the first eight months of Mayor Marty Walsh’s term as the number of more moderately-priced condos on the market dwindles.
Condo sales under $500,000 have plunged in 2014, even as luxury units over $1 million changing hands has exploded, the latest numbers show.
It’s hardly for lack of demand. Rather, nobody is building those badly needed, lower-priced units. Instead, developers have flooded the market with high-priced rental towers, while laying plans for a wave of super-luxury condo high-rises that will soar high above the skyline.
Given the wheels at City Hall turn ever so slowly, who knows how long it will take for the new mayor to roll out incentives for construction of new middle class housing, or how effective they will be.
So I have two, admittedly counterintuitive words for anyone wondering how Boston can get over its addiction to super luxury housing: Condo conversions.
The last thing Boston needs right now is another “luxury” apartment tower. It’s time to convert some of these overpriced, cookie-cutter rentals, now competing furiously for a limited pool of deep-pocketed renters, into mid-market condos.
In fact, some developers, reading the tea leaves of empty $5,000-a-month units and “free rent” promotions, are already starting to move in that direction.
“We desperately need that under a half a million dollar market,” notes Kevin Ahearn, president of Otis & Ahearn, a top downtown Boston luxury brokerage and research firm.
With few if any new moderately priced condo units being built right now in Boston, sales under $500,000 across the city are certainly slumping right now.
There were just eight sales under $100,000 this year through the end of August, compared to 32 last year. Sales in the $100,000 to $250,000 range fell by roughly 25 percent, to 223, notes John Ford, broker-owner of downtown Boston based Ford Realty.
And in the crucial $250,000 to $500,000 range, sales are off about 10 percent, falling to 1,177, Ford notes.
By contrast, we’ve already seen 230 condos sell for at least $1,000 a square foot so far this year in downtown Boston alone – basically $1 million and up, through the first week of August according to Otis & Ahearn. That’s compared to 128 at this point last year and 82 during the same period back in 2012.
Yet be fair, Walsh can hardly be blamed for the current housing mess.
Rather, it’s a by-product of years of big talk about affordable housing by his predecessor, Tom Menino, that wasn’t always matched by action. Lots of luxury units got built, but too often developers were let off the hook when it came to following through on pledges to include moderately priced units.
It took years to get into this mess and it will likely to take years to get out.
But condo conversions could provide at least a stopgap measure until the Walsh Administration is able to roll out its own plans for spurring the construction of more moderately priced housing.
OK, condo conversions may seem an unlikely way to go about it. After all, they became a dirty word back in the 1970s and 80s, blamed for gentrifying working class neighborhoods.
But in the context of a downtown Boston that is increasingly becoming a playground for the rich, converting increasingly hard-to-tell-apart luxury apartment towers could actually work in reverse.
At the end of the day apartments, even luxury apartments, are still apartments. They are typically smaller than condos – think less than 1,000 square feet – and aren’t likely to have the kind of amenities and distinctive layouts of million-dollar-plus condos.
That means a luxury apartment tower isn’t likely to become the next super high-end condo project, but rather one with prices in the mid-market to lower luxury range, Ahearn tells me.
A good example can be found over at Museum Towers, overlooking the Charles near the Museum of Science. Museum Towers started off as rentals before going condo. You can find a number of units selling in the $400,000s.
Over at the Charlestown Navy Yard, Parris Landing made the jump from rentals to condos back in 2007, with units now selling in $600,000s and $700,000s – the lower end of the luxury range.
The next Museum Towers-style conversion may happen fairly quickly, with Ahearn now working with a downtown Boston developer who is considering plans to go condo.
That is likely to be the ice breaker. After all, developers like nothing better than a trend to jump on and this could be the next one.
Email: sbvanvoorhis@hotmail.com
