Ancient seers were stuck using stars, tea leaves and bird guts to try and read the future; modern day real estate observers have sales data.
But even though the methods differ, the astonished gasps when a strange omen comes into to view are roughly the same. And you could have heard them when April’s sales figures came out: For the first time since The Warren Group, publisher of Banker & Tradesman, began tracking them, the statewide median condo price was higher than the median price for single family homes.
The Warren Group began tracking the condo market in 1987.
Perhaps one more crazy thing doesn’t seem so strange in what has been a crazy spring market to begin with, with low condo inventory sparking bidding wars the likes of which haven’t been seen for seven years. In Boston, there’s been welcome news of condo projects in the pipeline – but there’s a dearth of luxury inventory currently on the market, and that’s been driving up prices all over town.
But a peek beneath the hood at town-by-town numbers suggests there’s more to the condo market revival than a resurgence of the urban core – though that is a factor. Year-to-date, condo sales in Suffolk Country are up, but no more than the state’s average. Massachusetts condo sales are up 11.2 percent, while Suffolk County’s sales are up 11.7 percent.
Moving Up
The real performer, then, isn’t Central Boston, but its neighbors. Year-to-date, median condo sales in Middlesex County were up 18.9 percent. Norfolk County condo sales were up 25.3 percent.
Some of the hot spots are well known – condo prices in crowded Somerville have bumped up 16.8 percent to $385,000, while sales were up 42.6 percent. Both marks are better than in also-hot Cambridge, which saw prices rise 9.3 percent to $431,700 while sales rose 27.5 percent.
“It think people still want to get into Cambridge – it’s just been really really hard this year,” because of tight inventory, said Alex Coon, Boston area manager for online brokerage Redfin. “There’s a resurgence of people buying closer to the city – they’re just not ready to take the jump to the suburbs. In particular with Somerville, the city just seems to kinda [have a lot] going on – even in the fairly inflated condo market, there’s opportunity there. It’s driving a lot of those buyers who may be priced out of the Cambridge craziness.”
But it’s not just the usual suspects.
A quiet resurgence in suburban condo sales, with an especially marked increase in median prices, suggests that distressed sales are taking up a smaller percentage of the market as sellers begin to brave the market. The biggest increase in median condo price so far this year is in tiny Ayer, which recorded 16 condo sales through April – a small number, but still more than triple last year’s volume. The median price rose from $115,000 to $197,000.
Wilmington, Framingham, Waltham, Winchester, Malden and Newton have all seen median condo prices shoot up more that 15 percent so far this year compared to last year.
Gary Rogers, an agent at RE/MAX on the Charles in Waltham, said he sees the loosening up of the suburban condo market as heralding the return of another near-mythical creature: The move-up buyer.
‘Feeding Frenzy’
As folks move out of the condos and town homes they first purchased years ago, a good chunk of decent properties are getting put on the market just in time to meet demand. And of those properties, many are competitive with single-family homes, and sometimes offer less hassle than the red-hot single-family market.
“There’s a bit more of feeding frenzy over the good stuff,” said Coon. “It may be that there’s some people fed up with the [single-family] stock that’s out there.”
The improved spring market is “releasing a lot more of the town-houses. So instead of a $250,000 or $300,000 condo-conversion [being listed], we’re now seeing some of the town homes that were bought at $380,000 several years ago, which had dropped down to $360,000, now they’re back on the market for $370,000,” because the owner’s ready to move up, Rodgers said.
With current underwriting so strict and bridge loans tough to come by, many potential move-up buyers need to complete the sale of their current property before making a purchase – especially as low single-family inventory sparks multiple bids, spurring single-family purchasers to be ready to move quickly to close a deal.
“I have people who are selling a beautiful condo – they know they’re going to have to move in with their parents,” after the condo sale in order to be ready to make their own purchase, Rodgers said.
Also affecting overall condo trends is a reduction in the percentage of distressed properties which were dragging the market down. Although Framingham still has “a ways to go,” according to Karen LaChance, an agent with ERA Key Realty in Framingham, she said she’s still seeing substantial improvement.
Last year, “there was such a malaise – an awful lot of people were just looking last year and not buying,” she said. This year, she’s seeing condos selling “in every complex – and a lot quicker.”
Even distressed properties are showing some signs of a shift. LaChance knows of one condo association that bought several units in its own building, rather than let them go at auction, confident it could get a better price than the bank.
