Rich O’Connor, a veteran Beacon Hill agent, tells me he could list a dog house and get five offers on it in 24 hours. I don’t doubt him. I just wonder how much over asking the offers would go. I mean, would it be just a few percentage points in excess of the list price or would the bidding for the dog house get even crazier?
Rich, of course, is commenting on the inventory, or lack thereof, in the Greater Boston condominium market. One recent day – April 2 — Beacon Hill had only five condos priced under $1 million available for purchase. On the same day a year ago, the number of Beacon Hill condos available-for sale priced under $1 million dollars was closer to 36. South Boston is another inventory – challenged Boston neighborhood. One of the hottest markets in the city, South Boston has only seven condos available to buy in its wheelhouse price points between $350,000 and $450,000. A year ago Southie had more than 40 condos on the market in this price range. And if the South End’s lack of condominium inventory is any indication, even buyers in elite price points can face the same inventory challenge. A year ago, as many as 24 South End condos may have been available to buy between $1 million and $1.5 million. Today, only five.
Simply put: This might be the most dire supply situation the city has seen of any quality of life commodity since recent folks lined up outside gas stations in ’70s. MLS reports showed that all the neighborhoods that make up the city of Boston — the entire city — had a cumulative total of only 491 condos available to buy. You’ll excuse me if I think that sounds more like a typo than an inventory amount. I mean, it was only two Aprils ago, in 2011, when MLS showed Boston had nearly 2,000 condos on-market. What happened? Did Jillian Michaels yell at the city and force it to radically trim its condo waistline? I don’t know, but take it easy, Boston, your condo market is looking kind of, well, anorexic.
I reviewed closed Boston condominium sales for last month to see how the low inventory impacted the market results. In brief, the results could be rename “March Real Estate Madness.”
The median time it took for a Boston condominium to find a buyer dropped from 115 days in March 2012 to just 59 days in March 2013.
The average sell-to-list ratio was 100 percent. In other words, on average, there was no negotiating room.
The median sales price increased $50k versus March 2012, $425,000 versus $375,000.
What can be expected of the Greater Boston condo inventory during the rest of the sales season? I looked at the inventory numbers for every spring since 2008 trying to get a sense of what the coming months hold. Out of the five years I looked at, only one year had even 10 percent more condos on market on June 1 than it had on April 1. All I can say is “Uh oh.” Of course, every developer in the area seems to be starting projects in the city. Even the mayor announced a plan to roll out 30,000 new housing units in Boston by 2020. That might sound like the housing cavalry is riding in to town, but that cavalry might only be able to save the folks who want to buy or rent in 2020. What about the folks who want to do something this spring? What’s it going to be like for those folks? In the words of the venerable Clubber Lang: “My prediction is pain.”
Lea Cohen, an agent who knows more about the Brookline condominium market than many, talked with me about a recent Brookline condominium offering. She speculated that although the list price was $575,000, the 16-offer situation surrounding the property likely caused the sales price to go to $650K. Almost unfathomably, Brookline has had even more competitive offer situations than this one, like a property which garnered 25 offers. Cohen thinks that it might be some time before any one offers less than the full asking price for a Brookline condominium. Like a lot of agents, Cohen likes to work with buyers, but I am thinking that trying to put in winning bids for buyers in a market like this is a little like playing the lottery with your entire weekly paycheck.
A month ago in Banker & Tradesman, I wrote that Boston might only have a six-week supply of on-market condominiums. I fear that in April, Boston’s absorption may actually drop under four weeks. Clearly, if there ever was a time to put a dog house on the market, now is the time.
David Bates is a broker with Gibson / Sotheby’s International Realty and author of The Bates Real Estate Blog, www.BatesRealEstateReport.com.
