| The first quarter of 2018 delivered a new high-water mark for condominium prices in Boston. The average price per square foot was over $1,000 per square foot for all condos for the first time and sale prices were above $1.4 million.
This was the recovery we were expecting when the market dipped in Q4 2016. All metrics were up double-digit percentages compared to the same quarter last year. Even sales volume for all condos in Boston, which had lagged national trends due to limited available deliverable inventory, was up 13 percent over the prior year.
The 618 condos sold in Q1 2018 in Boston is the highest first-quarter volume on record since at least 2009. The average unit price was $1.4 million, but even more significantly, the highest average median price of $950,000 was up 28 percent over last year’s first quarter, and 4 percent higher than the prior peak in Q3 2017. This positive result, based upon unrecorded new building sales, seems a long time coming, considering the perceived strength and stability in the Boston condominium market.
In the upscale and luxury market, sales volume was up 21 percent over the first quarter of last year, which is a marked improvement over previous time periods. However, it is notable that compared to Q1 2017, there were only 11 more units placed under agreement/recorded in the Q1 2018 priced between $800 and $1,800 per square foot, though there were 34 percent more sales than the same quarter 2016.
Many condos are placed under agreement but not recorded at the time of actual sale on MLS and only show when a new building delivers and closing is recorded through the Registry of Deeds. Current examples of that are 50 Liberty, Siena, Pier 4, Echelon, One Dalton and The Archer Residences. Both 50 Liberty and Siena started delivering in March and April this year. Average price per square foot closed and under agreement in upscale and luxury market was down 6 percent when compared to Q1 2017.
We define luxury as the top 10 percent of the market and must be in a full-service building. Upscale is defined above $700 per square foot, greater than $500,000 absolute price and in buildings with more than four units excluding brownstones and must have central air conditioning.
Two-Bedroom Units in High Demand
Implied months inventory as of the end of the Q1 2018 is approximately 3.3 months, with the lowest inventory in the South End and Charlestown. These stats can be significantly skewed up when a new large luxury building comes online in any neighborhood that has not seen consistent new inventory coming online – i.e. the Seaport (22 and 50 Liberty, Pier 4, EchelonSeaport), the Back Bay (One Dalton) or Beacon Hill (The Archer Residences).
In the luxury market, the greatest number of sales continues to be of two-bedroom units due to supply being the greatest of this unit type. Average price per square foot for luxury buildings continues to be greatest for three-bedrooms at around $1,706 per square foot, while days to offer remains shortest for one-bedrooms as they are typically on the market less than two months due to lack of supply.
Overall, the upscale and luxury condominium market is very strong based upon limited supply and a clear level of demand. Though at the highest prices there is not the same level of price acceleration versus the less expensive but still luxury units, we expect the upward trend to continue. This has been highlighted by the strength of one-bedroom prices over the last year and the challenges new buyers have breaking into this market. As we continue to capture the data for Q2 2018, we anticipate modest upward movement with the delivery of both 50 Liberty in Seaport and Siena in the South End.
Janice Dumont is CEO of Advisors Living, a division of Boston Realty Advisors.
