Boston’s condo market experienced a boom during the first part of the year. A condo with more than 3,000 square feet of living space in this Beacon Street property sold for $5.2 million in March.
Condo sales in some of Boston’s most desirable neighborhoods hit a record pace during the first half of the year as homebuyers took advantage of some of the lowest mortgage interest rates in four decades.
Some 1,535 condos were sold in Boston proper – including the Back Bay, Beacon Hill, South End, North End and waterfront neighborhoods – through July of this year. That’s the largest number of condo units sold during the first seven months of any year in more than 10 years, and a 47 percent increase compared with the 1,038 condo units that were sold there during the same period a year ago, according to The Warren Group, parent company of Banker & Tradesman.
Boston’s sales volume at this point has already surpassed the total number of condo unit sales in all of 2001. “Since January it’s been wild,” said Lili Banani, a real estate agent in one of the Boston offices of Coldwell Banker Residential Brokerage. “I don’t know whether people feel the [interest] rates are going up and they feel it’s the best time to invest.”
Last spring’s real estate market was “fantastic” said Dave Stenberg, a manager of Hammond GMAC Residential Real Estate’s Boston offices. “Business is up substantially from last year,” he said.
Local Realtors feel that an upswing in consumer confidence, along with the low mortgage interest rates, have fueled the condo market. In addition, local Realtors say they are seeing demand from a growing pool of empty nesters, young professionals and even families that are moving to or remaining in the city, because of its esteemed universities, hospitals and cultural attractions.
“Boston is one of the most desirable cities in the country and real estate reflects that,” said Stenberg.
Last year, a total of 2,067 condo units were sold, a slight dip from the 2,138 condos sold in 2002 but significantly more than the 1,516 units that traded hands in 2001.
According to Stenberg, the number of available properties for sale in the Back Bay, Beacon Hill and South End has been shrinking since October of last year. As of mid-August, there were 397 homes for sale in those neighborhoods, down from 577 during the same months a year ago. Most, but not all, of the homes listed for sale are condominiums.
In fact, the number of homes for sale in those neighborhoods has declined each month since last October, dipping below 400 for the first time since January 2002, said Stenberg. The drop comes even as new luxury condo projects, such as Atelier 505 in the South End, are appearing throughout the city. Many of those new condos are pre-sold before construction is completed.
According to Stenberg, after the height of the boom market in 2000, when properties sold rapidly and it wasn’t uncommon for sellers to get multiple offers for their homes, Realtors started noticing a change in the market in 2001.
With the economy in the dumps following the Sept. 11, 2001, terrorist attacks, the residential real estate market became more favorable for homebuyers. Even though it wasn’t quite a buyers’ market, Stenberg said homebuyers did have more “leverage.” That continued through 2002 and into 2003, says Stenberg.
More recently, sellers have gained in the marketplace. “Since last October, we have started to see a trend that started in 2001 reverse itself,” he said.
With demand remaining robust, price appreciation has been impressive. The median price for condos that sold in Boston from January through July reached $443,000 – a 12 percent jump from the $395,000 median price during the same period in 2003.
“This year prices were very, very strong,” said Ed Sullivan, another real estate agent with Coldwell Banker Residential Brokerage. In the South End, Sullivan said he is consistently seeing condos that are in good condition – but not necessarily in full-service residential buildings – selling for $600 per square foot.
The average price for a renovated condo has been running anywhere from $800 to $1,100 per square foot, said Banani. But some properties have fetched record-breaking prices this year. In Beacon Hill’s Louisburg Square, for example, a 721-square-foot condo sold for $1.6 million in May, while a 3,051-square-foot condo on Beacon Street sold for $5.2 million – or about $1,700 per square foot.
That pales in comparison to a 2,245-square-foot condo at 128 Commonwealth Ave. in the Back Bay that sold in June for a whopping $8.65 million, according to records from the Suffolk County Registry of Deeds.
Quick Draw
Sullivan and Banani said empty nesters are a big part of the condo buyer pool in Boston.
Sullivan said he is working with empty nesters from states like Michigan and California who are moving to Boston because they’re so enamored with the city’s neighborhoods.
Banani said even families that once sought to move to larger homes in the suburbs are instead opting to stay in the city. “The city [now] is a lot more family-friendly,” said Banani, who has been in real estate for 22 years.
Condos in the Back Bay, Beacon Hill and waterfront areas are selling faster this year than last year, according to information provided by the Multiple Listing Service Property Information Network. Back Bay condos sold within an average of 66 days from January through July of this year, compared to an average of 87 days during the same months in 2003. On Beacon Hill, condos were on the market an average 57 days this year, down from 64 the prior year.
On the waterfront, condos sold within an average of 72 days this year, down from 85 days in 2003. And in the South End, condos were selling slightly faster this year – 48 days, compared to 53.
While it generally has taken longer for properties priced at $3 million or higher to move, demand for luxury high-rise residential buildings that offer hotel-like services and amenities – like the Four Seasons and Ritz properties – has gone up, according to Banani. Those properties continue to boast the highest per-square-foot prices.
A 2,130-square-foot condo unit at the Four Seasons Place, for example, sold for $6.6 million in April – or more than $3,000 per square foot. The next property that will offer the ultimate in luxury living will be the Mandarin Oriental Hotel and condo project, which will be built on Boylston Street, she said. Condos in that property are expected to feature asking prices from $2 million to more than $8 million.
Banani said buyers are looking for finished and renovated properties, and units that are “priced right” sell within weeks. Recently, Banani had a listing that she was about to begin marketing. After telling fellow agents in her office about the property, the home sold almost immediately – before even being officially listed on the market.
Agents in Banani’s office have also seen a lot interest in new projects that are planned in the city. The new units tend to sell quickly, according to Banani. “Whether in the next two years we will have the same demand remains to be seen,” she said.
But for the fall, real estate agents are anticipating continued strength. “I think the supply is still staying kind of low,” said Stenberg. “I see a lot of buyer activity on weekends. Our open house traffic last week was very good.”
Aglaia Pikounis can be reached at apikounis@thewarrengroup.com.
