Condominiums at 776 Boylston St. (foreground) can fetch tens of millions of dollars, similar to many homes elsewhere in Boston’s Back Bay neighborhood. iStock photo
Urban Boston condominium sales prices approached $1.3 million in the second quarter as the new supply pipeline declines.
Despite elevated mortgage rates and competition from high-end rentals, the average sales price rose 4 percent over the previous year, The Collaborative Cos. reported.
Overall sales volume dropped 1 percent. Transactions in the largest segment of the market – the under-$1 million category – dropped nearly 5 percent to 541, reflecting the effects of mortgage rates on first-time homebuyers, TCC reported.
“The interest rate hikes of 2023 kept many potential buyers out of the market, resulting in numerous tenants resigning leases with their current landlords, as home sales prices did not decrease significantly enough across much of the Greater Boston area,” the report states.
Through the first half of the year, sales have declined 8 percent from 2023.
A “remarkably low” pipeline of future condominium construction likely will prevent the emergence of a buyer’s market in coming years, according to TCC data.
After more than 2,000 new units were completed in the past six years at projects including the Raffles Boston Back Bay and Winthrop Center, only 566 new condos are in the planning and construction stage.
The Ritz-Carlton Residences at the South Station Tower will deliver 166 luxury condos in 2025. And The Fallon Co. received construction financing in July for a 130-unit condo tower at the Fan Pier, although the company has not announced a construction start date.
The condo market data includes the neighborhoods of Allston, Back Bay, Beacon Hill, Brighton, Charlestown, Chinatown, East Boston, Fenway, Financial District and Downtown Crossing, North End, Seaport, South Boston, South End, Waterfront and West End.
Barriers to first-time homeownership are benefiting the rental market, where effective rents rose 3 percent over the previous year to $4.76 per square foot. That translates into average monthly rents of $3,857.
Apartment construction has been declining because of financing hurdles for developers, and only 388 units were completed in the second quarter in Boston.
And more rent increases are likely to come in the second half of the year, as consistent demand contributed to the current 97 percent occupancy rate.
