Putting yourself in a position to buy a home in Boston is like trying to get service in a busy bakery.
You’re going to have to take a number.
At least that’s what the current market dynamics seem to be indicating.
On the morning of March 9, MLS showed 524 Boston condominiums on the market available to buy.
That same morning, MLS showed that in the last month 352 Boston condominiums had gone “under agreement.”
Using the “under agreements” to determine demand and the “available condominium inventory” to determine supply, it means the citywide absorption rate is roughly 1.5 months. That’s another way of saying that at the current sales pace, Boston, the anchor of the 10th largest metropolitan area in the country, could run out of condominiums in just six weeks.
That’s not a seller’s market, that’s a Krispy Kreme market with the real estate equivalent of a “hot donuts” sign on.
Bear in mind that the 1.5 months of available inventory includes “all” the Boston condos available for sale – even ones that are “sales-challenged” by being overpriced, in terrible condition or in second-rate locations. Clearly, the absorption rate for normal, salable properties is even lower.
What does absorption look like for “very salable” condominiums?
Good question. Here are a few examples of “very salable” absorption in markets just outside the city, where the conditions of supply and demand are similar to Boston’s condominium market:
- Recently, a Brookline two-bed, two-bath condo with excellent finishes came to market. The listing agent told me that it attracted more than 130 people to the open house and garnered nine offers.
- A Cambridge property – which was not a condo – came up by Fresh Pond: 14 offers.
This exponential multiple offer situation is becoming far too common in the Hub. We have to acknowledge that we might not be observing the actions of motivated buyers, but witnessing the behavior of people in a panic.
Like grocery shoppers the day before an impending storm, it could be that today’s buyers are thinking, “I better buy now, in case there are no homes available for a while.” If that’s the case, is their sense of urgency correct? Don’t buyers with low offers face possible double jeopardy?
Not only might they miss out on the home of their dreams, they may miss out on the opportunity to buy one with insanely low interest rates. To make matters worse for them, can there be any doubt the over-heated current market will drive home prices higher in the not so distant future?
In the long term, of course, market forces will likely cause the local supply and demand of homes to even out a bit. In the short-term, however, could it be the city is a step away from seeing eager lines of people outside open houses waiting to get in – as if they were trendy restaurants or en vogue nightclubs.
David Bates is a broker with Gibson /Southeby’s International Realty and author of The Bates Real Estate Blog, www.BatesRealEstateReport.com
