| 
Has Boston’s ridiculously hot condominium market finally peaked? Real estate agent and data geek David Bates thinks so, and he has the stats in hand to back it up.
After rising for years, the price of Boston condos put under agreement actually fell in the first quarter of 2019 to $639,000, a drop of $10,000, or 1.5 percent, according to Bates, a broker associate at William Raveis and author of a blog on the local real estate market.
The number of pending condo sales – units under agreement that have yet to close – posted an even bigger drop, 7.4 percent.
On top of that, the number of listings on the market has risen, with Boston’s building boom pouring thousands of new units on the market, even as demand may be slowing.
‘Some People are Tapping the Brakes’
The declines come after years of steadily rising prices and sales, from multimillion-dollar pads in posh new downtown towers to apartments converted into condos in triple-deckers.
A 1.5 percent drop in price doesn’t mean the bottom is falling out of the market, but the decline in sales and prices does clearly seem to be a sign of a larger shift.
The go-go, blue skies forever market, characterized by frenetic bidding wars in which sellers couldn’t miss, is suddenly a thing of the past. In its stead is a market where the froth is gone, one with fewer bidding wars.
“It is a different market,” said Bates, who predicted a year ago, in this column, a market peak and decline. “It’s not flat out, all gas, no brakes, that it has been for the last five years. I think some people are tapping on the brakes.”
Certainly, the large number of new condos that have been built in Boston over the past few years must be factored into the equation.
Thousands of new units have hit the market in the new Millennium tower in Downtown Crossing, not to mention the new Pierce in Fenway and a bevy of new high-rises in the Seaport and South End.
And more are poised to open in the next few years, including the 60-story One Dalton near Symphony Hall, with units at the uber–deluxe Four Seasons skyrise selling for tens of millions of dollars.
Gain Access to New England Premier Source for Real Estate Data
Real estate is a moving target, but with a valuable tool like RE Records Search in your arsenal, you can get a bullseye every time. The Warren Group is New England’s premier source for timely and accurate real estate data, and RE Records Search provides valuable insight to the region’s property characteristics, tax records, sales and mortgage histories, and foreclosure information.
Stock Turbulence Made Buyers Think Twice
Maybe, just maybe, the now two–decade-long campaign by Boston Mayor Marty Walsh and, before him, the late, great Thomas M. Menino, to encourage the construction of housing, housing and more housing may be finally taking the edge off of prices.
It would be wonderful if that were real, and there is surely a bit of truth to it.
But anxiety about the future of the economy and the market – and the impact of all the turmoil on Wall Street on investment portfolios large and small – is the more likely culprit.
This was especially true after the stock market plunge during the last two months of 2018, which left a lot of people shaken and threatened to morph into something even worse.
While the markets have since climbed back onto their feet in a rally that began right after Christmas, the pre-crash giddiness and optimism is gone.
“The stock market and interest rates look a little more fragile,” Bates said. “The optimism on that stuff is not as good as it was.”
| Suffolk County First Quarter Condominium Sales | |
| Year | Number of Sales |
| 2014 | 844 |
| 2015 | 752 |
| 2016 | 913 |
| 2017 | 968 |
| 2018 | 1,150 |
| 2019 | 906 |
| Source: The Warren Group | |
Market’s Warning Lights Flashing
But it’s not just falling prices and sales. Other warning lights are flashing on the real estate market’s dashboard.
Condo price cuts nearly doubled during the first three months of 2019 compared to last year, to 221 from 127. That’s also nearly triple the number seen in the first quarter of 2015, when there were 81.
There’s also been a big drop in bidding wars. The number of condos and homes fetching multiple offers dropped to 14 percent in Boston during the first month of the year, down from 53 percent in January 2018, according to Redfin.
“You see fewer properties getting multiple offers,” Bates said. “We don’t see the insanity we saw a year ago in Boston.”
Meanwhile, the percentage of condos in Boston that sold at or above asking price has also taken a dive, falling to 47 percent in March from 59 percent the same month a year ago.
And even when buyers are overshooting the market, it’s not by as much as before.
Last March saw 32 condos in Boston with net offers $50,000 or more over asking, or 9 percent of all sales.
This March, that number dropped to 11 condos, or 4 percent of the market. In fact, the only reason the percentage wasn’t lower is because the overall number of pending sales also declined significantly.
Fed up with crazy condo prices, there are frustrated buyers out there who wouldn’t mind if the bottom fell out of the real estate market.
Scott Van Voorhis
But since only a steep economic downturn – à la another Great Recession – would have the power to send prices crashing through the floor, it’s probably not a wish anyone worried about their job security would want to see come true.
However, a little slowdown never killed anyone.
And if it means prices condo prices take a breather and the number of listings starts to pile up, that wouldn’t be such a bad thing, now would it?
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
