MP Boston’s Millennium and Winthrop Center towers and Hines’ Ritz Carlton towers rise above Boston’s Public Garden at sunset. Nearly 600 units in a trio of high-end towers are expected to close in the next year. Photo by James Sanna | Banker & Tradesman Staff

A spike in Massachusetts condominium sales prices in October may not be a signal of a flight to affordability so much as be a sign that developments under construction over the last few years are finally coming online. 

There was a decline in the number of sales in October both for single-family homes and condos, signaling less inventory and a cooler residential real estate market amid rising interest rates.  

The 4,183 single-family home sales across the Bay State in October were a 21.5 percent drop since October of last year, according to data from The Warren Group, publisher of Banker & Tradesman. The 1,729 condo sales during the same timeframe were a nearly 18 percent decline from last year, but condo prices soared in relation to single-family homes.  

The median single-family home price was still up 4 percent to $520,000, but this was smallest year-over-year increase seen since June of 2020. Meanwhile, the median condo sales price surged 12.7 percent to $479,000, an all-time high for the month of October.  

High-End Towers Hit Market 

Buyers often commit to a condo sale during construction, but they don’t actually close until the building is complete; this can make for deceptive sales statistics, experts say.

“People locked in, and they’re finally closing. So, that is going to become the anomaly,” said Melvin Vieira, president of the Greater Boston Association of Realtors and an agent with RE/MAX Destiny. “People do pre-buy or pre-purchase, so that’s the snap that you’re going to see.” 

It’s likely just the beginning of a wave of such price spikes in the condo market. Luxury condo towers like the 114-unit St. Regis Residences, Boston, the 145-unit Raffles Boston Back Bay Hotel & Residences and the 317-unit Residences at Winthrop Center are expected to open over the next year.  

Of course, one month doesn’t necessarily make a trend. But the number of pending condo sales in Cambridge also showed a decline in October compared to October of 2020, potentially a sign of construction that has since delivered, said Dawn Ruffini, president of the Massachusetts Association of Realtors.  

Additionally, 760 condos went under agreement in Greater Boston in October, according to data from the Greater Boston Association of Realtors. That’s down substantially from the 1,109 pending sales in October of last year and the 1,107 seen in October of 2020. 

“You almost have to backtrack to see where was that pocket that is now showing that spike in closings. I do think that’s some of it because Boston’s had a lot of construction,” Ruffini added. “We’ve had this blip and anomaly [in condo price spikes] because of some of this other development that’s been in the works for so long.” 

City Living Again in Vogue 

Additionally, some higher-end condos are beginning to trade as city living once again becomes desirable after the pandemic sparked so much interest in bigger living spaces found in the suburbs.  

“Boston never dipped price-wise, but it did slow a little bit. A few penthouses and condos that we had been marketing at the end of 2021 traded this year,” said Maggie Gold Seelig, founder of luxury boutique brokerage MGS Group Real Estate. “People are just coming back. Boston is just one of those cities, too, that always has an influx of people.” 

Expect sellers to have more pricing power in the suburban condo market as more luxury developments complete construction, and not always in the places you expect them, Seelig said. While downsizing to a condo typically meant selling a house in the suburbs and moving somewhere downtown, there are now projects underway in places like Wellesley. 

“[People who] would have been downtown Boston buyers 10 years ago are now saying, ‘Wait, now there are these buildings where I can get a really nice three-bedroom or two-bedroom with a den on one floor with some basic amenities,’” Seelig said. “They’re happy. They’re close to their friends and the local places they’re used to. They’re happy for a condo in the suburbs.” 

There is another rationale behind why Ruffini isn’t buying the idea the spike in sales signals a flight toward the more affordable condo market. Sales prices don’t factor in monthly condo fees for things like upkeep and management costs.  

Prior economic downturns like the 2008 housing market collapse made condos more affordable, even when you factored in those monthly fees. The pandemic also ushered in a new era of condo affordability relative to single-family homes, due to many buyers’ flight to the suburbs in search of more space than city living could offer. 

But today condos are practically at price parity with single-family homes once those costs are added in, Ruffini said. Rising interest rates are another part of the factor in today’s condo price equation. 

“The pandemic probably gave us between 12 and 18 months of more [condo] affordability,” Ruffini added. “The affordability for condos just changed in the last two to three months, as that interest rate just hit what I would call a tipping point for condos when you add in the fees.”