Higher-end condominiums in South Boston, Back Bay and Boston’s South End neighborhoods are hitting the market in record numbers.
No one knew exactly how the coronavirus pandemic would impact Boston’s real estate market. Construction was shut down for more than a month; people fled to the suburbs and began working remotely in greater numbers, and many college kids still have not returned for the fall semester.
While much uncertainty lies ahead, Boston real estate agents say they are seeing an interesting phenomenon play out: Condominiums are flooding the market in several of the city’s neighborhoods across several price ranges, threatening price declines in some of Boston’s hottest neighborhoods for the first time in many years.
There were 1,384 condos for sale in Boston as of Aug 13, compared to only 919 on the same day in 2019, according to Melvin Vieira, a realtor at RE/MAX Destiny/Vieira Group, citing MLS statistics.
Already, that’s had an impact on price, with the median asking price of a Boston condo going from $875,000 as of Aug. 13, 2019 to $849,000 as of Aug. 13 of this year, he said. Vieira added that average days on the market for Boston condos were currently lower than in 2019, but he expects that number to go up, as many of the condos just came on the market in July or August.
Meanwhile, Vieira said the number of single-family homes for sale in Massachusetts have been nearly chopped in half from 11,482 at this time in 2019 to slightly under 6,000 as of Aug. 13, as many sellers remain reluctant to list and a pulse of aspiring homebuyers has quickly snapped up what single-family homes are on offer across the state.
Can the Market Absorb?
This flood of units for sale in Boston begs the question of whether the market can absorb this many new condos, and whether all these sellers can find new places to live, especially if they are looking to transition to single-family homes.
“It’s a buyer’s market for condos and a seller’s market for single-family homes,” said Vieira, adding that many single-family open houses he has attended recently have been busy. “We are in a juxtaposition. We’re in what I call Bizarre-O world.”
Vieira said it’s a bit too early to pinpoint the exact reason for the influx of Boston condos on the market, but he said he thinks it comes down to a few different factors.
In mid–March, Boston Mayor Marty Walsh banned all construction in Boston to try and slow the rapid spread of the coronavirus, an order that extended into May. Vieira said some of this spike in condos hitting the market could be attributed to ones that were delayed by the freeze and are only just coming on the market now.
But there could be other forces at work. The rental market has been hugely disrupted by the pandemic and by colleges’ decisions to hold some classes remotely with 4,771 rental properties on the market in Boston as of Aug. 13, compared to 1,836 rentals at the same time last year, according to MLS statistics. Vieira said he suspects many people who bought condos to rent them on Airbnb or to college students simply don’t want to carry the note now that they don’t have that supplemental income.
With a flood of property hitting the Boston condominium market, some agents are concerned prices could come down.
South Boston Prices Suffer
As of Aug. 13, the areas with the most condos on the market, according to MLS statistics, were the South End with 187; South Boston with 179; and Back Bay with 153, all huge increases from last year.
Many condos on the market in South Boston have lost $100,000 to $150,000 in value overnight, said Perry DiNatale, owner of Perry DiNatale Realty. DiNatale said condos priced at $900,000 and up are really taking a hit, with nearly 100 priced over $900,000 still on the market as of Aug. 14.
“Real estate is driven by the perception of value and a sense of urgency, and when you have $1 million to buy a condo in South Boston, and there’s 90 on the market and probably another 90 not on the market, where is the pressure to purchase?” he said.
DiNatale added that he thinks the pandemic has hurt the purchasing power of many of the young professionals that now occupy South Boston because even low mortgage rates have not gotten condos moving.
It appears the lower end of the market has not been hit by the same flood of sales, though. As of Aug. 13 in South Boston, MLS data shows there were only 16 condo listings between $400,000 and $499,000 16 listings between $500,000 and $599,000 and another 14 listings between $600,000 to $699,000.
Both DiNatale and Vieira agreed they hadn’t seen a market like this since around the Great Recession.
“We’re in this weird world,” said Vieira. “The condo prices are going to get soft as a grape.”
