17 Responses to “A little drop – Boston Proper Condos” »»

1. wow
   Comment by wow | 02/25/09 at 7:43 am

   bradley… care to comment?

2. Bradley
   Comment by Bradley | 02/25/09 at 8:38 am

   All this says to me is that people are listing cheaper properties. Those in the higher valued homes are choosing not to sell, for whatever reason, be it that they are happily enjoying our great city and don’t want to move, or they’ve been scared by the media into thinking that the real estate downturn happening in places like Las Vegas, Phoenix and Miami also applies to Boston. It doesn’t. I said it before and I’ll say it again: too much money chasing too few properties with too little new construction = upward price pressure.

3. wow
   Comment by wow | 02/25/09 at 9:13 am

   yea but in order for your predictions to come true (higher prices in 09 than 08 in boston proper) doesn’t it start with the list price? 850k to 700k is a huge difference.

4. Bradley
   Comment by Bradley | 02/25/09 at 9:17 am

   Just as a follow up…. some people seem to have this weird idea that they’re going to eventually find a bargain on a condo in downtown Boston.

   Where is this coming from? Downtown?? I hate to break it to you but it ain’t gonna happen. Ever.

   If this were 1979, then I might say yeah, you can find a big large apartment for very little money. Back then the economy was in the toilet, inflation was rampant, jobs were scarce, and nobody, but NOBODY, wanted to live downtown. People thought of Boston as a slummy, rat-infested dump overrun with students. They were right, by and large. It was the era of “white flight” to the suburbs.

   I’m sorry though folks, but it’s 2009. Those days are long gone. Boston went through a major renaissance in the 80s, 90’s & 2000s where huge amounts of cash flowed into town. New industries were created, jobs multiplied, gigantic fortunes were made. And people began to return to downtown. Neighborhoods gentrified, homes were rehabbed, restaurants & amenities opened, the city became a great place to be.

   But they didn’t make any more land. Very few new properties were built, relative to the interest in downtown living. So supply remains tight, and unless there is some major changes in regulations, construction costs will remain prohibitively high.

   So if you think that the economy/credit crisis/bubble popping/whatever is going to cause the *downtown* parts of Boston to crater, you’ve got another thing coming. Boston’s going through a New Gilded Age and is being minimally affected by the recession happening in the wider US economy. Things here are looking pretty darned rosy.

   So if you’re looking for a bargain, try Roxbury, Dorcester or Mattapan.

   Not downtown. Not now, not in the forseeable future.

5. Tony Y
   Comment by Tony Y | 02/25/09 at 11:32 am

   Bradley, I am not sure what you are smoking. Give me some because I would love to be always cheerful. On your too much money argument, the country including Boston have gone through a period of massive destruction of wealth in the trillions, more than any other time in history.
   FACT, the economy is in the toilet. Many economist thinks this downturn could be more severe than the 1979. Ask how many of your friends have lost jobs, Boston’s economy is affect.
   In terms of supply of land, it has been tight but regulation is loosening. Just ask the mayor about his interest in building a 100 story office building. Like New York, we can build up.

6. Rob
   Comment by Rob | 02/25/09 at 11:39 am

   JohnF, I remembered you saying the you think prices in Boston Proper will rise in 2009 unless a large amount of jobs are being lost. Well, unemployment rate in Mass is rising fast and many jobs of being lost. Do you still think real estate prices in Boston for the 2009 year will be up compared to 2008?

7. JohnF
   Comment by JohnF | 02/25/09 at 12:03 pm

   Rob, You’re right I did say that. At that time there was no Housing Stability Act, there was no $8,000.00 tax credit for homebuyers, there was no talk of possible 4% interest rate. There was no program in place to bail out trouble homeowners.

   With all that said, I still do think jobs is one of the most important indicators to watch to see how the local real estate market will do. The other important indicators are real estate inventory and days on the market, Right now there are mix signals some positive, some negative. My position is that the number of real estate transactions will be higher in 2009 than 2008 but I don’t see prices going up at this time because of the banks fear of Jumbo loans.

8. Bradley
   Comment by Bradley | 02/25/09 at 12:20 pm

   Tony Y – Well, time will tell whether you or I are right. But so far I’m batting a thousand so I’m feeling pretty confident about things.

   I understand that the wider economy is in the tank, but real estate is local local local. Boston is more of a conservative old money town. We didn’t get as involved with the whole credit default obligation mess that the big NYC institutions did.

   As far as the job market goes, I’ve said before that this is a “renters recession”. I can’t think of a single homeowner friend living in the city center market that has lost his or her job.

9. condobuyer
   Comment by condobuyer | 02/25/09 at 12:52 pm

   If you are batting a thousand so are some of the rest of us. The data supports us too. If there is such upward pressure in price why are downtown luxury condos selling at a far slower rate than a year ago? Why aren’t people lined up down the street to quickly eat up the Clarendon, the W, 45 province, battery wharf, etc. etc… Where are those traffic jams? The inventory in these developments is very high.

10. Bradley
    Comment by Bradley | 02/25/09 at 1:36 pm

    condobuyer – Certainly there are some units available at the W, 45 Province, etc., but hey, it’s only February. Let’s see how they look in May. Do you honestly think you’re going to see major price reductions at those place?? Get real!

    I don’t mean to sound smug. I’m just trying to look at things realistically, and as near as I can see based on the evidence, prices haven’t been affected whatsoever over the past several years. Sub-prime crisis? Prices went up. Major recession hits? Prices went up. Wars? Prices went up.

    I just checked out a few properties that came onto the MLS in the past couple of days: 15 Upton Street #4… asking over $700/sqft. 680 Tremont #2, asking $712/sqft. 179 Comm Ave #4, asking $982/sqft.

    You think these values represent a market that’s in turmoil?? If things were really so bad, how could anyone in their right mind think about listing anything at nearly a thousand bucks a sqft?? Perhaps things are actually going pretty well?

    “Just you wait!” I’m sure will be the response. Well I’ve been hearing that prices are gonna decline downtown since, oh… I’d say 2005? Here we are 4 years later and as near as I can see, things have only gotten better.

11. condobuyer
    Comment by condobuyer | 02/25/09 at 1:48 pm

    Prices have not gone up across the board since 2005. I have been to open houses at Folio and the Intercontinental and both units were listed at prices they were bought for a few years ago. The Folio unit has now dropped the asking by 10%. The lafayette loft penthouse dropped from 1.5 to 1.35 to1.29 and had not sold the last time I checked. I don’t think that asking prices in new MLS listings always reflect the market accurately do you? Yes, the luxury developers will not drop prices b/c that’s how they work…but if things get worse you never know. Folio went to auction, Harborview went to rental, Avenir went to rental, Penmark reduced prices and added parking and is still selling three years later, Longwood reduced prices and is still selling three years later. Northpoint is selling and will be for a long time. The area is full of slow selling buildings…and will be come spring.

12. Tony Y
    Comment by Tony Y | 02/25/09 at 1:51 pm

    Bradley,
    Employers layoff only renters. Since I am a homeowner, I am going to run to my boss and tell him so. Thus, she can’t lay me off. In terms of the credit stuff, I think Bank of America is the largest financial company in Boston. The last I look, the stock is at less than $5. I don’t think it will make too many loans in the future. I don’t think credit it local. Local banks make up a tiny percent of all banking in Boston. Can someone name a sizable local bank?

13. Mike
    Comment by Mike | 02/25/09 at 1:55 pm

    Bradley -

    Care to comment on the recent data posted by John on this blog about how average and median prices on your “bulletproof” South End are down 10%? I seem to remember you posting that the best use you could think of for cash was to buy a South End condo, and that they were immune to current market turmoil.

    You seem to be batting zero, not a thousand.

    And why are you confusing asking price with “value”? Value is what someone will pay for a property, not what someone wants for a property.

    As far as why someone would list properties with those asking values, well, they could be smoking whatever you’re smoking. If they SELL them at those prices, then I think you have an argument.

    Mike

14. Bradley
    Comment by Bradley | 02/25/09 at 2:21 pm

    Mike – Regarding this 10% reduction, I would posit that those declines are a function of the mix. There are more lower priced listings in the inventory. They sell more quickly, thus making it appear that prices as a whole are declining. I’d say it’s simply a case that there are fewer higher priced listings coming online. Why that is is anyone’s guess. Perhaps people are simply happy where they’re living and don’t want to move. Or perhaps they’ve been scared by the gloomy media into thinking that they won’t be able to sell.

    Do you really think that a condo that went for $600,000 last year is going to fetch only $540,000 this year (i.e. a 10% reduction)?? Trust me, it’s not.

    The higher priced listings that do come online are getting nabbed pretty damned quick. Like I’d mentioned before, that place at 117 St. Botolph was listed for over $800k and was gone in less than 2 weeks.

    I predict you’re going to see more and more of that as springtime blooms.

15. Rob
    Comment by Rob | 02/25/09 at 3:00 pm

    Bradley, I think the concept of mix is one that I would agree with you. Because home prices are out of the reach of the average family, people can only buy the less expensive homes. That’s is why we are seeing more lower priced homes being sold. On the other hand, developers have added so many luxury condos during the boom that had inflated the average selling prices during the good times. As a result, prices of Boston Proper seem to have risen despite the rest of Boston was decline. The change in the mix toward a increased percentage of luxury condos will permanently elevate the average selling prices. Net net, I still think prices are declining for the same property. The condo that was sold for $600,000 last year is being sold for only $540,000.

16. Bradley
    Comment by Bradley | 02/26/09 at 8:46 am

    Speaking of mix, I just noticed that a $5,150,000 listing at the Mandarin Oriental just went “Inactive” on the MLS….. could this mean a big sale? Inquiring minds wanna know!

17. Numbers Guy
    Comment by Numbers Guy | 02/26/09 at 7:30 pm

    I can see the sales data for February already:

    Number of sales: 3
    Median sales price: $612K
    Mean sales price: $2.86 M

    Bradley says, “Buy now or you will be left out in the cold. Highest mean sales price — ever!”

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