5 Responses to “Boston South End Condos” »»

1. confused
   Comment by confused | 07/09/09 at 4:13 am

   I’m laying ten to one odds that there will soon be a post suggesting that, among other things, only low end places are selling and these statistic are meaningless.

   Call me psychic.

2. Mike
   Comment by Mike | 07/09/09 at 4:13 am

   Bradley, see those numbers? They’re called data. Used the right way, they are the basis for statistics. Statistics provide a reaonably OBJECTIVE way to measure market phenomena. These statistics suggest:

   Average price: 7% DOWN
   Median price: 5.6% DOWN
   Price per SqFt: 1.7% DOWN

   But probably the most important statistic of the group?

   Number of sales: 42.2% DOWN

   That last one is the real problem. What it suggests is that sellers’ expectations for prices are still too high compared to buyers’ requirements. And since buyers have multiple options (rent, buy somewhere else, etc.), they choose not to buy.

   In case you don’t understand, these are not good indicators for the future price of South End condos. For the average person who bought the average property in 2008, they “lost” $45,063, and if they put 20% down ($127,940), then they “lost” 35% of their down payment. That’s right in line with the loss on the S&P500 for the year 2008 (38%).

   Not such a good return for the single smartest thing you could do with your money….

   See how interesting things get when you look at objective data and not just wild guesses, suppositions, hopes and dreams?

   Mike

3. Funny
   Comment by Funny | 07/09/09 at 5:22 am

   Mike, didn’t you hear, these are small places not in the right location!

   Prices are going up, up, up, says the snake oil salesman. Get in now, before it too late!

4. Jason
   Comment by Jason | 07/09/09 at 7:15 am

   Mike,
   Wouldn’t the average price per square be a better value to use in figuring an owners gain/loss?

5. Mike
   Comment by Mike | 07/09/09 at 7:44 am

   Hi Jason –

   I agree average price per square foot may be a better value, since theoretically it provides some insulation against a distortion caused by mix (more smaller units selling). However, that only works reliably when the price per sq. foot remains constant depending on unit size, which I dont’ think is the case in the South End (PPSqFt can range from $300 to $1,000 or more).

   The PPSqFt decline of 1.7% is itself subject to distortion caused by mix. I can’t tell if the mix distortion is worse for average/median or for PPSqFt, but my gut says it’s moderately less for PPSqFt. The “real” decline for the South End? Probably somewhere between the two.

   My guess is 2009 has seen more sales of heavily discounted, smaller vaule luxury condos, where PPSqFt has fallen from outlandish levels to merely scandalous levels -grin-, but still high compared to the broad-based sales in 2008. Developers have high carrying costs and run their properties like businesses, so I expect they are quicker than the average private seller to recognize the new reality in market prices and adjust accordingly.

   If you go with PPSqFt, the similar numbers for the average property are:

   Loss: $10,875, on downpayment of $127,940 is “only” 8.5% negative return for the year.

   Mike

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