The Wall Street Journal ran a story recently where it was reported that prices on Beacon Hill had dropped, perhaps by “as much as 33%”. (“As much as?” Does that mean it might be considerably less? Shouldn’t the reporter have finished the statement … “as much as 33%, or as little as 3%.”)
Here’s the quote:
That sale typifies many parts of core Boston these days: flat to modestly higher prices but a longer time to sell. Prices in the city’s core are off less than 1% over the past year, according to first-quarter data from Listing Information Network, Boston’s MLS system. The real difference today is that homes are staying on the market for 111 days on average, up from 85 days in 2005.
Prices in key neighborhoods, such as Back Bay, the South End, Fenway and the Waterfront, are all up between 3% and 10%. Beacon Hill and the North End, however, are down sharply, as much as 33%. That’s partly the result of a slew of high-end properties that hit the market in 2006 and 2007 that were priced as high as $1.5 million, skewing the price data upward. Even without those sales, however, the median price would be down by double-digit amounts.
While the data may be accurate, you might end up drawing the wrong conclusion.
Prices of equal or similar properties did not drop 33% from one year to the next on Beacon Hill.
Here are graphics of sales for the periods January 1 – April 30 for 2007 and 2008. Analyze, then come back.
– click to enlarge, 2007 sales
– click to enlarge, 2008 sales
See any big differences?
The only differences that pop out at me are that 2007 had one big sale, $4,700,000, 2008 had four $1 million+ sales, and 2008 had four sales below $250,000.
The Journal article says that the big-ticket sales in 2007 skewed those figures; no, in fact, it’s because of the four sub-$250,000 sales and multiple $300,000 – $400,000 sales that 2008 looks bad compared to last year.
Without the four sub-$250,000 sales, in fact, median sales price would be somewhere around $512,500, pretty close to this year’s median of $522,750. Average sales price would be somewhere around $642,600.
More importantly, if you look at the breakdown of sales each year, you’ll see that each range had around the same number of sales (except $700,000 – $800,000!).
What did you get for the median price, each year?
2007 median sale:
Steps from Charles Street! Renovated sunny corner two bedroom condominium with many windows, offers new hardwood floors, designer kitchen with granite countertops and stainless steel appliances, recessed lighting throughout, LG washer/dryer combo unit, conveniently located in the condominium, and common laundry located in the basement as well additional storage! Common roof deck with spectacular views of the Charles River!
Approx. Living Area: 755 sq. ft. ($686.09/sq. ft.) Approx. Acres: 0 Garage Spaces: 0 — Association Fee: $331.47 Fee Includes: Heat, Hot Water, Water, Sewer, Master Insurance, Exterior Maintenance, Snow Removal
2008 median sale:
Well situated and inviting 1+ bedroom duplex condo just steps from Charles Street. Full staircase leading to guest sleeping area/study and beautiful panoramic private roof deck. Front facing with fabulous light and open floor plan. Renovated spacious eat-in kitchen. Hardwood floors and exposed brick detail. Extra private storage and common laundry. Professionally managed association with 80% owner occupancy.
Approx. Living Area: 615 sq. ft. ($747.97/sq. ft.) Approx. Acres: Garage Spaces: 0 — Association Fee: $270.61 Fee Includes: Heat, Hot Water, Water, Sewer, Master Insurance, Extra Storage
So, in 2007, the median was a two-bedroom, 750 square foot+ condo; in 2008, the median sale was a one bedroom, 600+ square foot condo.
This is a slowdown?
** Oh, big caveat: the WSJ uses data reported by LINK, whereas I used MLSPIN. LINK is more complete, but since both databases showed drops one year to the next, I would assume that everything is the same, proportionately. Also, LINK is not “Boston’s MLS system”. It is one of two multiple listing services, the other being MLSPIN.)
Source: Multiple Listing Service Property Information Network, Inc., for the periods 01/01/2007-04/30/2007 and 01/01/2008-04/30/2008, collected from information provided by third-party sources.
More: Where Home Prices Are Holding Up – By Jeff D Opdyke, The Wall Street Journal