South Boston real estate market goes sideways

Regarding South Boston real estate sales, the following appeared in this week’s Banker & Tradesman:

During the first four months of this year, 25 condos were sold, compared to 29 for the same period in 2007, according to The Warren Group, parent company of Banker & Tradesman. During the same months in 2005 and 2006, there 22 sales in each year.

Consider the Macallen Building on nearby Dorchester Avenue, developed by Pappas Properties. About half of the 140 condos have been sold since sales commenced in December of 2006, according to the Suffolk Registry of Deeds.

But the last 6 units have sold at deep discounts … [a]mong the largest of the price breaks was an 18.6 percent discount for a one-bedroom unit that initially was priced at $750,000 and ultimately sold for $610,000, The biggest reduction came for a two-bedroom dwelling that had an asking price of $1.3 million but sold for $1 million, a 23 percent concession.

That’s not really a “loss”, of course, since the list prices were best guesses of value, not what someone owed on a mortgage loan or paid to build it.

Further into the B&T article:

In addition, resales at the Trolley House, a 24-unit complex on nearby West Second Street, have been disappointing. A two-bedroom unit sold last month for $503,000, from an asking price of $589,000, a 14.6 markdown.

A broker familiar with the Trolley House said sellers are taking a loss because home values have been flat for the last three years in South Boston.

“Some of the first people who bought overpaid at the peak of the market and they are taking a loss selling now,” said the agent, who asked not to be identified.

According to the public record, of the three units that sold at the Trolley House during the past six months, two owners broke even, at least on paper. One unit was bought in 2005 for $440,000 and was resold at $475,000. One unit was bought at $475,000 and was resold at $500,000.

Of course, after broker commissions and closing costs, I would assume there was no money left over. But, that doesn’t paint as dire a picture as the B&T article, does it?

** The third unit sold in 2005 for $562,000, then resold in 2008 for $503,000.

Source: Slow Condominium Market Speeds South Boston Rentals; Cardinal Cushing High School Redevelopment Project Banks on Demand for Transit-Oriented Apartment Units – By Thomas Grillo, Banker & Tradesman (subscription required)

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