Here we will take a closer look at first quarter sales activity in the following neighborhoods: Back Bay, Beacon Hill, Fenway, Midtown, North End, Seaport, South End, Waterfront, West End. Select neighborhoods are reporting record prices, both in terms of selling prices and prices per square foot (largely achieved by the delivery of brand new luxury developments), but a decrease in the overall pace of sales may be a sign that we are heading toward a cooling period from the growth that has dominated the past 6 years or so.
Comparing the first quarters of 2018 to 2017 (including all condominium and co-op price points):
- the number of closings was down 10% from last year
- the number of properties being put under agreement was down 16% from last year
Since 2018's first quarter saw fewer new listings than both 2017 and 2016, limited inventory is one explanation for the decrease in sales. In a limited inventory market, days on market statistics typically remain low, as has been the case in recent years. But for the properties that have sold in Q1 2018 compared to last year, days on market is actually up over 15%. Now, even with fewer listings to choose from and compete for, buyers are taking more time to watch the market. Whether it is due to expectations of rising interest rates, anxieties over the current political climate, or concerns if we’ve already reached a high point in the cyclical nature of the market, Boston's buyers are increasingly wary of overpaying.
An era of aspirational pricing?
Buyers are especially taking their time in the top of the market, a segment dominated by boutique and large-scale new developments of Boston’s recent building boom. In the last few years, developers have been able to command premiums for their product by offering superior product and superior services in high-demand downtown locations (all this in the face of rising construction costs). The term, “aspirational pricing,” has been gaining ground for listings that have been priced at dramatic premiums above current market conditions. In a softening luxury market, the question stands if the “aspirational” pricing of developers reflects conditions of the years past more so than the current reality. Some aspirations will continue to be realized - albeit with longer market time - if true value is realized in the location, views, finishes and amenities the property offers.
Others will be left to sit on the market.
In the first quarter, only seven properties closed above $5million citywide while twenty-six remain active on the market. It took an average of 48 more days for these properties to sell than all others priced below $5million.
In other segments of the market, would-be buyers do not have the luxury of being overly price conscious. Specific areas and price points have and will continue to draw bid wars and over-asks immediately once a property is listed. This is especially the case regarding properties in or below the $1million to $2million range, even more so if they include multiple bedrooms. A common formula stands for these types of properties: list the property mid week; hold open houses and private shows through the weekend; collect bids early in the following week. Because of the intense appeal of Boston among a wide range of clientele – from suburban empty nesters to young urban professionals to international investors – this formula is likely to hold.
Sources: LINK; MLS
