BOSTON-Low interest rates, rising single family home prices and a growing interest in city living made 2004 a record year for condominium sales in Boston. According to a draft study prepared by Northeast Apartment Advisors, Inc. of Acton and obtained by GlobeSt.com, condominium sales have nearly doubled since 2000 in Boston's urban areas with the average unit price gaining about $40,000 in the last year alone.
The record number of transactions also accounts for a record dollar volume with $2.96 billion of cash changing hands, marking a 46.5% increase in dollar volume from the 2003 total of $2.02 billion. The study, which analyzed sales in the Back Bay, Alston, Beacon Hill, Charlestown, Cambridge, South Boston, Brighton, the Fenway, Downtown, Seaport, South End and South Boston submarkets, found that 5,784 units were sold in those neighborhoods during 2004, an increase of more than 1,300 units over 2003. Total sales also climbed during the period by $940,000 to $2.96 billion, the report notes.
"The demand is there," Tom Meagher, a multifamily, development and financial specialist with Northeast Advisors, tells GlobeSt.com. Demand for upscale units priced above $500,000 also jumped dramatically in the last year, rising an astonishing 72.7% and capturing 32.5%of all condos sold in the area, the report notes. Sales of units under $500,000 also remained strong with 3,907 units--an increase of more than 500 units over 2003--sold during last year.
Meagher says the jump in luxury unit sales is due in large part to empty nesters who sold their suburban homes and are moving to the city to be closer to Boston's amenities. "It's really quite easy to understand when you have an empty nester who says "why do we need a 3,000-sf home and a 45-minute commute?"
But the numbers don't show everything. Meagher says demand for condo units would be even higher if there was enough supply to meet the needs of buyers Several condo conversions and new builds are underway to fill that void since Boston's condo market shows little sign of cooling in the near term. But inflation and rising interest rates could put a quick halt to all the market activity, Meagher warns. "We aren't at that point yet where we are starting to see the pullback, but when it happens, it's going to happen pretty quickly."
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