The Boston Upscale and Luxury Condo Market had a Strong 2016.
Sales volume in the Boston Upscale and Luxury condo market in 2016 was up 7% with the average price up 20% to $1,150,000. An unseasonably high fourth quarter 2015 can be attributed to the closing of 22 Liberty, while the third and fourth quarters 2016 benefited from the closing of Millennium Tower. Overall, when comparing fourth quarter 2015 and 2016 absolute prices remained fairly flat, with fewer transactions happening in 2016 because a majority of the Millennium Tower sales happened in third quarter versus fourth quarter 2016. We define the Upscale market as condos $700/SF+, $500,000+, 4+ units, and central AC in the building, while Luxury is the top 10% of the market. Even though the average price per square foot may be 6% below the end of last year average PPSF, it is still 5% higher than the next highest quarter. As condo prices continue to go up, many buildings that did not qualify as “Upscale” in 2015 do now, as they are now trading higher than $700/SF and $500,000, further showing that pricing along all residential segments is up.
Neighborhood Supply Low and Demand High. When observing all Boston markets, there is still a shortage of supply in all neighborhoods. Market equilibrium is typically defined as 6 months of available inventory. Very few large residential projects are delivering in 2017, but those that are, are 40%+ sold out. The two largest buildings delivering in 2017, Pierce (The Fenway) and 50 Liberty (Seaport), are both 40-50% sold out as of the end of 2016. A few other projects slated to be delivered this year are Siena (South End), 110 Broad (Financial District) and Telford 180 (Brighton) are also selling fast. Sales offices for LoveJoy Wharf (Waterfront, near North Station) with plans to capture some of the pent up demand in the “Upscale” market for homes located on the water but with no parking in the building offered. Back Bay continues to go strong with One Dalton condos selling at record high selling prices with a new high watermark on price per square foot as well.
What’s Hot? By the end of 2016, the main three condo types (1, 2 and 3 bedrooms) in the upscale and luxury markets all saw big jumps in asking prices. Both one and two bedroom condos saw the largest jump at approximately a $100,000 increase to average asking prices, bringing them up to $1.1 million and $1.9 million, respectively. Three bedrooms saw the largest sales to ask spread of three condo types, but still achieved an average sales price over $3 million.
Overall, 2017 looks to be an exciting year in the Boston real estate market, with prices only expected to continue to rise in a supply constrained market.