Boston continues to be a hot, growing world-class city where a sundry of people want to live. The city is still a popular place for companies to locate, and empty nesters continue to flock from their big suburban homes in favor of smaller condos in one of the celebrated neighborhoods of Boston.
2019 was a year of high demand, record prices and fewer sales in Boston's real estate market, according to LINK.
The decrease in condo sales was not because of a lack of homebuyers, but rather a shortage of homes on the market to purchase. As a result, just as it has been in recent years, prices were driven by high demand vs. lower supply of homes on the market.
Boston continues to be a hot, growing world-class city where a sundry of people want to live. The city is still a popular place for companies to locate, and empty-nesters continue to flock from their big suburban homes in favor of smaller condos in one of the celebrated neighborhoods of Boston.
According to Jonathan J. Miller, President/CEO of Miller Samuel Inc., which just released its report on the state of the real estate market in Boston for Douglas Elliman, the Boston market is still sizzling with high demand, especially for townhouses and luxury condos. He points out that property moves very fast in Boston.
“Whatever’s being built is being snapped up,” he said. “This has been going on since the financial crisis (2007-2008).”
He said the city’s luxury condo market has been “sustained” for quite a while now.
“As the year came to an end, the market remained very tight in Boston,” said Scott Elwell, Regional Vice President of Sales for Westchester and New England for Douglas Elliman Real Estate. “We’ll have to keep an eye on the inventory shortage as we head into 2020, but it’s exciting to see both sales and prices reaching new heights in the city.”
Here is the breakdown of sales per neighborhood covered by LINK and Boston Homes:
There were many new records set during 2019 in Boston’s condo and luxury condo markets, according to LINK.
The average selling price citywide for the year was a record $1,370,167. That’s a 12 percent upsurge from 2018 when it was $1,221,912.
The median selling price was also a legend – at $899,000 – a 3 percent increase from the previous year of $875,000.
The average price per square foot also hit a new high mark of $1,056, up 4 percent from the old mark of $1,014 in 2018, although the median price per square foot remained the same as 2018 at $955.
Sales volume for the year was also a new record, increasing one percent to $4,022,809,915 from $3,977,140,157 in 2018.
According to the Miller Samuel’s report, the listing inventory for condos fell at the end of the year for the first time in seven quarters. The townhouse inventory was unchanged in the fourth quarter after rising annually for the prior two quarters.
Link reports that sales in 2019 dropped 9 percent to 2,936 from 3,209 in 2018. The only category to see an increase was in three-plus bedroom units, which rose 4 percent to 439 units sold. With tight competition among buyers, the average price jumped up 18 percent to $2,797,917, while the median grew 4 percent to $1,860,000.
The biggest descent was of one bedroom condos, which dropped 16 percent to 892 sold as compared to 1,064 sold in 2018. One bedroom units were the only ones to finish the year with lower prices, dipping 2 percent to an average of $755,749. The median slipped 3 percent to $660,000.
One out of every four condo sold in Boston was sold at higher than the asking price.
The luxury category depicts a very hot market with demand high and prices soaring. This category is being driven by One Dalton – the new 61-story tower of ultra-luxury homes in the Back Bay that has been quickly selling for the past few quarters.
The luxe category includes the full-service buildings such as the InterContinental, Four Seasons, Ritz, Rowes Wharf, One Dalton, The Lucas, Pierce Boston, The Lyndon, The Whitwell, 50 Liberty, Lovejoy Wharf, Millennium Tower and 180 Beacon. These places typically include valet parking and concierge service along with lifestyle amenities such as social clubs, theaters, gyms and pools. Some even include an array of special events.
LINK reports the average selling price in the luxe category escalated to a new record price of $3,059,945, which is 24 percent higher than the old mark of $2,467,930 set in 2017.
The median selling price also hit a new high, mounting 14 percent more than the old record set in 2017 – climbing from $1,935,000 to $2,212,500.
There’s also a new record average price per square foot of $1,723 and median PSF of $1,570.
The biggest proliferation in sales was with three-plus bedrooms, going from 68 sold in 2018 to 91 in 2019 – due in large part to One Dalton.
The biggest decrease was with one bedroom luxury unit, declining 47 percent from 208 in 2018 to 111 sold last year.
The most popular units remain two-bedroom. Last year saw 257 of that size selling. Although that’s down 9 percent from the previous year when 282 were sold, that’s still much higher than the 136 sold in 2017.
Here is the breakdown of overall sales per neighborhood covered by LINK and Boston Homes:
Driven by One Dalton, there were many records shattered in the Back Bay. The average selling price rocketed 39 percent from $1,755,957 in 2018 to a new record of $2,437,649. The median hit record territory, climbing 13 percent from $1,196,000 to $1,352,500.
The average price per square foot set a new high mark of $1,489 – up 17 percent from 2018 and the median PSF hit a new index of $1,243, up 4 percent from the previous year.
The Back Bay was one of only five neighborhoods to see the number of sales go up. Seven neighborhood saw sales go down. The number of condos sold in the Back Bay rose 8 percent to 454. The sales volume hit a legendary $1,106,692,431 – a giant 44 percent increase from the old mark set in 2016. Condos stayed on the market for an average of only 74 days before being sold in this neighborhood.
Sales on Beacon Hill went up 19 percent from 2018, rising to 179 sold. The average selling price was a record $1,575,674 – up 3 percent from the old mark set in 2017 and up 16 percent from 2018. The median price went up 15 percent to $900,000.
The average price per square foot hit a new high of $1,227. That’s 2 percent higher than the old record of $1,208 set in 2018.
Charlestown also had a good year with sales going up 5 percent to 327 sold. The median selling price set a new record of $725,000 – a 1 percent increase from the previous record set in 2018. The average selling price actually slipped 2 percent to $782,369.
There was a new record set in average PSF, shifting up a percent to $740 (second lowest in Boston). The median PSF also shuffled up a percent to $741 (third lowest).
Charlestown is a very appealing neighborhood, especially for families. Homes only stayed on the market for 44 days.
The number of sales plummeted in the Fenway – falling 39 percent to 132 condos sold. It’s the biggest descent in the city, but that is due to decline in inventory, not demand, especially when considering that homes in this area stayed on the market an average of only 39 days. That’s the fastest selling time in Boston. Unlike in 2018, there were no big multi-unit accommodations driving sales this time around.
The average selling price dropped 24 percent to $889,456 and the median was 35 percent lower, falling to $603,000.
Midtown saw the number of condos closing rise 4 percent to 179 sold. The average selling price was 2 percent lower at $1,577,418 and the median was 3 percent lower at $1,250,000. The average PSF was $1,108, which is 4 percent lower than 2018. The median PSF was down 6 percent to $1,087.
The popular North End saw sales stumble 30 percent to only 63 sold due to the absolute shortage of homes to buy. The average selling price was $692,030 – a 4 percent drop from 2018, but the median rose 7 percent to a record of $630,000. Homes here lasted on the market only an average of 59 days.
It was another good year on the Seaport. The number of condos sold was a record for that neighborhood with a 5 percent increase from the old mark of 234 sold in 2018 to 245 homes with new owners last year.
The average selling price also set a new high mark at $2,186,366 as did the median at $1,701,000.
There were new records with price per square foot, now at $1,482 (the highest in the city) for average and $1,500 (also the highest in Boston) for median, which rose 19 percent from 2018.
Sales volume is also an all-time high, climbing 5 percent to $535,659,789.
Homes stayed on the market an average of 71 days.
Although sales dropped 15 percent, Southie continues to be a hot spot for those seeking new homes. 634 homes sold last year – the highest number in the city. The drop is only because of lack of inventory. There’s plenty of demand and homes only lasted on the market an average of 52 days.
The average selling price of $801,822 is a new high as is the median of $749,000. The average PSF is now $736 (lowest price in Boston) and the median is $725 (second lowest).
The South End continues to be very popular among buyers. Sales fell 16 percent to 530, but once again – it’s all about supply and demand.
The average and median selling price both set new records with the average going up 2 percent to $1,239,499 and the median rising a percent to $990,000. The average and median price per square foot also hit new high marks with the average now $1,058 and the median at $1,059.
Home here were on the market an average of only 56 days.
As with other neighborhoods, the Waterfront sales figures were also affected by the lack of inventory with a 22 percent drop to 136 sold.
However, the average and median selling prices were in record territory. The average was up 16 percent to $1,431,028 and the median climbed 30 percent higher to $1,287,500.
The average and median PSF also reached new highs with the average now at $1,058 and the median at $1,018.
The West End saw sales sink 5 percent to 57 units sold for the year. The average selling price fell 3 percent to $689,544 and median dropped 17 percent to $565,000 – both are the lowest in Boston.
The average PSF went up 2 percent to $763 (third lowest in Boston) and the median went down five percent to $654 (lowest in the city).
Presidential election years always add drama to the economy. A year ago, many financial experts were warning of a recession. Fortunately that hasn't happened yet.
The SALT tax, part of the Republicans’ tax package passed in 2015, has not put a damper on the real estate market in Boston yet. Under that provision, homeowners are heavily capped as to how much of their real estate taxes they can deduct from their income taxes. This especially hits hard at homeowners in places where housing prices are high.
Also, President Trump’s tariff-laden trade wars with many countries has had a negative effect on many sectors of the US economy, but there is one plus, thanks to the Federal Reserve. The Fed’s concern has helped keep mortgage interest rates low – a great benefit for people who are shopping for homes. It has been one of the key factors in keeping the real estate market going strong.
On the negative side, supply is still not keeping up with demand. Uncertainly may be playing a role, convincing people to hang onto their homes rather than to sell and move. Enjoying their lovely homes may be another factor.
“The regional and national economy is still fairly strong,” said Miller. “The wildcards are economic policy and the election.”
Boston is still a city very much in demand. It’s a city with a great deal to offer and it’s a place where people desire to live. Those are just a few of the reasons that continue to make this a hot real estate market.