O&A View

There are less than two weeks remaining in what has turned out to be a very positive year for the real estate market in Downtown Boston.  Transactions and dollar volume have surged more than 30% above 2011 while the median price is 6% greater than its previous year end high of $470,000, achieved in 2008 and 2010.  This is a story that for the most part, has remained below the media radar all year, with the local newspapers only recently reporting on the positive trends in Boston real estate.

Going into 2013 inventory or more precisely, the lack of inventory will continue to apply upward pressure on prices.  At the end of last quarter (Q3) of 2012 there were, according to the listing service LINK, only 375 condominiums available for sale in Downtown Boston.  The previous low inventory point was 486 condominiums for sale, at the end of Q1 2003, a time when interest rates were very low, as they are now.  In addition the country was coming out of the Dot-Com recession during that time.  Coincidentally 2003 was also the beginning of a very robust period for sales and dollar volume growth in Downtown Boston.  One fundamental difference between 2012 and 2003 is new construction inventory coming to the market.  In 2003 there were three large, full service buildings introduced: Grandview (60 units), Atelier 505 (104 units) and One Charles (232 units) those buildings were followed in 2004 by:  Parris Landing (367 units), Strada (104 units), Bowdoin Place (75 units), Channel Center (117 units).  The only new construction building to debut this year was Millennium Place (265 units, anticipated occupancy October 2013) and the next new construction, for-sale buildings exist only on paper, as permits or proposals.  Perhaps the rising prices will entice sellers into the market who have been resistant heretofore, thereby giving buyers a few more choices while they wait for new inventory to be created.

*For a copy of Otis & Ahearn's Downtown Boston Condominium Weekly Report, click here to request.