Condominium prices in Boston continued to fall precipitously to start the year despite a sales market moving product at a blistering pace.

The average price per SF of a downtown Boston condo fell 22% year-over-year to $991 per SF while inventory rose 44% in the same period, according to Miller Samuel/Douglas Elliman figures released Thursday. The market is moving, however, with less than three months of inventory on the market, far less than some of Boston's peer cities, Miller Samuel CEO Jonathan Miller said.

“Sales are surging, but you have prices declining,” Miller said. “Because the mix shifted to smaller-sized unit, likely because of the drop of mortgage rates. As you move lower in price, you have a greater dependency in financing."

The city's inventory spiked in Q3 2020 to 1,125 units, but it has steadily dropped to the current 600 units on the market, Miller said. The average price of a condo in downtown Boston sat at $1.1M in Q1 2021, a 29% drop in the past 12 months, according to the Elliman report. Luxury condos also saw their average price fall 40% from $5.8M to $3.5M year-over-year.

The drops were driven by massive sales that closed in Q1 2020 at the One Dalton Boston tower in Back Bay, where 20 closings averaged $7M, Douglas Elliman Boston Executive Manager of Sales Lisa Rainis said. The market in the past year also saw an uptick of transactions in the $500K to $1M range, she said.

“I think the hardest hit were these tall towers,” Rainis said. “People didn’t want to be with 600 other people, I think that was a big put-off.”

The luxury market, defined as the top 10% of sales in the Elliman report, has seen more drastic shifts than the Boston market at large. Inventory increased 500% from last year's 35 units in Q1 2020 to the 208 units available at the end of March. That is still a far brighter outlook than East Coast metros like Miami, which touts 10.7 months of supply, and Manhattan, where luxury supply sits at 20.8 months of inventory, Miller said.

Boston's residential market may experience a bump with students from Boston's colleges expected to return to campus this fall and as the suburban single-family housing market tightens significantly. One metric by Miller shows 15.4% of condo sales selling above the asking price last quarter, evidence of bidding wars.

“The buyer’s confidence is huge right now,” Rainis said. “The rates are low, they want to acquire assets, that’s their main focus, it’s exciting to see. It’s not [just] the suburbs.”