Boston Median Condo Price Surpasses $1M For First Time
Fueled by a lack of sales and dwindling inventory, the average price of a Boston condominium hit a new record at the end of last year.
The median condo in Boston sold for just over $1M in the fourth quarter, up from $977K in the third quarter and a 21% jump from the $869K median from the year before, according to new data from Douglas Elliman and Miller Samuel.
The average sale price of a downtown Boston condo also hit a record-high $1.7M, a 23.4% increase from the year before.
Miller Samuel CEO Jonathan Miller, who authors the reports, told Bisnow that these price increases are due to the dwindling inventory on the market, which is still trending lower. Sales volume also fell 21.6%. This led to a fifth of the sales in the quarter going into some form of "a bidding war," Miller said.
"What we're seeing is the steady progression of upward price pressure, despite what mortgage rates have been doing for the last two years," Miller said. "This quarter, we actually saw sales continue to fall on a year-to-year basis. I think that's more a function of limited inventory."
The sales weren't dispersed evenly, with the average price of a Back Bay condo seeing a jump of 76.3%, which Miller credited to a shift in the size of the units sold. The Seaport submarket saw the opposite, with the average sale price falling 32%.
Coming off of a pandemic-fueled boom, there aren't many cranes in the sky building new condo projects. Last summer, Boston's inventory receded by 12.2% compared to the second quarter of 2022. In the fourth quarter, inventory dropped another 9.3% year-over-year. Inventory has declined in 11 of the past 12 quarters, according to the report.
The only major luxury project in the works is Hines' 166-unit South Station Tower, which began pre-sales on units in September. With the limited supply, prices of the units available have risen.
Despite the rise in prices and slowdown in supply, some developers have struggled to hit initial sales targets, forcing them to take out loans to extend their runways in the hopes more buyers will emerge.
Some have even tried new sales strategies. Cronin Development put 10 units up for a "limited inventory bid sale" in October at its St. Regis Residences development in the Seaport. All 10 units sold to cash buyers.
Miller said new construction isn't the only way to boost inventory. He said he hopes that potential rate cuts this year will unlock existing inventory in the market that sellers are holding on to because of the low mortgage rates they acquired in years prior.
"New construction in Boston isn't enough," Miller said. "The issue is the rest of the inventory, the existing, which has been locked up by keeping rates too low for too long."
