This month, Nick takes a look at the Boston luxury market and discusses how it has changed over the past six months in both condominium and single-family sales. He also explains how the market for luxury rental homes has changed in the city and around the Boston downtown area.
As buyer preferences shift, what changes have you seen in the Boston luxury condo market, specifically in downtown neighborhoods?
Since COVID arrived, we’ve seen a dramatic shift in buyer preferences. With people spending more and more time at home, the demand for larger square footage and outdoor space has increased dramatically. This, combined with the fact that many people are no longer location dependent due to working from home, has caused many buyers to shift their focus from the city to the suburbs.
The effect of this shift on the downtown Boston market has been significant, with an increase of 56.48% in current condo inventory and a 65.58% increase in months supply to 5.58 (as of 10/17/20).
The increase in inventory, combined with historically low interest rates, has created a fantastic opportunity for buyers who are still interested in purchasing in Boston. My suggestion to anyone interested in buying a condo in Boston is to do so as soon as possible. Rates won’t stay this way forever and the city will again become the place to be once a vaccine is distributed and things get closer to normal.
What impact have you seen on single-family homes in surrounding suburbs?
The exact opposite of what we’ve seen in downtown Boston has happened to the suburban market. Single family inventory is now at all time lows and days on market have dropped significantly. For example, when looking at data for single family homes in Middlesex county, the number of homes on the market today (10/17/20) vs. the same time last year is down 44.72% and the days on market are now only 59 vs. 84, a drop of 29.76%.
This has now created an opportunity for homeowners in the suburbs to unlock the significant equity they have built up. Empty nesters who were planning on downsizing to a condo in the city have it especially good as they can now sell quickly for top dollar while taking advantage of the slowing condo market. If you own a single family home anywhere within an hour of Boston and were considering selling at some point in the next few years, now is the time to pull the trigger!
How has the rental market shifted with large, full-service buildings?
The full-service rental buildings are generally owned by large investment companies who use real time data to determine pricing for their units. What this means is that we typically see them act first when it comes to changing supply and demand. As I mentioned in previous blog posts, the Boston rental market has shifted dramatically since COVID with inventory up 158.03% as of today.
This shift has caused the luxury rental buildings to begin adjusting prices downward as well as offer incentives for prospective tenants such as one to three months of free rent. The trickle down effect of these adjustments results in smaller landlords sometimes reacting to slowly and creating more and more vacancies. This creates more leverage for tenants to negotiate on price and terms, including many landlords now being the ones to pay real estate brokerage fees.