Lots of New Luxury Apartments There is a silver lining in the storm cloud that is Boston's dearth of new for-sale development, and it comes at the expense of its luxury apartment market. In short, there are a lot of luxury apartments going up in the city, maybe too many. It's taking some new complexes a long time and all sorts of tenant sweeteners to fill their units. Some luxury rental towers, then, have pivoted to condos, opening up that much more for-sale inventory.
Bidding Wars Still, what little new condo development there is in Boston is not nearly enough to satisfy that demand. (And, frankly, this holds true for the rental development as well.) So those in the market for condos in particular often show up at open houses with garbage bags full of cash or some other ready financing, prepared to go above and beyond what sellers want. Yes, bidding wars are a common feature of many condo sales across the city; perhaps even most. These bidding wars lead to super-fast sales and to our next trend.
Over-Asks The redoubtable Mr. Bates has also been all over this one: Lots of Boston buyers offering lots over what condos (and single-families) are asking. It's not only that this over-ask trend drives up prices that much more; it's that the, um, coverage of such over-asks drives up the hype and hysteria surrounding the Boston housing market. The vibrancy ofBoston real estate is a very real thing, don't get us wrong; we just wonder how much of it is a self-perpetuating cycle and how much is really the invisible hand doing its thing.
Tougher Lending Even though mortgage rates remain cartoonishly low, lending terms remain tougher than they were before the last bubble burst in 2007 and 2008. Simply put, it's harder to get a home loan; and harder to get one on terms that will allow for victory in a Boston bidding war. This keeps more Bostonians in the rental market, which, in turn, dries up the inventory in that real estate sector; which, in turn, ensures that rents escalate along with sales prices. Vicious cycle, this.
But! The Federal Reserve has signaled a gradual rise in rates through 2015. This will make it more expensive to borrow money for a mortgage, which could dampen the fervor of Boston buyers (of U.S. buyers in general). That will mean fewer bidding wars, fewer over-asks, more tenants instead of owners (sorry, apartment-hunters), and, ultimately, fewer sellers, as homes are taken off the market or never put on in the first place as prices come down amid this flagging demand. Or at least that's the scenario. Starting next year.
How We Can Help
Most of these factors have been driving the Boston housing market for decades. At Group Boston Real Estate, our experienced, knowledgeable agents know how to navigate these muddy waters. Our close relationships with other real estate brokers and mortgage originators ensure you'll get the home you desire under the terms you desire.
Courtesy of Tom Acitelli and Curbed.Boston