Million Dollar Condo Sales Remained High in 2006, Despite Overall Market Slowdown

Economists, real estate brokers, the media, and the overall general public have been talking about the serious real estate bubble "bursting" over the past 12 months or so. Although one of the main indicators of a weakening real estate market, the average number of days on the market, has significantly increased, the number of $1 million plus condo sales during 2006 was near that of 2005 for the downtown Boston market. With the opening of several new luxury condominium developments over the past year, such as 44 Prince (North End), 360 Newbury (Back Bay), and The Residences at the Intercontinental (waterfront), combined with the resale of several units at developments such as The Ritz Carlton Residences (midtown) and One Charles (Back Bay), the number of units sold over $1 million was 373 for 2006. This figure was just below the total of 388 for 2005.

According to figures released by the Massachusetts Association of Realtors, median condo sale prices for 2006 actually increased 2% over the past year to $270,000 statewide ($399,000 in the City of Boston ), whereas the median sales price for single-family residences dropped 4% in 2006 to around $340,000.

As most people are aware, the holidays and start of winter are typically the slowest months of the year for real estate sales activity. Over the past 3 months or so, the market has witnessed a lot of condos being withdrawn from MLS (Multiple Listing Service) or listings which have expired and are currently off of the market. With all the hype of a buyers market still in the air, it will be interesting to see how these units, that were previously on the market, will be priced when they become active listings once again in the upcoming months (let's hope!). Will the sellers who missed the opportunity of high prices 18 months ago try again, but this time to sell their properties at more reasonable prices, or will the trend of high prices and lengthened "days on the market" continue through the upcoming year? Sellers of resale properties are also going to have to think about the steady influx of preconstruction units that are going to be entering the market in the next year. If not priced reasonably, sellers may be in for another tough year.

Sources: "2006 Saw 373 million-dollar sales," Boston Homes, January 6-12, 2006
"Luxe downtown condos skirt housing bust," Kimberly Blanton, The Boston Globe, January 6, 2007