We are excited to announce the release of the Compass Q4 2018 Boston Quarterly Market Insights Report. This report highlights the prevailing trends shaping the market for each neighborhood.
01. Boston Inventory
Availability increased 17% in the Boston condo market to 595 listed units this quarter, however, the condo market remains under-supplied at 1.5 months of supply*. The Seaport District has 32 units currently available, an increase of 20 units year-over-year, which is attributable to the area’s influx of new construction projects such as Echelon Seaport at 133 Seaport Blvd., Pier 4 at 300 Pier Four Blvd. and the Muse at 63 Melcher St. Inventory also increased in Somerville (70 units currently available, +45 units YoY), the upswing was primarily due to increased activity in a boutique new development at Beacon260 as well as several newly renovated for-sale 2/3-family homes.
The median asking PPSF was $842/SF in Q4-2018, a decrease of 7% year-over-year. Due to luxury product that recently came to market, the Seaport District saw a large increase in median asking PPSF (+44% to $1,452). 40 active condos in North End/Waterfront have a median asking PPSF of $965/SF, a 16% decrease year-over-year, which may be partially attributable to the increased levels of resale inventory stock in relatively large buildings such as 357 Commercial St and 65 E India, as well as decreased number of active units at the new-built Lovejoy Wharf in Q4-2018.
Inventory levels in the Boston single family market were stable year-over-year, albeit low, with 112 single family homes available at the end of Q4-2018; like the condo market, months of supply signals an under-supplied market at 1.1 months. In response to an inventory-constrained market, sellers raised asking prices 6% on a per-square-foot basis, asking $529/SF in Q4-2018. The median absolute asking price in Q4-2018 was $2M, a 24% increase year-over-year, which was partly attributable to the size of available homes (16% larger than Q4-2017 average), but also a result of high demand and low supply. Available homes in Boston had spent 72 days on the market, a decrease year-over-year from 94 days in Q4 2017.
Asking price per square foot (PPSF) increased by more than 10% in most of the neighborhoods, increasing most dramatically in Back Bay ($1,446/SF from $886/SF YoY – skewed by the only active listing asking for $11M) and in Beacon Hill ($1,254/SF from $1,013/SF YoY), however South Boston saw a decrease in asking PPSF, with valuations of $454/SF (-14% YoY). The majority of available inventory was located in Newton, where 51 homes were listed (-2 homes YoY) at a median PPSF of $484 (+11% YoY)
*Months of Supply represents the number of active units divided by the number of closings during the trailing 12 months, excluding shadow inventory. 6-9 months of supply indicates equilibrium, under 6 months indicates an under-supplied market, and over 9 months indicates an over-supplied market.
02. Boston Closings
Boston’s condo market had substantially fewer closings in Q4-2018, down 17% year-over-year to 885 transactions at a median sales price of $785K. The number of sales declined in nearly every market under Compass’ universe of coverage, with the exception of Back Bay (70 closings, +4 closings YoY), Seaport District (25 closings, +15 closings YoY), and Somerville (119 closings, +7 closings YoY). Neighborhoods with the largest decreases in number of sales include South End/Bay Village (-41 closings YoY to 96 closings) and Newton (-36 closings YoY to 53 closings). Overall, condos in Boston spent 22 days on the market, an increase of one day year-over-year.
Condo prices in Boston have risen steadily for years, reaching a post-recession high in Q2-2018 of $800K. In Q4-2018, the median closing price was slightly lower at $785K, a 2% increase year-over-year. Median PPSF increased 6% overall year-over-year to $759/SF, with modest gains in most neighborhoods under analysis. However, valuations in the Seaport District grew substantially (+38% YoY to $1,231/SF), primarily due to the delivery of full-service luxury condominium buildings, such as the Muse and 50 Liberty. Valuation in West End declined 17% year-over-year to $569/SF this quarter, which can be attributed to fewer new development closings in the area.
Single family closings in Boston remained stable in Q4-2018, despite signs of a shifting market elsewhere in the country. 269 single family residences closed in Boston in Q4-2018, a decrease of 1% compared to Q4-2017 at a median price of $1.2M. Newton, where the majority of sales are clustered, saw a 6% drop in closings year-over-year to 132 closings this quarter. The price segment with the largest concentration of homes closed in Q4-2018 was between $500K-$1M (110 homes).
Single family valuations in Boston increased 2% year-over-year to $495/SF. The highest valuations were seen in Back Bay ($1,093/SF, -36% YoY) and in South End/Bay Village ($957/SF, +14% YoY). Residences spent a median of only 23 days on the market, despite an increase of three days year-over-year, still indicating a sign of strong demand from motivated buyers.
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