I read a particularly interesting article today on Boston.com titled “High-end condos still a tough sell in Boston.“ The article used LINK information to explain that third quarter sales in Boston’s high-end, full-service buildings fell 32.3 percent, median sales prices dropped 12.6 percent, and price per square foot was off by 20.3 percent, as compared with the third quarter of 2008. Well….true, but the high-end market in Boston is certainly not determined by full-service buildings alone. In fact, most Boston real estate sales for more than $1m are not in full-service buildings but in renovated brownstones. Also, in the third quarter of last year, we saw the closings for some very high-end properties in new construction full-service buildings such as The Battery Wharf, Zero Marlborough and The Mandarin Oriental. There will always be an uptick in sales of full-service buildings when a new building is completed and buyers begin to close. Many closings last August in The Battery Wharf were actually on properties that went under-agreement more than a year before! Currently, both The W Boston Residences and The Clarendon are both still under construction. So I am guessing Boston.com will run an article in the spring market discussing the rise in full-service building sales. Full-service building sales are notoriously difficult to dissect, unless you break down quarterly sales by individual buildings. I just think a quick blurb on some statistical data does not quite illuminate the entire picture when looking at the Boston luxury real estate market.
The article uses the recent marketing auction of 14 luxury homes at The Bryant as a sign that the Boston luxury market is on its knees. All 14 auctioned units sold last Saturday for an average of $1.4m. It was the first auction in an upscale Back Bay residential complex in decades – true – but it was not a foreclosure auction, it was a marketing auction. The developer decided that the fastest way to sell for the highest market price was by creating a buzz and getting all interested parties to bid against each other. It worked. In fact, marketing auctions are becoming a popular way to get buyers off the fence and to the closing table. That said, the building was a tough sell from day one. Master bedrooms in units below the 5th floor look directly into a brick wall, so natural light only enters through the Columbus Avenue side of the homes. Auctioned units sold for about 27 percent less than the asking price, and buyers definitely got some great deals. Using this auction to help get The Bryant to the 50 percent sold mark, now the buyer pool will be greatly expanded as more home buyers will be able to qualify for mortgages under the stricter mortgage guidelines.