Weekly Thoughts From Jason S. Weissman: 2010 Boston Residential Real Estate Price Predictions

It's that time of year again, and I am predicting where the residential real estate prices will be in the City of Boston at the end of 2010.

To accurately predict pricing, we have to look at the historicals and segment the marketplace, here are some key points:

We are covering the following neighborhoods:
Back Bay, Beacon Hill, Fenway, South End, North End, Midtown and the Waterfront.

We are covering only Condominiums.

Prediction # 1: Days on Market will decrease in 2010 to an average of 80 Days on Market to Sell.

Prediction # 2:  Nominal "average" sale prices will increase by 4% to 5% in the neighborhoods mentioned above. However, real prices will be flat as we expect the Urban Northeast CPI to increase to just under 5%. With this, actual appreciation will be flat.

Prediction # 3: There are about five luxury condo developments in the neighborhoods covered above. These projects will either become rentals and the larger, higher price point units will sell at significant discounts, if developers and the corresponding lenders want to unload product. Look for "original" pro forma sales prices that were $1000 to $1200 per square foot, to sell for $700-850 per square foot. In fact, there will be significant price declines in the luxury full service buildings with "a lot of product." Prices in brownstone properties and boutique full service buildings (inelastic product) should increase in the high single digits due to buyer demand.

Prediction # 4: The healthiest segment in the marketplace will be Back Bay and South End "brownstone" condominiums priced from $400-700K. These properties could have double digit price increases in 2010.

Prediction # 5: Driving the pricing stability will be the fact that mortgage interest rates should remain relatively flat this year in 2010.

Prediction # 6: Look for more purchases from international buyers and investors looking to hedge future inflation risk with purchasing top quality Boston Condo Product.

Read the detailed explanations below and Graph:
Volume of unit sales peaked in 2007 with 1,512 sales. There were 1,160 sales in 2009. To place volume of unit sales in perspective, in 2003 there were only 779 sales, while the volume of unit sales in 2004, matched the volume of 2009. What does this mean? There remains a heavy demand for condo product type in the target neighborhoods and the market remains very fluid. Days on market "DOM" increased from 2005, but with an average in 2009 of just over 100 "DOM", the Boston Condo Market remains highly liquid and vibrant.



I am the Founder and Principal of Boston Realty Advisors. Please check in weekly to review my blog entries. I value client/reader feedback! Also, please email in questions and discussion topics.