Watch John & Anthony on Fox 25 News Why Condo Prices Higher Than Single-Family Homes
Unprecedented numbers in the real estate market here in the Bay State, for the first quarter of 2014 the average price of a condo was higher than that of a single-family home and that’s a first for Massachusetts. Average condo sold for about $404,000 and single-family homes sold for $396,000 so what do these numbers tell us about what’s going on in the housing market these days? We’re joined by John McGeough and Anthony Lamacchia of Lamacchia Realty and John we’ll start with you, just unusual is this, this never happened here has it happened anywhere else in the country, condos selling for higher than single-family homes?
Yeah if you look at New York City and some very city focused places you’re going to see condos slightly higher now so it’s extremely rare for Massachusetts and it’s showing us that if there’s demand for a certain product and there’s not a whole lot of the product you’re going to see those price points come up and that’s exactly what’s happened.
Supply and demand so Anthony why the demand?
There’s been increase in demand for the past ten years, and I think especially over the last five, and you can actually see the demand has gone up and the supply has gone down. 2011 the supply started to go down as the demand is going up and then what’s happened is the prices start going up and there’s a number of reasons, one of them is younger folks I think are less interested in the commutes so they’re buying closer to Boston instead of buying single-family they’re buying condos; older folks and empty nesters who are downsizing are buying condos and townhouses.
Then there’s the condo fees which can vary greatly are they taking a hard look at those numbers and saying, you know what you don’t have to mow, or shovel the steps.
I would say after a winter like this they’re factoring in, ok a couple hundred bucks I’ll take it. I think based who’s purchasing the condo as Anthony said the younger set, in some cases the older set both of those type of buyers they’re comfortable allocating a certain amount to the maintenance, because you can spend more time doing whatever you want instead of mowing the lawns, shoveling
Put a price on avoiding the aggravation of doing those thing. And is this why also Anthony we’re seeing more construction in condos?
Yes, and a big reason as a builder the more units you build the more money you make. And also zoning has an impact on that too what we’ve seen in the last ten years is builders buying single-family homes that are in a two family zone knock down the house put up two townhouses and that has really helped and some of these townhouses now are bigger than single family homes– multiple bathrooms, multiple bedrooms, and that’s driven the price up.
Maxed out with amenities, granite counters, etc., let’s look at some numbers which are really telling: Somerville of condos sold 60% over asking price and in Boston sales jumped more than 17%; and we’ve talked about this before, the average price is almost a million dollars. So what do these numbers mean to the person who’s trying to sell or maybe buy the average single family home, is there more inventory out there or is there a better opportunity for buyers and sellers in a more difficult situation?
Well if you look at Somerville in particular close to Boston, you have townhouses, some new construction, but you also have a lot of conversions, multi families, two, three, families being converted I mean it’s a good situation for sellers, and it can be beneficial for buyers you have to balance it, so we don’t necessarily see Somerville or some of those other towns continuing to run up too much, but who knows, I mean 60% is a staggering number when you’re talking about over asking.
Yeah and that’s all because of the lack of supply. You just named two places that have an extremely low supply of condos and singles, and this doesn’t mean by any stretch that single family homes are hurting it’s just there’s more demand for condos right now and there’s less supply and that’s why the prices spiked. Will it stay like this forever, I don’t know.
Will the trend we’re talking about congested areas like Somerville and Boston condos really doing well, is that trend moving out to the suburbs?
Condos, no. Condos are definitely seeing higher price points closer to Boston, and we’ll always see that, because you’re seeing the new construction focused on condos so you’re going to get a premium for that. As you go farther out we’re not seeing the big difference where condo prices are higher than single families a lot of that is being driven by those two towns that you mentioned, Boston and Somerville.
Also it’s what people are looking for if they’re a little bit further out they’re looking for the house generally in the city, then they want a condo.
And that’s why I mentioned commuting. When I first got into this business in 2004, there were more people interested in living outside the 95 belt or the 495 belt, commuting to Boston, I’m not saying no one is interested in that now, but I feel that more people are more interested in having less of a commute.
We saw that in some of the towns we visited with Zip Trips, you could get a lot of house for your money.
There’s no question the further out you get the more house you get for your money. Supply is low, driven up the prices for condos.
Interesting stuff, thanks.
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