Condo Prices in Massachusetts Surpass Single-Family Home Prices For the First Time
The average price for a condo in Massachusetts for the first quarter of 2014 was $404,078, according to data provided by the MLS Property Information Network. The average price for a single-family home was $396,564, making this the first time condo prices have exceeded prices for single-family homes.
As you can see from the chart below, prices for condos (which also include townhouses) in 2003 were considerably lower than prices for single-family homes. A condo in Massachusetts then cost an average of $271,237, 28% less than it cost for a single-family home, which at that time was $376,335. Both condo and single-family home prices continued to increase during the housing boom in the early 2000s and began to drop off after 2007 when the housing crisis began.
In 2009, average prices for single-family homes dipped below what they were in 2003, while condos stayed above their 2003 prices. In 2010 prices began to show gains for all types of homes, but for condos the increases were more dramatic. Condo prices increased 9% from 2009 to 2010 compared to a 6% price increase for single-family homes.
Prices for all types of homes have been increasing each year since then, but demand has outpaced supply more for condos than single-family homes. We are seeing this the most in Suffolk and Middlesex counties.
The number of condos in Suffolk and Middlesex counties has dropped to its lowest point since 2003. Yet the demand for condos in these areas is higher than ever, causing prices to spike and increasing average overall condo prices for the state.
The increase in demand is caused by more baby boomers downsizing and moving into condos, and more young professionals moving into the area due to the influx of high-tech jobs.
Builders are taking advantage of this increase in demand for condos. It’s more profitable for them to build luxury condos than single-family homes, particularly in the metro Boston area. As we reported last month, there are new luxury condo units opening up in the Seaport District and Charlestown. With limited space in the metro Boston area to build, developers have to make the most out of the space they have. This is why many builders opt to tear down single-family homes and build condo units or duplexes rather than rehabbing the single-family homes and selling them as one unit.