A year ago housing inventory levels statewide were down 17 percent from the previous year. Well, here we are a year later and things are pretty much the same — which isn't necessarily a bad thing. That is, unless you're a buyer looking to find a home in the city of Boston.
The fall market is typically the second busiest time of the year for real estate transactions after the spring market. Yet where is the inventory? According to Otis & Ahearn Real Estate, the downtown Boston market currently has 328 units versus 531 units at the same time last year, which is a decline of 62 percent. At the same time, the average price of sold units year to date is $727,457, up from $660,864 last year. That's a 9 percent gain. The downtown market includes these neighborhoods: Back Bay, Beacon Hill, Bay Village, East Cambridge, Charlestown Navy Yard, Chinatown, Fenway, Financial District, Leather District, Midtown, North End, South Boston, South End, Seaport, West End and Waterfront.
So where is the inventory? Private sellers seem to be more hesitant to put their homes on the market, as they have no place to go. And with an abundant supply of new development inventory just a few years ago, developers who put the brakes on projects then for various reasons, including lack of financing, are now trying to play catch up. But that will take time.
With the last new building selling out at a record pace (Millennium Place in Downtown Crossing), there's not much left on the horizon for new inventory. The bulk of inventory currently being built is to be leased and not sold, although that could change as developers see the continued need for new supply. In any case, the time frame for these projects to be built is anywhere from 30 to 48 months from breaking ground to obtaining their certificates of occupancy, so any new inventory should come in about three years.
"In the downtown market there is only 1.5 months of supply inventory," said Kevin Ahearn, president of Otis and Ahearn. "Since 2004, the city has lost 1,100 units of sales priced at under $500,000." To this end, says Ahearn, "the city and the Boston Redevelopment Authority (BRA) are working to promote both higher density and height construction to help with this lack of lower priced inventory."
Two of the three strongest city markets (Back Bay and South End) have just 138 units between them, according to information gathered from the Multiple Listing Service Property Information Network.
Surprisingly, other than the latest bit of sluggishness in the market due to the government shutdown, which sparked a bit of fear with consumers, the market has held steady here in Boston.
According to Ahearn, "The city of Boston should have a record year in terms of overall number of transactions (with the exception of 2004 and 2005) since 1998."
Charlie Abrahams is a licensed real estate agent in Boston who works with buyers and sellers and can be reached at: Bostonrealestate@charlieabrahams.com.
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