No wonder every buyer in Boston is confused as all hell – the media is just twisting everyone’s mind.
Today (yes, both articles released today) we have Michelle Hillman with the Boston Business Journal posting an article on how the luxury Boston Real Estate market is cruising at the high-end (via Signs of life at top of condo market) and then Thomas Grillo with the inside “sneak preview” rumoring that the ultra-luxury Bryant on Columbus is going auction because it can’t seem to sell its luxury units (via Most of South End building’s condos unsold).
SO WHAT IS GOING ON???
Well, there are many factors – some relate to the market and some relate to the development & marketing team (if new construction).
1. The Economy (numero uno)
2. The Real Estate Economy (credit crunch, mortgage financing & risk)
3. The Condominium vertical (scarred by South Florida, Las Vegas & Phoenix)
4. Marketing “professionals” opinions
5. The owners (developers, investors in the project)
Later next week we will be releasing our Q1 – Q3 Boston real estate report which will drill down and segment out our local downtown real estate economy. Lets the #’s speak – data is king.
Credit Crunch: As far as the other factors, there is no question the credit crunch and lack of great financing options (not saying it’s a bad thing) has slowed not just our real estate market, but nationally. The simple 5/1 ARM interest only @ 3.5% on an $800,000 condo simple just does not exist anymore. In 2005, with just 5% down, you could buy a new $800,000 condo, plop down $40k and your mortgage payment would only be $2,300 per month – crazy -been there done that – and it’s over and probably for good.
That same buyer now has to put down between $80-$160k and their mortgage payment will be closer to $4,000-$4,500 per month. Enough said on that point.
The Condominium vertical: With massive overbuilding in many empty-nester & second home markets like Miami, Phoenix, Las Vegas – the word “condominium” is the devil to large corporate bankers, Wall Street and of course Fannie Mae & Freddie Mac. Even in primary borrower cities like Boston, New York, & Washington D.C. – condominiums are being treated the same everywhere especially if they are new construction. The guidelines – 70% pre-sold and 70% owner-occupancy and if you don’t have that – GOOD LUCK. That make marketing new construction developments very difficult as financing options are limited.
Marketing Opinions: Well, everybody has one – that’s the problem. We stick to the data and it seems to navigate us and our clients into a VERY FAVORABLE position. Dear Developers – maybe you should give us a call
The Owners: Of course every development and every owner has different goals and objectives. Some developers can afford to hold on to their product and take their time selling units and some have the pressures from banking relationship to move the product and get out. Its different on every deal.
BOTTOM LINE: Unfortunately, you can’t just consume online data, you can’t just read the press and local market reports, you can’t just count on your gut feeling or buying in an “A” location – you really have to put it all together with a real estate VERY knowledgeable real estate consultant.
Here @ CondoDomain we take pride in obsessing in every nook & cranny in our local “Downtown Boston Real Estate Market” and we are proud to say we know it inside and out because its ALL WE DO.
Feel free to reach out to us anytime. We know fall (right now) is our busy season but we are ready to help you. Tell us your story! Ask us a question! Call us anytime – 617.849.4993