Bostonians are bombarded with talk of a “real estate downturn”, the buzz around town is that Buyers want to take advantage of the real estate crisis, sometimes we hear that prices are falling, and foreclosures are being touted as a widespread epidemic.
However, in the core of downtown Boston:
- There’s no real estate downturn
- Boston city center real estate is not in the middle of a real estate crisis
- Prices are not falling, but appreciating, in downtown Boston
- There are little to no foreclosures in downtown Boston
What do we mean by “downtown Boston”? Simply put, it’s the neighborhoods that make up the core of the city: Back Bay, South End, Beacon Hill, West End, North End, Waterfront, Financial District, Midtown, Leather District, northern South Boston, and the Seaport District. Oftentimes, generalizations are made about what “Boston” actually encompasses, and Boston is inaccurately lumped into state-level Massachusetts information, skewing the public’s perception of the real story.
Does it matter that distinctions are made between downtown Boston, the suburbs, the state of Massachusetts, and the US, when talking about the status of the real estate market? On many levels, yes. Sellers need to know that they can still sell and make a profit, Buyers need to know that they are still going to have to pay a premium for living in the city center, and everyone needs to know that the downtown Boston real estate market is much more stable than the majority of news stories would have you believe.
Kevin Ahearn puts together yearly statistics for downtown Boston real estate, representing a broader scale of neighborhoods than we alluded to above, and he displays a 5.74% appreciation in average Boston condo prices in 2007 over 2006. Additionally, to take a specific South End neighborhood example, we see both average and median home prices continuing to rise. The city center is much different than the rest of the state, or the country for that matter, and these statistics demonstrate that.
Across the USA, foreclosures are indeed up in numbers, however, there is by no means an epidemic of foreclosures in the city of Boston. Take, for instance, a recent foreclosure map that John Keith put together that provided a visual representation of where foreclosures are cropping up in Boston. One might think that there are tens of foreclosures all across the city. There was 1 foreclosure in downtown Boston at the time of this writing, at 25 Channel Center. A single foreclosure is far from an epidemic.
We aren’t trying to put a “positive Realtor spin” on these messages. Truth be told, there are many towns, cities, and even states that are experiencing falling prices, and significant foreclosure numbers. However, mass generalizations that liken downtown Boston to the state of Massachusetts, or the country for that matter, paint an inaccurate picture. More accuracy and attention to detail needs to be practiced when citing real estate statistics – real estate is local. Bottom line, according to the data available, downtown Boston real estate is doing just fine.
Keith Munsell 
I always find articles/posts like this incredibly misleading. While the average (or median) price may rise, numbers can make them say whatever you want.
For example, all the locations listed above in the “nicer” areas of Boston. What about Allston, Brighton, “Southern” South Boston, etc.?
Second, price appreciation (as defined above) is incredibly misleading about the actual real estate conditions in a market. How many new condo complexes have come on the market in those areas listed above? Quite a few ranging from D4, to 285 Columbus, to 25 Athens, etc. Are any condo buildings coming on the market with pricing less expensive than the prices in the surrounding areas? Doubtful
Lastly, let’s say someone buys a condo for $500k and puts $100k worth of upgrades but then can only sell the unit for $550k – this shows as a 10% APPRECIATION even though the owner lost 50k (or 9% of their total investment).
A more accurate approach would be to take a random sample of condos that were sold last year and see what those condos sold for this year.
Try that for 20 units and tell me if the market is “doing just fine”
Allston and Brighton are not downtown Boston, isn’t that one of the main points of the post?
Buying a condo in February 2007, and then selling the same condo in February 2008, is not a realistic experiment. Furthermore, not all home improvements increase home values – certain improvements will never return their full cost in added value (i.e. what’s the Return on Investment). Check out Home Improvements That Pay You Back for some examples.
Fine, so look at condos that were purchased 2 years ago and see what they sold for now. I’d imagine with a little research finding 50 condos that have been bought and sold since 2006 wouldn’t be too much of a problem.
Ha, so I guess Dorchester is part of Boston too, what’s next, Newton, Malden? “Nicer” areas of Boston, no, it’s just downtown Boston. If I live in Allston, I live in Allston, not Boston – just because someone from outside the state doesn’t know where Allston is when they ask where you live, and you answer Boston to keep it simple, doesn’t mean you actually live in the city.
I for one am tired of the continuous and negative stories that consistently try to pull us down with generalizations.
Alan, we’re not being misled here, the overall trends are there, on prices, and foreclosures in Boston, downtown Boston that is.
Fine, so eliminate the talk of anything other than the core downtown market and do my 20 property analysis and see what you come up with. Individual properties that haven’t spent money on upgrades are NOT selling for above their price a year ago.
Obviously you’re best served by people thinking prices are appreciation and you’re ignoring the facts for your own self interest
As a West Toronto Realtor, I have read many articles about U.S. housing crisis. But recently I have found an article, that is really interesting in my opinion, the main message is, that cities with “knowledge economies” are experiencing fewer foreclosures. If you think about it, it´s not such nonsense, because the creative workers (those, who are not working manually) are usually more flexible workers with a greater array of employment options.
Before spending 1 million or more talk with Karl Case at Wellelsey. He’s an economist with 30 years plus experience in Boston real estate. Realtors are not economists. If you were buying in the south end next month, which realtor would you chose? All information would be most apppreciated.
Thank you.