Boston Luxury Real Estate Prices are Soaring with No End in SightJanuary 11, 2014
In the last six months, real estate prices of Boston luxury homes have soared to a record breaking level. There are several factors that contribute to this unrealistic surge.
Factors that Impact Boston Luxury Homes Sale Price
For one, the shortage of inventory that we keep talking about nonstop has created a demand for the homes that are actually on the market, or coming on the market. Secondly there is an abundance of available funds - national and international buyers view Boston luxury real estate as a very desirable and solid investment. Even in the down market, Boston Luxury real estate continued to be strong. Third, buyers who were sitting on the sideline are tired of waiting any longer and are willing to pay high prices for a property regardless of it’s actual worth.
Considering these factors, we are confronted by a market that is getting out of control. Buyers are willing to pay anything for a unique and luxury property to seal the deal. Prices of $1700+ per square foot seem to be the going rate and the norm for luxury and totally renovated properties. We are even seeing prices upward of $2000 per square foot. For example, a resale at the Clarendon went for $2,017 per square foot; 3 Commonwealth sold for $2,236 per square foot; and a unit at the Heritage On the Garden sold for a whopping $2,467 per square foot. These prices were unheard of in the local market. Unfortunately, with limited inventory, we don’t see a relief in sight.
Needless to say that soaring Boston luxury homes prices are bringing out the desperate “must buy” buyers. However, it is also keeping a good majority of people whose timing is flexible and don't have to buy TODAY, out of the market. More casual buyers are willing to wait until the bubble bursts - but when and /if this happens is the $20M question. Buyers in this category should also bear in mind that the mortgagee rates are inching up. So, even if the prices come down slightly, they will be paying higher rates on their mortgage.
It will be wise to discuss and weigh all these options with a knowledgeable real estate professional.