‘The Market’s Getting Saturated With Condos’ In Mass.
The Boston Globe reports the condo boom is ending. “Sales of multifamily properties in Massachusetts dropped 15 percent last year, ending a four-year run of rising sales and signaling that the market for condominiums converted from duplexes, triple-deckers, and four-families has peaked.”
“Sales were fueled by contractors’ converting them to condos, investors’ buying them as long-term holdings, and homebuyers who would rent the spare units to help pay the mortgage. But last year, multifamily sales declined to 7,980, the MAR said yesterday. ‘There’s been a tremendous amount of condo conversion, especially in recent years,’ said (realtor) Arthur Foley in Quincy. ‘The market’s getting saturated with condos.’”
“Builders, small developers, and investors rushed to buy two- and three-families in Somerville, Quincy, Waltham, Dorchester, Worcester, and other communities. They could purchase the properties relatively cheaply and renovate and resell them as condos for far more than they paid for the properties.”
“Multifamily sales in Greater Boston decreased 7.6 percent last year. Declines were worse in other regions: 24.1 percent less in northeastern Massachusetts and 19.3 percent less on the South Shore. In some markets, rising mortgage interest rates caused condo prices to flatten or drop.”
“Paul Campano, an agent who works in in East Boston and Somerville said sales of converted condos have probably peaked. ‘If you want to buy a Somerville condo and you’re going to be there four or five years, I wouldn’t worry. But if you buy and may have to move in a year or two, I’d have some concern,’ he said.”
“A record 379 condos are for sale in Dorchester, Ken Osherow said, and investors are scrambling to sell their units because they now realize overbuilding caused a glut. ‘Would you invest in a three-family and convert it right now?’ Osherow said. ‘Probably not.’”
‘Paul Campano, an agent who works in in East Boston and Somerville said sales of converted condos have probably peaked. ‘If you want to buy a Somerville condo and you’re going to be there four or five years, I wouldn’t worry. But if you buy and may have to move in a year or two, I’d have some concern,’ he said.’
That’s about as close as we’ll probably get to a realtor saying it’s not a good time to buy.
Right! Four or 5 years will be near the bottom. At least they are starting to break through the denial. Thanks, but no thanks Paul. I’ll wait until 2011 or 2012, and I’m sure you won’t be selling real estate by then.
This works to the bargain hunter’s advantage. You have “experts” say today that fives years from now everything will be as good as it is today. But when that times comes and it has only gotten worse year after year, a large majority don’t want to have anything to do with RE. During this time of uncertainity, you will have a chance to pick up a nice deal.
I wonder if these condos, after their flipper-owners have been shorn, aren’t where a lot of increasingly disenchanted boomers might wind up. That Florida property has gotten too expensive and condo living, in decent neighborhoods, is pretty safe and very convenient. Many thus could stay close to their kids. I’d have a real tear in my eye if they didn’t move here to the South, of course, but in return I promise never to consider moving up there, so we have fairness and balance. What a sweet solution.
I have owned four houses. Lost a little on two, a lot on one, and made up all I lost in the fourth.
I live in the area where all this “condo boom” talk is playing out. And there is palpable desperation among some builders. Mostly you can say it’s people who are using HELOC’s to do the work. Hoping to flip the condo of course. I will just wait and see for about 24 months. Then hopefully by then I will be able to separate the wheat from the chaff.
So you are saying these aren’t big developers, just mom and pop giving it a try?
The more I read, the more I believe that this entire “you can live the life of your dreams, become a millionaire, by buying properties with no money down” crap I’ve heard on the radio for the last 5 years was really tried by lot’s of Moms and Pops, and many other people.
It’s the people who HELOCed in the last two years and bought ‘to be built’ properties that are going to be most screwed. This because not only will the investment go bad, but their own home will lose value also, the ARM resets, can’t refinance…. Holy crap. I wonder if there are any numbers out there that give some indication of how many of the huge amounts of I/O ARMs in the last three years were the average Mary and Joe who HELOCed to get in on the game?
This is really scary. Especially if you consider average income in NE relative to prices.
novasold
“Paul Campano, an agent who works in in East Boston and Somerville said sales of converted condos have probably peaked. ‘If you want to buy a Somerville condo and you’re going to be there four or five years, I wouldn’t worry. But if you buy and may have to move in a year or two, I’d have some concern,’ he said.”
Firstly, why would someone buy a condo if they know they’re only going to stay a year or two? Oh, right, I forgot about the huge profit you’re supposed to make when you sell.
If all these flipped triple-deckers don’t sell as condos, perhaps some of them will go back to being rentals. Rentals that are all tricked out with flipper crap like granite countertops and stainless steel appliances. Anybody looking at apartments and seeing this?
Moopheus:
Or projects. Think section 508 housing. This is going to be ugly in many of the major metro areas.
novasold
There are condos going up all over the Boston suburbs. It boggles the mind. My guess is that most will become senior housing.
Any amazing supply of condos is going up in and around every city in the US. They may not make land anymore, but condos can be stacked higher and higher. Eventually their prices will converge to the cost of production, which is about 25% of what they are selling for today. Buy today, expect to loose 75%.