High mortgage rates and low inventory are taking a bite out of Boston’s condo market.
Condominium sales in the city declined by 20.5 percent in the first quarter compared to the same period last year, according to a report by Berkshire Hathaway Homeservices’s Warren Residential brokerage reported by Boston.com.
In the first three months of the year, there were only 574 condo transactions, a significant drop from the 722 deals in 2023’s first quarter. Brokerage head Nick Warren attributed the decline in activity to similar phenomena seen across the country as mortgage rates remain elevated when compared to the early pandemic and inventory remains historically low.
The number of sales since the first quarter of 2021 has declined by 46.1 percent. There were more than 1,000 condo deals in the first January-to-March period enhanced by the housing boom to come out of the pandemic’s initial onset.
It would take 2.63 months to sell Boston’s condo inventory in the first quarter, a supply increase of 21.2 percent year-over-year.
While sales cratered, the depressed inventory led to a gain in prices.
The average condo sales price in Boston increased by 6.1 percent year-over-year in the first quarter, coming out to nearly $1.1 million. Three neighborhoods – Waterfront, Allston and Jamaica Plain — felt an annual price increase of more than 25 percent each, though only the latter recorded more than a dozen sales.
Broken out into neighborhoods, South End saw the most condo transactions with 52 in the first quarter, one more than South Boston. Mattapan and Bay Village were quieter with two deals apiece, Mission Hill had a lone sale and Roxbury didn’t see a single one.
Many renters are making the jump straight to the suburbs and skipping the interim step sometimes seen of city condo ownership, according to Warren. He added that sales across the board are depressed as people don’t want to sell the 2 and 3 percent mortgage rates they landed during the beginning of Covid.
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