If you want know how competitive the Hub condo market became in 2015, take a look at the sale of the condominiums located at 373-375 Border St, East Boston. They were priced so high that if 373 Border received an offer for asking price and closed immediately, it would become the highest priced condo sale in East Boston in the first 202 days of 2015. But the condos on Border didn’t sell for asking price – not even close to asking. Instead, listing agent Jeffrey Bowen received multiple over ask offers and a few of the offers had no inspection or financing contingencies. “My seller was ecstatic,” Bowen confided to me. In the end, 375 sold $76,000 over ask and 373 sold $81,000 over ask. Folks, we’re not talking about going all in for some underpriced condo in one of the Hub’s high end markets. We’re talking about East Boston…and frankly, we’re talking about a part of East Boston that isn’t even the most in-demand part of East Boston.
Offer competitiveness – how frequently offers consistently come in relative to list prices– reflects how balanced supply and demand are in a market. In Boston, the disparity between demand and supply has been widening for some time. As a result, so too has the discrepancy between a condominium’s list price and its final sale price.
The condo this kitchen was in sold for $675,000 over ask.
I’ve been posting about Boston real estate trends since 2011 and I first reported on the phenomena of extreme over ask offers in the Hub in a column for Boston.Curbed on March 20, 2013. Amongst other examples, the column noted a Brookline condo closing $36,000 over ask and a Cambridge sale that sold $100,000 over ask. Having been an agent in the Hub since 1995, I had been in a number of bidding wars, but the amount these properties garnered over ask seemed staggering and somewhat unbelievable to me. I recall contacting the agents to make sure the sales didn’t include extras, such as the buyers adding a parking space to the condo order or asking a builder for upgrades in finishes, the cost of which were tacked on to sales prices but not list prices. I confirmed they were legitimate market sales and reflected what was originally offered in their MLS listings.
Unfortunately, what seemed like anomalies in 2013 quickly became par for the Hub condo buying course. Last year, 172 Brookline condo sales went at least $36,000 over ask. Across the river, 62 Cambridge condo sales – more than five a month – went at least $100,000 over ask. Simply put: these incredible numbers are just the tip of a statistical iceberg that suggests the Hub has been in the midst of the most competitive condominium market in its 40-plus year condo history.
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Today, the Hub’s extreme over ask offers aren’t limited to select upscale markets such as Brookline or Cambridge. Offers that go $50,000 over ask literally DOT the Hub’s more modestly priced condominium landscape as well. 174 Grampian Way, Dorchester closed $55,000 over ask. 34 Catherine #3, Roslindale went $62,100 over ask. In 2014, Brighton had only one accepted offer for $50,000 over ask, but in 2015, 16 accepted Brighton offers hit that mark. And in South Boston, a red-hot Hub market that had previously been sober in its offer amounts, 20 condos sold for $50,000 over in 2015.
In the Hub markets that have attracted extreme over ask offers since the beginning of this trend, 2015 pushed the pedal to the metal. Compared to 2014, $50,000 over ask winning offers were up 36% in Brookline, up 57% in the South End, and up 75% in Somerville. In Cambridge, which in recent years has consistently been the most prolific and most extreme over ask market in the Hub, nearly one out of every three condominiums sold in 2015 was the result of buyers paying at least $50,000 over ask. Incredible!
I took a deeper dive into the over ask data and reviewed 2015’s condominium sales in 15 of the Hub’s most important markets, roughly 5,000 condominium sales. I quickly found more than 700 accepted offers that went $50,000 or more over ask in 2015. That’s up from fewer than 500 such sales in 2014.
Additionally, while these extreme over ask offers seemingly knew no geographic boundaries, they also appeared not to be limited to any specific price point. Gail Roberts & Team put on market a $2.1 million listing in Cambridge last year and Ed Feijo later told me, “We had 5 offers on the property and there had been two neck and neck,” adding that the winning offer was the one that “just stepped up enough to get the property.” By stepping up “just enough” Ed means the winning buyer offered $450,000 more than the asking price. Last year, Boston made the highest condo sale in its history and guess what? That sold way over ask too! Explaining how a $15 million list price attracted a $400,000 over ask offer, listing agent Dan Mullin wrote me that there were “several interested buyers and it was truly one of a kind.”
Extreme over ask offers have become so pervasive in the Hub that the condominiums attracting them can at times lack important sales features. Last year, Beacon Hill’s highest over ask didn’t have in-unit laundry and Brookline’s highest over ask came without secured parking. Properties that attract extreme over ask offers can also at times be in uninspiring condition. One of the listing agents on a condominium that went way, way, over ask gave me the following assessment of its condition when it came to market: “It was not in the best shape. While it was ok, it needed some revising.” Despite needing new kitchen and baths, that $1.499 million listing sold more than $360,000 over ask. Double incredible!
Bear in mind that sellers are not known for setting passive list prices in the first place. In the typical “what to list at” conversation between a seller and their agent before putting the home on market, the agent may share comparable sales that show the sellers home’s value to be in a certain range. More often than not, shortly after getting the range from a broker or brokers the seller usually chooses the highest figure in the range as the list price. Sometimes sellers even choose a number that goes beyond the high side of the range. So, how surprising is it when offers immediately come in that are well in excess of the agent’s assessment of value and well beyond the seller’s hoped-for price?
Based on how regularly Boston offers end up selling so far beyond the list price, you might conclude that Boston’s condo prices aren’t going up fast enough. But clearly, extreme over asks reflect the area’s desperate need for more inventory (supply). So, unless we see an immediate and seismic change in the Hub’s condo supply, extreme over ask offers should be plentiful this spring.
I’m not saying that every condo in Boston will go way over ask, but while interest rates remain low and local inventory continues to be starved, there may be few limits to how much over ask a Hub condominium might fetch. So, buyers who are thinking of purchasing a Hub condo in the near future – to paraphrase a line in the movie The Untouchables (1987) – can’t make the mistake of bringing a knife to an offer gunfight.
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