I think that most people would agree that we live in a world of too much information. The business of residential real estate is no different. When you try to digest too much data or information, you end up feeling like you know a more facts but not really what it all adds up. I compiled a list of statistics from the MLS database on what I consider the “downtown” Boston neighborhoods. The following chart shows what I think is most interesting and most relevant about the immediate past 5 years in downtown Boston. Year 1 is 3/8/2012-3/8/2013 and Year 2 is 3/8/2015-3/8/2016, etc. through Year 5, the immediate past year 3/8/16-3/8/17.
# = Number of total Lisings sold
DOM = Days on market from listing to contract for sale
SP = Mean Sale Price
SP:LP = The ratio of the final sales price to the last listing price. A “100” means the property sold for the last asking price.
Year # DOM SP SP:LP
5 2566 32 $770,000 100
4 2661 30 695,000 100
3 2655 32 637,000 100
2 3082 33 585,000 99
1 3048 33 530,000 98
These statistics tell most of the story of the downtown real estate market over the last 5 years. First, inventory is up – about 20% over the last 5 years. I think this is the result of the large number of new high end construction projects in the downtown markets, as well as the consistent and constant development in the neighborhoods.
To understand the meaning of the DOM statistic it is helpful to know that the national average for the past 5 years is about 86 days, and it rarely dips below 70 in any given month. The Boston average has hovered at about 30 for the last 5 years. Property sells FAST in Boston.
Along the same lines, the SP:OP ratio has creeped up from the high 90s to 100%. Property sells at about asking price in Boston.
Prices are up 45% in 5 years with an average appreciation of over 9% per year. The immediate past year saw the largest increase with prices going up about 10.8%
The evidence is clear that the market has been strong and consistent for the last 5 years. Can it go on forever? Probably not, and, as always, the $64,000 questions is when the market will turn? I will be looking for the statistical signs of a slowdown and I will let you know when I see them!