Our focus on providing quality content will remain unchanged, and we are bringing additional contributors into the fold who specialize in unique niches of the real estate market in an effort to both maintain that focus on quality and provide the depth of coverage that our readers have come to expect.

We thank you for your continued readership.  In the short term, you will begin to see that the look and feel of the website will remain relatively the same, but with an updated logo (below) and new URL.

On the market-rate front, list prices were lowered on several units this week.  For instance, unit 311, an 850 square foot one-bedroom one-bathroom was reduced from $489,000 to $449,000, unit 205, a 1,031 square foot one-bedroom two-bathroom unit was reduced from $599,000 to $499,000, and unit 215, a 1,382 square foot two-bedroom two-bathroom unit was reduced from $719,000 to $699,000.  According to LINK, 16 of the 92 loft-style condos at FP3 have sold (17%).

Currently there are 25 rental apartments on the market at Harbor Towers.  Apart from the two large penthouse units available for $10,000 and $11,000 per month – most units are 1 or 2 bedrooms and range between $1,700 and $4,500.  The units are most closely comparable to those at Emerson and Longfellow Place at the West End Apartments in that they generally offer parquet floors, galley kitchens and lots of space.  However, at Harbor Towers every unit has its own personal touches added to it by unit owners – some have granite counters or an open kitchen.  What brings most renters and buyers to Harbor Towers are the panoramic views of the harbor and the city from two of Boston’s tallest residential buildings.  The harbor side pool certainly adds to the appeal for renters, and with the additional supply of available units, the prices have become more affordable.

“The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%. In addition, the company won’t back loans for sales in buildings where 15% of current owners are delinquent on association fees or where more than 10% of units are owned by a single-entity…The new policy became effective March 1, and most lenders have started to implement Fannie’s guidelines.”

In my business I work mainly with lenders and attorneys. Except in cases where developers have failed (often repeatedly) to reach the prescribed milestones, lenders to this point have been very generous with extensions and have been inclined to work with developers through slower than expected sales. Lately, as pressure has been mounting, I’m hearing about a lot less patience. Until this fall it was easy to be optimistic that something would happen and sales would improve in a relatively short time but the fact is that today most of the people I’m talking to are now expecting a longer down cycle than they may have previously.

After just two short months we’ll be able to assess the spring market and whether or not its made a significant impact on inventory. While there are some positive signs in the residential market, many lenders will be unable or unwilling to extend construction loans without some concrete evidence of forward motion. If Fannie’s new rules stifle that motion over these next two months, you can count on a spate of condo auctions through the second half of the year.

Ultimately, USA foreclosure statistics have little applicability to downtown Boston for two reasons, the first revolves around the fact that the number of foreclosures in downtown Boston is quite low, and second, simple supply and demand economic forces in the city center prevent  any foreclosure pricing “deal” opportunities – these forces erode any price point differentials between market and foreclosure prices.  Foreclosed homes stay at their foreclosure list prices because of supply gluts, and the economics of Boston’s real estate market prevent the surges in supply of “cheap” homes to support the market dynamics that are being seen in the hardest hit housing markets in the USA.

A compilation of 2008 (January – October) Boston foreclosures by the Boston Globe shows that there was one foreclosure sale in downtown Boston during the first 10 months of 2008 – yes, many more outside the city center, but the downtown market demonstrates significant insulation to foreclosure pressure.  The single unit was a Leather District loft-style condo that sold for $443 per square foot, more than $100 more per square foot than current high-end units at the newly renovated Beach Street Lofts are selling for.

Case in point for the economic forces of the downtown market on a bank-owned unit offered to the public was 10 Hanover Street unit 3, a one-bedroom one-bathroom 690 square foot condo in the North End.   In June 2008,  the condo hit the market for sale, and was listed at $274,900 ($395 per square foot), a very attractive price for the unit and the neighborhood. We worked with clients to move quickly on the property, despite this, there were over 20 offers on the unit, and it closed two months later for almost $100,000 more than the list price at $365,000 ($529 per square foot).  In the end, the short sale property didn’t really end up offering the value for which Buyers were clamoring. In 2008, the average price per square foot in the North End was approximately $600.  This example highlights that simply supply and demand in downtown Boston prevent foreclosure “deals” from occurring.

Unit 809 at the Ritz Carlton will be an interesting condo to follow to see if the theory checks out.  Unit 809 is a 1+ bedroom 1.5 bathroom 1,357 square foot unit in the Ritz Carlton Millennium Towers that is a bank-owned property recently listed for sale at $679,900 ($501 per square foot), and represents almost a 50% discount on the average price per square foot in the building – granted, the average price per square foot is being inflated substantially by several other recently listed properties in the development, including Manny Ramirez’s Ritz Carlton condo. Unit 809 is being sold as is, and is competing against 8 other units that are priced under $700 per square foot, the others at “market prices”.

The economics of supply and demand in downtown Boston trumps any “deal” that a Buyer assumes can be had by finding a foreclosure.  The first hurdle lies in the absolute number of foreclosures in the city center, there really are none, and when coupled with the supply and demand forces present in the city, the idea of a “deal” on a downtown Boston condo quickly becomes elusive.

New exclusive photos of the Boston W development are below.

Back Bay housing prices have stayed resilient over the past year, with average and median prices increasing substantially when looking at performance over the same 3 month period from 2008 to 2009

January 1, 2008 – March 25, 2008
Back Bay Condos Sold: 70
Back Bay Average Sales Price: $1,185,402
Back Bay Median Sales Price: $671,250
Back Bay Average Price per Square Foot: $793
Back Bay Average Days on Market:    107

January 1, 2009 – March 25, 2009
Back Bay Condos Sold: 47
Back Bay Average Sales Price: $1,334,491
Back Bay Median Sales Price: $781,000
Back Bay Average Price per Square Foot: $785
Back Bay Average Days on Market: 155

It’s interesting to note that these numbers are not inflated by ultra-luxury closings that would include Zero Marlborough or the Mandarin Oriental, as there have been no closings for either of these two buildings during the first quarter of 2008 or 2009.

8 of the 12 units at Zero Marlborough have sold, the 4 that remain for sale are all 3,300+ square foot 3+ bedroom 3.5 bathroom units listed for sale between $4,669,000 and $4,765,000 (approximately $1,421 per square foot).

Almost 90% of the Boston Intercontinental residences at 500 Atlantic Avenue have been sold since opening to residents in 2006, and a large handful of developer units, as well as some resales, are currently available for sale.  Construction began on the Intercontinental in late 2004, when there was only a handful of condo hotel developments in Boston. Since that time, we’ve seen several more announced to the market and/or delivered, including, the Mandarin Oriental, Battery Wharf, and the Boston W Hotel.  The Intercontinental boasts a unique location along the Fort Point Channel nestled up against the newly opened Greenway and the bustling Financial District – both the hotel and residences make for an excellent home base for business travelers and financial services workers respectively.

While some selective slowdowns have occurred in the Boston ultra luxury market, the Intercontinental has held a steady course, and has demonstrated signs of resiliency from a price per square foot perspective over the past 6 months. Over the past twelve months, 16 condos have sold at the Intercontinental:

Condos Sold (Past 12 Months): 16
Average Sales Price: $1,843,418
Median Sales Price: $1,597,000
Average Price per Square Foot: $922
Average Days on Market: 170

Over the past three months, units seem to be lingering longer on the market, but price per square foot in the building has edged up – this may be a function of the fact that the 3 units that did sell were some of the largest and most prestigious units in the building.

Condos Sold (Past 3 Months): 3
Average Sales Price: $2,978,333
Median Sales Price: $2,935,000
Average Price per Square Foot: $982
Average Days on Market: 290

Part of the approximate $1,000 price per square foot values that the Intercontinental is commanding is attributable to the level of service that residents enjoy.  Luxury services include a 24-hour concierge, spa, fitness center, room service, pet-care, and valet parking – as a resident, many of these services are paid for on a continuing basis through monthly HOA fees that average approximately $1.28 per square foot.

There are currently 22 condos for sale at the Intercontinental, with the following statistics:

Condos for Sale: 22
Average Sales Price: $1,633,036
Median Sales Price: $1,175,000
Average Price per Square Foot: $971
Average Days on Market: 178

The least expensive condo for sale in the development is a 421 square foot studio priced at $369,900, and the most expensive currently is the 4,700+ square foot 4+ bedroom penthouse listed at $6.45 million.  8 of the 22 units for sale are under $1 million, while the remainder are over.

A new listing this week hit the market on Marlborough Street, specifically, unit 1 at 347 Marlborough Street.  The condo is a 605 square foot unit that is accompanied by one deeded tandem parking space, exceptional in-unit and common area storage, and a common washer and dryer that is close enough that you would think it was part of the unit itself.  Listed at $499,000, there is an additional 120 square foot sun room that is not factored into the 605 square foot calculation, which brings the effective per square foot price to approximately $688.

Back Bay location on one of Boston’s most desirable streets! This garden-level home features hardwood floors, exposed brick, and a wood-burning stove. Unique 120 square foot sun room (not included in square footage calculation) floods the unit with light and serves as a great dining area. The galley kitchen offers ample storage and everything a modern cook needs. The spacious bedroom boasts large closets and great built-ins. Common laundry and one deeded tandem parking space included.

An open house will be held at 347 Marlborough Street unit 1 on Sunday, March 15, 2009 from 12:30 PM to 2:30 PM.

This special rental offer is on the table for renters who choose a 14 month lease, beginning on or around April 1st, and involves two months of free rent – all utilities (even Direct TV), and one garage parking space all included in the rental fee.  It’s extremely rare for a building that offers such a stacked list of amenities and quality to offer such a promotion.  From its newly finished onsite gym to the heated three-season pool on the 20,000 square foot landscaped terrace, to the soon to open gourmet market, the things to do right at the Macallen Building outnumber those in several small New England towns.  Not to mention it’s located right next to the Red Line Broadway T stop  and the Harbor Walk.

Rents start at $2,200 for the one studio that is available, $2,250 for spacious and open loft 1 bedroom units, $3,500 for 2 bedrooms, and $6,900 for the one 3 bedroom currently available.  If you factor in the 2 months free, most of the rents will come down by at least $300 per month effectively, which makes this offer rather compelling for the trendsetting renter to live in one of the most unique buildings Boston has ever seen.

- Jay Alberino is the Founder & CEO of Eleven Park Realty, and has recently launched myCityApartment, a guide to houses and apartments for rent in Boston, Brookline, and Cambridge. Jay can be contacted to stay up to date with prices and offers, or to take a tour of Audubon Park or other apartments in Boston.