Posted on May 13th, 2015
In terms of Boston real estate, multi-unit housing prices and condominiums were far better off during the recession and recovery then the single family homes. Before the housing bust, median condo prices were on a sharp rise. Between 2000 and 2005, they went up 70% from just under the price of $177,000 to more than $300,000 this was compared with a 56% rise in the cost of single-family home prices during the same period. During the crash, the condo prices actually outperformed and declined 8.7% between the years 2007 and 2009. This was in contrast to a 14.7% decrease in single-family home prices. Following the 2008 recession the condo prices hit a brief low of $280,000 in 2009, but then rose by 22% to $341,000 which occurred by the third quarter of 2014. Single family home prices have seemed to have leveled off.
Another way to look at Boston condo prices is to look at a price ratios. Since the year 2000, the ratio of condominiums to similar family home prices has gone upward. They have risen from 0.68% to 0.88% by the year 2014 which is almost a 30% increase. Through the year 2013 and the first three quarters 2014, condominiums or selling for 88% of the median price of a single family home. The upper cost of condominiums and the slowing of the single-family home prices reflects a growing preference to the need to own a condominium. Unless more of these units come onto the market, the ratio of condominium prices to single family homes is going to keep rising.
In the Boston real estate market, the price for two and three unit buildings in the greater Boston area has gone up quite significantly. This is shown through the years 2000 till November 2014. This is even more than condominium prices and single-family home prices. The price for these multi-unit structures grew from the year 2000 to the year 2005. The median price for three unit housing went up from $225,500 to $492,200. Investment practices explain these disproportionate numbers partially. During the housing boom investors and Boston wanted to purchase triple decker units which can provide them with a nice rental income which drove up the prices in a drastic way.
Over the past five years, use multi-unit housing market has had another price explosion as investors are competing for these units. Since a post-recession low in 2009, the price of a triple decker unit was $244,000, but now the same triple decker unit is selling for $452,000 which is a large 85% increase in only five years’ time.
This is more than six times the increase of a single family home and it’s under four times the appreciation for condominiums during the same time period.
Boston real estate prices are estimated to continue to rise for triple deckers and duplexes and to demand for multi-unit housing continues to go up. The impact of this on the greater Boston rental market is quite significant. Investors are charging higher rents to what working class families are able to afford