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The New Normal in the Greater Boston Condo Market

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Here's the latest installment of Bates By the Numbers, a weekly feature by broker David Bates that drills down into the Hub's housing market to uncover those trends you would not otherwise see.

When I was a kid, I used to ask my dad for $20. He would respond, "$10? What do you need $5 for?" If only he were a little more like today's condominium market, where buyers and maybe even their dads, are happy to give whatever is asked for and even more.

A survey of April's condominium closings shows that in many Greater Boston neighborhoods full price and over-ask are the new norm, the standard, par for the real estate course. I took a look at six Boston neighborhoods where this extraordinary event has become most ordinary.

In Jamaica Plain and Cambridge, the majority of April condo traded sold for full price or more. In Somerville , South Boston, and the South End, more than 60 percent of April condo sales were for full price or more. Meanwhile, in Brookline, part of which was recently named by the Boston Business Journal as the hottest real estate market of 291 Massachusetts communities, nearly two-thirds of April's condo sales had full-price or over-ask offers.

In some situations, it appeared the asking price was about as relevant as the reserve bid at an auction. How much over the asking price were Greater Boston condo buyers willing to go? In South Boston, one buyer ponied up $25K over-ask, but in JP a buyer found nearly twice the inspiration of the Southie buyer and paid nearly $50K over-ask. In Somerville, $70K over-ask was the highest; in the South End, $80K over-ask; and in Cambridge a buyer paid more than $100,000 over-ask. In Brookline, the market hotter than Tabasco-infused jalapenos, a buyer went $115K over-ask.

When I plug in the $400K-$449K sales range for the six Greater Boston neighborhoods where over-ask offers were most prolific (see above), the sell-to-list ratio for April sales was 103 percent. You read that right: On average, condos in this price range were selling for 3 percent more than what sellers were asking. That's more than $12,000 over ask!

Of the 34 sales in this sales range, a stunning 73 percent closed at the asking price or more. Incredible! But if we break it down by neighborhood, it gets even more incredible. In Somerville, 83 percent of the closings in this price range were for full price or over-ask. In the South End, all five closings, 100 percent of the sales in this price range, were full price or over-ask. Meanwhile, in Brookline, the market where buyers are advised to wear oven mitts to property showings to shield themselves from the heat, all five sales in this price range were at least 5 percent over the asking price.

And if you thought that paying retail or over for real estate was just an endeavor the other 99 percent of us engage in, think again. Of 16 condos that sold in these neighborhoods in April for more than $1 million, 10 received full price or more. In other words, the majority of condo sales in the highest price range went for full price or more.

What to expect in May? Well, a tell-tale sign of whether a property will get full price or more is whether it went under agreement in 14 days or less. Of the 539 April under-agreements in these six markets, nearly half went under agreement in less than 14 days. In Brookline, the market that's so hot it may spontaneously combust, nearly 60 percent went under agreement in less than 14 days.
· Our Bates By the Numbers archive [Curbed Boston]