Here's the latest installment of Bates By the Numbers, a weekly feature by Boston real estate agent David Bates that drills down into the Hub's housing market to uncover those trends you would not otherwise see. Check out his ebook, Context: Nine Key Condo Markets, 2.0.
According to multiple-listing-service records, Steve Bremis has represented and sold nearly 600 listings in Somerville, almost 400 of them condominiums. That's just in the last 17 years. The MLS doesn't have records for the hundreds of Somerville sales he made his first 16 years in the business. With 33 years total in the Somerville market, Steve may have more enthusiasm for and knowledge about the Somerville market than almost anyone in it. He recently shared with me his thoughts about what is happening in that market today.
Describe what's happening in the Somerville market?
There's a very strong demand. There's very little inventory. There are a number of factors that affect that. From actual construction starting on the Green Line… Even this weekend, Harvard Street was closed down because they were working on infrastructure for the Green Line. Before, we never saw anything like that… The Green Line has been funded. You actually see guys out there working and that's huge…
Another thing is Assembly Row has really started to take off. There's some new businesses that have raised the eyebrows a little bit as far as East Somerville. They're pretty high end businesses and they're doing fantastic. … Just the magnitude of Assembly Row brings up what was the weakest part of Somerville.
It looks like Somerville already has a lot of million-dollar sales this year.
And that's the tip of the iceberg. I have probably 12 to 14 listings under construction right now that will all come out in the next three to six months that will all be over a million dollars. So what you're seeing right now is just a glimpse of what's going to be coming.
That million-dollar price point is new. What is driving it?
The market appears to be there. I think prices are so expensive in Cambridge and Boston and the influx of a lot of new high- tech jobs coming into the area… That product, although it seems expensive for us, is relatively cheap compared to Cambridge and Boston.
What sale comes up in your mind as most symbolic of the new Somerville market?
Sales down on Dover Street that went well over a million dollars [$1.255 and $1.395 million] closed the beginning of April] and they were sold pre-construction. That speaks volumes. It's a new price point. It's a price point that many might have questioned a few years ago and not only did it sell quickly, but it sold for well over a million dollars… It sold pre-construction... That's huge. They didn't even have to finish the product [laughs]. That's what really blew me away. Not only did they hit it, but they clearly hit it easily. It really opened up my eyes as to the potential of that market here.
Who is the Somerville buyer?
It definitely was young professionals, but now you are seeing a wider variety. You are seeing more established professionals because of that price point rising so rapidly.
You are also seeing –believe it or not—people coming from the suburbs back. I think a lot of these professionals have children that are living here. The boomers want to be closer to town, closer to the action. I remember there was one week we heard from two different people that were living in Lexington, selling their homes in Lexington and coming to Somerville. That was very telling because that has never happened before. You not only have people from the suburbs coming back to the city, but you have the young professionals and now the more established professionals who don't want to pay the Cambridge, Boston prices.
What's going to happen in the rest of 2014 in the Somerville market
I think it will continue to rise. Because demand appears strong and it doesn't appear to be letting up and so I don't see that changing… Just the words used to describe Somerville lately are pretty amazing. A lot of people are calling it the 'New Cambridge.' …The Globe article that came out this weekend compared it to Brooklyn. These are things that weren't associated with this city before. … [In terms of pricing] we had a bump of about 25 percent last year. I'm going to say another 15 percent to 20 percent [this year].
What do you think will happen to inventory?
They'll build it as quickly as they are allowed to …Keep in mind the acquisition [cost] for the developer is very high … The land cost per unit was running $75K to $125K per unit. There are developers now paying over $200,000 a unit, just for the land. So doing that math: $200K for the land, $250K for the unit to develop it, you're already over $450K without even a profit.
Does Somerville rising impact the Medford market?
Medford, I have been telling people for three years now, is the best-kept secret around. ... A more suburban feel, a lot of the same advantages, but what you lose in Medford is accessibility and that's why Cambridge and Somerville are so hot. You have the rental bike stations in Somerville everywhere …You have what will be three T stops, which is somewhat unprecedented and only Cambridge would compare.
As the traffic starts to get bad, that public access is extremely important. Medford doesn't have that. I don't think they ever will anytime in the near future. As a community close to Boston, fantastic, but these professionals are buying and paying for that accessibility and that's not going to be provided for them in Medford.
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