Considered to be one of the hottest real estate markets in Boston, the South Boston neighborhood has seen some recent changes that have left some wondering if the neighborhood is experiencing a bit of a real estate slowdown. On the other hand, given the rapid price growth of properties in the popular neighborhood, it may simply be the natural slowdown that should be expected of a market that has been experiencing skyrocketing prices over the past two years.
For years, South Boston was considered a good option for those who wanted to stretch their dollars as far as possible while remaining near to the downtown area. With the average price reaching the half million dollar mark in 2013, buyers have started to look at other areas. As a result, South Boston has transformed into one of the area’s more desirable areas, akin to places such as Back Bay and South End.
Over the past few months, price drops in the South Boston neighborhood have experienced a dramatic spike. In other words, the number of properties being sold at prices over the asking price has seen a significant decrease. On the other hand, the median number of days on the market for properties in the area continues to be low. So far, this figure has remained at around 45 days in 2014. Furthermore, prices continue to go up at a fast pace, with the average sale price of condos and single-family homes increasing by $30,000 to $533,104 in 2014.
Generally speaking, two factors have contributed to the price drops in the South Boston area. The first of these is overpricing. While demand remains high in the South Boston neighborhood, buyers are experiencing sticker shock as they see the large price tags being placed on properties in the neighborhood. Therefore, in order to slow down the number of price drops taking place in the neighborhood, both property owners and real estate agents need to set more realistic prices on the homes. This will give a boost to the overall health of the neighborhood while also providing more room for negotiation. On the other hand, if the overpricing continues, the homes are going to start spending more time on the market and the market will ultimately experience a slow down.
The increased number of price drops in the South Boston area can also be contributed to the increase in inventory in the neighborhood. At the end of April, there were 88 condos and single-family homes for sale in South Boston. At the same time last year, there were only 64. With more homes to choose from within the neighborhood, buyers are not feeling as anxious to close on a property. As a result, they are more willing to wait out the market and to find a home within their price range. Of course, it should be noted that this increase in inventory is largely due to the fact that several new units were recently released on the West Side of South Boston. If current trends continue, this increase in inventory is likely to be leveled back out by the middle of the year.
To help keep South Boston among one of the area’s hottest neighborhoods, developers are taking steps to add more amenities to the area. As a result, a number of new coffee shops, restaurants, shopping opportunities and entertainment venues have been getting built in the neighborhood on a regular basis. As the neighborhood continues to evolve, prices are likely to continue to go up so long as issues regarding overpricing and increases in inventory are properly addressed and managed.