The lead story in the Back Bay market for 2019 will undoubtedly be the opening of the new Four Seasons property known as One Dalton. This mixed-use property (hotel and condominium) will open its doors for hotel occupancy in May. Condo occupancy is expected to follow shortly thereafter. Looking for a special night out in Boston this summer? Book a room here. Rates are starting around $620 per night with the 20% off opening special. With taxes, you’re looking at $710 for the night!
Construction at One Dalton is almost complete
FOCUSING IN ON LOWER BACK BAY
We’ll save the deeper dive into One Dalton for later in the year, once the sales figures have gone public. This posting focuses on existing housing stock in Back Bay and the Lower Back Bay sub neighborhood in particular. This is the section of the neighborhood closest to the Boston Public Garden. Defined as the “lower numbered addresses” of Commonwealth Ave, Marlborough St and Beacon Street, this area packs a major punch with its real estate sales activity in 2019.
Through mid May this year, the Lower Back Bay had 9 sales over $2M. This accounts for 43% of the sales volume in Back Bay. The impressive average price per square foot in this area has crossed over $2,000 and currently sits at $2,299 as we close in on the midpoint of the year. Notably, a mega sale ($20M) at the Heritage on the Garden for over $4,000 per square foot is hoisting that number. The median price per foot is slightly more representative even though it’s not a significant deviation from the average at $2,133.
Back Bay – Heritage on the Garden #1005/1006 | Sold: $20,000,000 | 1/22/2019 Home last sold in 2015 for $15,400,000
THE HIGH END OF THE BACK BAY MARKET
Despite significant gains in the price per foot so far this year (vs 2018) in the Back Bay, there may be some “cause for pause” in that the number of transactions over $2M in 2019 is cut almost in half from the previous year (41 vs 21). However, the number of transactions leading up to the opening of a new building (such as One Dalton) tends to decrease. This is because the buyers have been under agreement for a longer period at that new building. Once the Four Seasons opens, we can expect Back Bay’s numbers to surge on both a price per foot and number of transactions perspective.
Based on the number of sales we’re witnessing, for sale inventory is stacking up in the Back Bay. As of this writing, almost 40 properties are on the market for more than $4M. 13 properties are on the market for more than $7M. Applying the industry standard “months of supply”, we have 29 months of supply at the $4M+ level. If no new listings came on the market, selling at the current rate, it would take 2.5 years to sell each listed home. For reference, a balanced market is around 6 months of supply. A seller’s market is under 6 months! At the $7M+ mark, we’re sitting on 26 months of supply. It does not take a rocket scientist to understand that those numbers are not exactly healthy. More than anything, we advise that sellers reframe their expectations if they hope to move super high end properties in the Back Bay market over the next year.
Be sure to check back in with us when we do a review of the first half of 2019. We expect to have seen closing data at One Dalton at that time.