19 August
Comments (0)

Our “Imperfect” Market: Boston 2021 | By Jeff Hamilton

To say it bluntly, the Boston luxury real estate market is far from “perfect!” Don’t blame Zillow, they’ve made vast strides to make information about the housing market easier to come by for consumers. In conjunction with Redfin and, these are the three sites we find consumers use most often to learn about Boston luxury real estate.

However, these sites still fall well short of making the market a fully transparent arena. Even those of us closest to the markets are often limited by the amount of information we can absorb in each specific geographical area we cover. In theory, the smaller the areas we cover, the better our information should be which is a large part of the reason we focus so intently on the South End and Back Bay. Probably 25 to 50 percent of the information we glean that becomes valuable to us is via our cooperative brokerage community as well as our friends and clients who live and work within the neighborhood

The regional MLS (Multiple Listing Service) that we subscribe to is the primary aggregator of information for us on a day to day basis but the best agents labor to collect (and analyze) data that does not come to us via the MLS. To supplement our understanding of what’s going on in the markets, we have to source and uncover on the ground insights. 

Interestingly, over the last several years, and maybe most notably during the CoronaVirus pandemic, off-market transactions have gained share across the market. Not surprisingly, this makes the job of those of us who are close to the market more difficult. If it makes it harder for us, imagine what it does to those consumers (buyers and sellers) who are not engaged in the market each and every day. Individual anecdotes are aplenty but how can they be representative of a larger marketplace that has no shortage of nuance?

Over the last seven years, I have observed all types of real estate consumers in the South End, Back Bay and Beacon Hill. There are a relatively impressive number of people who we come across who have an immaculate understanding of the local real estate scene. These people tend to already live in the neighborhood and are super connected to their friends and neighbors. They pick up on every detail available via obsessing over Zillow and Redfin while also creating their own spreadsheets from information they’ve triangulated from friends, brokers and even the Suffolk County Registry of Deeds. Truthfully, these consumers are better equipped to handle the pricing side of a transaction than 75 percent of the agents who do business here. Of course, pricing isn’t everything.

In an environment where the housing inventory barely reaches “trace” levels of availability, we know our market acumen can make all the difference for our buyers and sellers. Whether it’s that seller that we’ve been tracking for 3 years or the buyer who’s been looking for the perfect match for 18 months and can only be compelled by the odd side of a single street, we are primed to put the final puzzle piece together at the perfect moment to make a match that can work for all.

Finally, back to the idea of a “perfect” market.

“A perfect market is a market that is structured to have no anomalies that would otherwise interfere with the best prices being obtained. Examples of this perfect market structure are:

  1. A large number of buyers 
  2. A large number of sellers
  3. Products are homogeneous
  4. Information is freely available to everyone in the market
  5. There is no collusion between the market participants
  6. Every participant is a price taker, not having the ability to influence market prices

There are few perfect markets; those selling commodities, such as agricultural products, represent the closest approximation of a perfect market.

It is generally not a good idea to be a seller in a perfect market, because prices are driven down so low that it is quite difficult to generate a reasonable profit. Consequently, many sellers seek out less perfect markets, where they can realize higher profit levels.”


It’s worth noting that not all comparable sales are created equally. We’re surprised how often we’re surprised about pricing that is achieved around the market. There are no shortage of examples we can point to of units achieving pricing we did not think they deserved (for better or for worse). Here are three examples just in 2021:

53 Warren Ave., #3Listed for $1.6M. Sold for $2.2M ($1,594/SF)

23 Milford St., #3

Listed for $1.699M. Sold for $1.9M ($1,333/SF)

43 Union Park, #3
Listed for $1.99M. Sold for $1.627M ($837/SF)

None of these units were brand new construction… The first two were more updated than the third one but neither had luxury appliances, cabinets or finishes. Additionally, very few who know the South End well would suggest that any street is more desirable than Union Park. Milford and Warren Ave are great streets but, given the choice, at least 8 out of 10 South Enders would choose Union Park over the other two. And yet, look at the delta between those price per square foot numbers!

We advise our clients that we would expect to spend close to $400/SF to gut renovate a condo to high end specifications. So, if you bought that Union Park unit and put $500/SF into it for an absolutely lavish home, you’d have a basis at the exact same $/SF as the Milford unit which very much needed work itself. You’d still be more than $200/SF less than what the Warren unit sold for and you’d be in a better location! How does that happen in an open market place??

It’s all driven by supply/demand factors and, interestingly, even in a market that is as allegedly illiquid as real estate, supply/demand can change week to week.

How does the market move? Well, all the sellers we talk to will only see the top numbers from the comps and will ( perhaps unfairly) compare their units to those sales. All the buyers will see the Union Park number and will think that they should have gotten such a great deal. 

Alas, all good truths are somewhere in the middle. Our strategy remains to price our listings conservatively with the understanding that this market responds to up front “value.” On the buy side, we hope that our clients can lean in to trust our advice on when it’s time to go big with an offer and when it’s time to let someone else bid it to the moon knowing there will be another unit coming behind it that we might not be able to see yet. 

We’re gearing up to bring a handful of listings to the South End market this fall. We’re very much looking forward to learning what dynamics will be in play but we feel it’s a pretty safe bet that the market still won’t be perfect!