Anyone who’s paid even just casual attention to the Boston residential real estate market knows that home values continue to rise, and out of that a phenomenon has emerged: the $1 million one-bedroom, one-bathroom condominium.
It’s a mouthful, especially if your jaw just dropped at the idea. But they exist, and, according to experts, we’re going to see more of them as homes appreciate and the inventory grows.
Other factors contribute to the rising sales — among them a move toward urban living by empty-nesters and young professionals and the desire to walk to work or live near public transportation. Sometimes people are just looking for a good investment.
Though it feels as if there are so many projects that have either been completed or are under construction, developers shy away from the one-bedroom, one-bathroom option in favor of larger units that can grab more money per square foot, according to Debra Taylor Blair, president of LINK, a real estate information service that tracks the Boston condominium market. There is an “incessant demand” for one-bedroom, one-bathroom units because fewer of them are being built, Taylor Blair said. “A two-bedroom buyer would have more options.”
LINK’s data support the trend. There’s an upward trajectory in sales of these homes from 2014 through 2018 — 31 in 2014, 66 in 2015, 121 in 2016, 93 in 2017, 172 in 2018, and 34 so far this year, according to LINK, which pulls data for all sales, including those not on the Multiple Listing Service.
The demand is multi-faceted, she said; it’s not just one group of people, but many. In addition to empty-nesters, young professionals, and those keen on urban living, there are people who are not based in Boston, but come here often for work, who are buying second homes.
There are also wealthy foreign students whose parents buy a condominium here because it’s a nice living option and doubles as an investment, according to Taylor Blair.
The amenities are also a big perk. Though the condominium might be small on square footage, the building itself may have a work bar, media room, a rooftop deck, or other attractions, she said. “The newer buildings have the amenities to a whole new level.”
Rising home values have also played a role.
“I mean, pretty much any kind of housing you’re going to look at from 2013 to 2018 is going to have gone up,” said Cassidy Norton, associate publisher and media relations director of The Warren Group, a real estate analytics firm. Part of it is market appreciation, but part of it is also that most of the new condos in Boston are luxury, Norton explained. “The units that are coming to market, the new ones, are more expensive than what we already have.”
And a significant number of these aren’t primary residences, according to Norton. In fact, she said, of the 300 properties of this type that are currently owned, “a third of them are definitely not owner-occupied” or the company’s database has flagged the owner as unknown.
Some are rented out.
“You can actually find some of these on Airbnb, and they go for thousands of dollars a night,” Norton said.
Then there’s another option that may seem more baffling.
“Some of them just stay vacant because they’re an investment property, and people have parked their money there. And they’re waiting for it to be worth more money so they can turn around and sell it,” Norton said.
Sometimes these properties don’t end up on the MLS at all. A leasing office handles the sales, Norton said.
Then there are companies who buy these homes for their workers. Some people come in for just a short time, and they’re put up in one of these condos. A major Boston employer bought multiple homes this size in a new building for this purpose, Norton said.
Whatever the reason for buying, both Taylor Blair and Norton said they believe the upward trend will continue.
“They keep building these giant luxury towers,” Norton said. “Part of it is a blessed increase in supply that we are not seeing in other sections of the market, and part of it is that real estate just continues to get more expensive.”