Condominium Sales

A story in today’s Globe attributed the continued strength of the Massachusetts real estate market to soaring condominium sales. While condo sales are up 24% from the same period last year, sales of single-family homes are slightly down. It’s apparent that buyers at both ends of the market – first time home buyers seeking an affordable place to live and older folks seeking to downsize and cash in on the appreciation of their suburban residences – have made the condominium market very attractive. The story does report, however, that sales of high-end units in Back Bay, Beacon Hill, South Boston and Charlestown are slowing, with less units sold in those areas so far this year as compared to the same period in 2004. This could have significant consequences in Lowell since many of the purchasers of downtown residential condominium units have chosen to live here for economic reasons – a unit in Lowell is affordable while a comparable one closer to Boston is not. With prices in Boston sliding, that dynamic might change. The growth of the condo market here in Lowell is evident from the following statistics: In May and June of 2004, we recorded 742 deeds for the city of Lowell. Of those, 197 (27%) were for condominiums. In May and June of 2005, we recorded 772 deeds, 243 (32%) of which were condominiums. While the number of all deeds recorded for these two months increased by 4% from 2004 to 2005, the number of condominium deeds increased by 23%. Unfortunately, this means that the number of non-condominium deeds decreased by 3%. This transition to a real estate market dominated by condominiums is demonstrated by the number of Master Deeds (the document that creates the condo complex) that have been recorded over the past few years for Lowell. In 2001, there were 7. In 2002, there were 22. In 2003, there were 15. In 2004, there were 41. Up to today in 2005, there have been 25 with many more under construction or in the planning stages. Unfortunately, past experience has shown that when a real estate bubble bursts, condo prices collapse precipitously. If there’s a slow down of the real estate market, this increased dependence on condominiums for housing stock could have dire consequences for the city of Lowell.