BOSTON, MA - The sight of construction crews building new condominiums these days is likely to draw the real estate equivalent of rubbernecking at a highway crash. After all, in the midst of the worst real estate market since the Great Depression, opening a new luxury condo project is as counterintuitive - or foolhardy depending on your perspective - as it gets. Yet a handful of developers, both in downtown Boston and in the suburbs, are pushing forward with ambitious new projects.
The builders' motives vary, from bad timing to a bullish belief in the longer-term potential of the Boston-area housing market. The real estate market was already slow in 2007 when Bob Rinaldi began work on 20 South Ave. in Natick. But like so many others he never expected the financial typhoon that hit a year later, pushing the broader economy deeper into a recession and further suppressing the housing sector.
So he changed his game plan. He initially hoped to build high-price housing. Now, he pitches the 24 trendy, modern units as a lower-cost alternative to city living. Instead of starting off in the $600,000 range, prices are in the $500,000s, with a couple of units now selling for $499,000.
"I believe in this market you have to show them they really are getting a good deal," Rinaldi said. So far he's sold six units, though just one at the market rate; the rest were subsidized condos that went for roughly $200,000 to meet requirements for affordable housing. Rinaldi is also offering to work with buyers to customize their units, mixing and matching items seen in different model units.
Whether buyers see this as the kind of bargain-basement opportunity they're expecting in such a slow market is unclear. "Everybody is tire-kicking right now," said Lesley Palmiter of William Raveis, who is trying to move units at a newly opened, upscale condo complex in Natick Center. "A lot of people are sitting on the fence."
Still, the lower prices at 20 South Ave. did seem to help draw additional interest. While hardly jammed, a recent open house did attract several couples, among them, Jason Morse and his wife. Tired of the upkeep of the single-family home they own, the pair have been looking for a condo for two years and are intrigued by the single-floor layout of the 20 South units, which are a relatively spacious 1,600 to 2,000 square feet.
But they don't feel any urgency to buy now, either. "The more we wait, the more it works in our favor," Morse said. "This is probably going to be the year to buy something, 2009." The couple's interest was enough to draw a visit from Rinaldi, who took a break from an afternoon sledding with his children to make an impromptu appearance. To help spur sales, the developer has also teamed up with Needham Bank, to offer a 4.87 percent 30-year, fixed-rate mortgage to qualifying buyers.
Rinaldi is not alone offering concessions to attract buyers. At the Nouvelle, a new condo high-rise built at the revamped Natick Mall, now known as the Natick Collection, buyers can commit now and not make any mortgage payments for two or three months while they try to sell their current home. The project's developer will also consider paying down the mortgage rate or even covering some condo fees in advance, said Kevin Ahearn of Otis & Ahearn, which is marketing the project.
The high-rise opened this past fall, with only about 30 of its 215 units spoken for, he said. Like their counterparts in the suburbs, the developers behind a number of new condo high-rises taking shape in downtown Boston are also struggling to get buyers to commit. But unlike their country cousins, these downtown developers are holding firm on prices. That unwillingness to start bargaining, in turn, is a reflection of the relative strength of the downtown market, where prices, for the most part, have held somewhat during the downturn.
Projects under construction include the new Clarendon tower near the Hancock Tower, the W Boston Residences in the Theatre District, and 45 Province St. in downtown Boston. "People are really putting low offers in and these high-end developers are not really budging much on the pricing," said John Ford, head of Ford Realty and a top downtown broker.
Whether downtown or in the suburbs, developers in this market need more buyers like Dr. Joel Lopes. Lopes, who works in Boston, is moving ahead with plans to buy a unit for just under $600,000 at 20 South Ave., the new Natick complex. He's attracted to the roomy, open layout of the nearly 2,000-square-foot single-floor unit, gym, storage space, and garage parking for two cars, as well as the building's location a block from the commuter rail station.
After looking for two years, Lopes said he finally found a unit he liked at the price he is willing to pay. "Two years ago, for something like this," he said, "I would definitely have been paying $700,000 or more."
Source: Boston.com