After months of searching for a condominium, Brittany Martin, a nurse at a Boston hospital, says she now might stick with renting.
Yes, she still wants to buy, but listings are often snapped up before she can even see them.
“If you like a place, you had better have an offer on it or it will be off the market tomorrow,” she said. “You don’t have a second to think.”
Boxed out of Cambridge’s red hot condo market? Not quite.
Martin has been searching for months in Natick and other area suburbs, but has been unable to even so much as put in a bid as desirable units get scooped up fast.
After being hammered by the real estate downturn and recession, the region’s condo market is showing signs of life again.
Buyers like Martin are looking anew at condominiums, especially as prices for single-family homes escalate. Yet challenges remain, from a shortage in listings after a yearslong drought in new condo construction to competition from the rental market, where there are more options.
“Everything is hot right now because of the shortage of inventory,” said Sam Schneiderman, president of the Massachusetts Association of Buyer Agents. “There are single-family buyers and there are condo buyers, and there are people who are simply seeking shelter at this point.”
For many prospective buyers, condos are a relatively affordable way to break into a community with eye-popping house prices. The median price for a single-family home in Needham during the first four months of the year was $706,000 compared with $445,000 for a condo, while the median Newton home price was $811,450, as opposed to $416,250 for a condo, according to the Boston-based Warren Group, which tracks the real estate industry.
“It is a great alternative, especially if it is a school system concern,” said Alex Coon, Boston area market manager for Redfin, a national brokerage company.
Yet brokers say a growing shortage of condos has put a damper on the market in some communities. Sales were up this year in Needham, Newton, and Framingham as of April 30, but lagging in Concord and Natick, according to data from the Warren Group.
Statewide, the number of condos on the market at the end of April dropped by nearly a third compared with the same time last year, from 10,396 to 7,024, according to the Massachusetts Association of Realtors. Middlesex County saw a similar drop, from 2033 to 1,348, according to MLS Property Information Network
One result has been a two-tiered market, with attractive units getting snapped up quickly while worn or less desirable units languish, brokers and buyers say.
Bill Spencer, who has been hunting for a condo in Concord, has seen this at first hand, having looked at units that were unappealing in one way or another, and languishing on the market.
Yet when he came across an attractive condo in West Concord that he was interested in buying, Spencer had a rude awakening.
He first offered a little below the $550,000 listing price, increasing it to the asking price when it became clear there was competition. Given a final chance to sweeten his bid, he added $5,000 to his offer, only to lose out to another buyer.
This was after he lost out on a Lincoln condo that got snapped up before he could see it.
“I had an appointment to see it Friday morning but they accepted an offer on Thursday,” he recalled.
Martin, the nurse looking in Natick, has run into a similar problem. She has seen her share of condos where the layout just didn’t work for her — such as a single bathroom accessible only through the master bedroom.
Yet she has gotten excited about units only to have them snapped up before she could even schedule a showing.
“I have found that condos go on the market and then they are off the market before you have a chance to look at them,” Martin said.
There’s a reason for the slim pickings, said Thomas Skahen, a co-owner and founder of Littleton-based PrimeTime Communities, which markets new condo developments.
Banks pulled back from financing new condo projects during the recession, and are only now edging back into the market, he said. Developers are starting to draw up plans again, but most of these new projects are a year or more from opening.
In addition, much of the new condo development is taking place in communities farther from Boston, such as Framingham, Berlin, and Hopkinton, where bigger projects with hundreds of units are taking shape, Skahen said.
“I think this is going to be the way of the world,” he said. “You are going to have to get into a car and drive to get new product.”
The apartment market is also tight right now as well, but there has been an explosion in new rental development, with banks seeing such projects as lower-risk investments, Skahen said.
Also on the market are single-family homes that have been rented out by owners who relocated or moved on to buy another house.
Unable to find a condo to buy, some people are opting to rent for another year, said Lesley Palmiter, with Keller Williams Real Estate in Newton.
While she has spent years selling condos and homes, Palmiter said, she now finds herself helping some thwarted buyers, including Martin, find a temporary landing spot in the rental market.
“I am dealing with a lot of buyers right now who are very frustrated and who can’t find what they want,” she said. “They are deciding to rent and wait for a while.”