The State of the Roslindale Condo Market

Posted by: Tim White
Posted on: Wednesday, July 18, 2007 at 7:20 am
Categories: Financing, Home Selling, Home Buying, Market Conditions, Roslindale

In part 2 of our series on the state of the real estate market in Roslindale, we’ll explore in detail the overall condition of condo market segment.  In the first installment of this series, we focused on Roslindale’s single family segment, and soon we’ll explore the health of the multi-family segment, but today it’s all about condos, condos, condos.  And the results are….

Well, to be honest it’s a bit of a mixed bag.  Although I have faith in the long term health of this market segment, right now it resembles something like the proverbial struggle between style vs. substance (perception vs. reality), and in this instance style seems to be trumping substance.  I know this sounds somewhat cryptic, so allow me to explain:

The reason why it’s important to use more than one analytic tool–defined as a key market indicators–when attempting to analyze the condition of any given market or market segment is that each tool reveals a unique perspective on the market, and when these key indicators, each of which performs a specific analytic function, are employed, they should provide for a more substantial glimpse into said market’s overall condition.  More tools = more dimensional depth and weight = more complete picture.  Fair enough?

Using a single tool, however, does not a story make.

For example, if we look at the Roslindale condo market through the lens of the key market indicator of ‘median sales prices over time,’ things ‘appear’ to be doing just fine relative to state of this market over the preceding 24 month period.

roslindale-condos-median-price.jpg

June 2007 figures notwithstanding, the graph depicts a market trending upward in terms of median sales price.  In fact, this upward trend for the last quarter shows a higher median sales price than at any other time in the past 2 years.  However, this good news is tempered by a rather precipitous June dip in median sales prices (and let’s hope that’s all it is–a dip). So, there it is– this upwardly trending ”style” of the Roslindale condo market–but, again, things are not always what they seem.  The fact is, however, that evaluating the market as a whole by looking only at median sales prices, is not a best practice approach. 

The next analytic tools we’ll employ–supply and demand by units and sales rate MSI–reveal a more complete picture by adding dimension, substance and weight to the analysis.  Unfortunately, the news depicted here for the Roslindale condo market is not as uplifting as the first graph might suggest.  Here is the ’substance:’

roslindale-condo-supply-demand.jpg

This graphs illustrates that the amount of inventory on the Roslindale condo market, although not at its highest, is well in excess of demand.  The demand itself is flat and even trending down slightly.  By the numbers, the were 87 condos for sale in June of 2007 with only 9 going under contract, compared to June 2005 where there were 81 condos for sale with 28 under contracts.  There is reason for concern here.  It appears as if sellers and buyers are not nearly aligned when it comes to opinions of condo values in Roslindale.  Either sellers need to adjust their expectations down or buyer must adjust theirs up, but somethings gotta give.  Right now it seems there’s a bit of a stalemate between the two sides.  The only condos that are selling it seems are the one that are priced aggressively.  There seems to be little motivation, based of the number of sales, on the buying or selling sides to adjust their respective postures.

Finally, lets look at what’s happening with the sales rate based on the monthly supply of inventory (MSI) for Condos in Roslindale

roslindale-condo-msi-sales-rate.jpg

The term “sales rate” is used to describe the relationship between inventory for sale and inventory sold in the form of a mathematical equation.  It is often expressed in terms of the current monthly supply of inventory (MSI) which basically means that in any given month, if no additional inventory were added to existing levels, how many months out would the current supply last.   Presently, in Roslindale existing levels of inventory are projected to last 6.5 months out.  By comparison, in June ‘06 the MSI was at 5.5 months itself up from June ‘07 when the MSI was at 2.5 months.  It should also be noted that the average days on the market (DOM) for condos in Roslindale is hovering around 75 days.

Taking into consideration all three (3) of these key market indicators when applied to the condo market in Roslindale what I see is a market that looks good from the outside, but a closer look reveals some cracks in the armor.  It seems to me to be an issue of expectations:  Sellers perhaps being too high and buyers maybe overeaching a bit as well.  As such, we have stalemate.  Best advice to sellers is to act competitvely and realistically when pricing their condo units.  For buyers, there’s a deal wating for you in this market so don’t be afraid to pull the trigger.  It’s a great time to buy!

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