Luxury Boston Home Sales Are Fueled by Overseas InvestorsSeptember 13, 2014
It is hard to hope for prices of Boston luxury real estate residential market to stabilize or go down as long as the demand stays high and there’s a shortage of supply. New products coming on the market seem to be at a record high, even though not all of these Boston luxury homes sell at the asking prices.
Needed: Recently Renovated, Move-In Ready Homes
Aside from supply and demand that should be factored into pricing Boston luxury homes, the demand by foreign buyers is also a major price driver. There’s a higher than usual demand by foreign buyers for super luxury homes with outstanding details. Typically for the most part, they gravitate towards luxury homes that are in immaculate 2014 renovated condition. They don’t want to deal with any work. If they are buying Boston luxury real estate to live in or as an investment, they want it to be in move-in condition. In many instances, they even buy properties fully furnished, as is. That’s how much they don’t to deal with shopping for furniture et al.
Being in a new market, foreign investors feel safer to buy something that is move-in ready. Foreign buyers are also less sensitive to comparable sales and the market condition than they are to long term investment values. They may not necessarily live in these properties right away, but they may plan to eventually live there.
In Boston, overseas buyers tend to favor new projects in luxury high rise buildings with hotel amenities and services where they buy one or multiple residences. In affluent suburbs, foreign buyers like the grand regal architecture and design with manicured gardens. Then again, the houses must be in excellent condition or have gone through recent, extensive renovation. The antique detail is of no interest to the majority of foreign buyers. They live in the 21st Century and they want a 21st Century luxury home.
Bottom line, foreign buyers and limited supply have contributed to the surge in prices of the local luxury market.