Something Unusual Happens When You Buy More in Back Bay
David Bates / May 31, 2012-10:37 am
Don’t expect a discount for buying volume in Back Bay real estate. You won’t see a sale: “buy one bedroom, get one bedroom free.” You won’t be getting a “frequent square footer card.” When it comes to bedrooms, bathrooms and square feet in Back Bay there is no diminishing marginal utility. In fact, there is the opposite — a premium to be paid for additional amenities — as if they were luxury upgrades.
Consider the cost of bedrooms. In my quick review of 2011 Back Bay condo sales, the average price for a one bedroom condominium was $500K and the average for a two bedroom condominium was $1.144 million. Seen in this context, the cost of the second bedroom was $644,000, nearly $150K more than the first. Do you want to add a bedroom to that two bedroom order and get a three bedroom instead? Well, on average a third bedroom cost $1,050,000, making the total cost for a Back Bay three bedroom condominium on average $2.194 million. Hey, if you have to ask what a fourth bedroom would cost, you probably can’t afford it… But if you can, the average cost of a Back Bay four bedroom condo is $4.1 million. That’s nearly two million dollars for one bedroom. That’s one expensive bedroom!
The cost of additional bathrooms may be even more price prohibitive than additional bedrooms. The median price of a Back Bay condo with one bathroom was $465K, but the median price for condos with two full bathrooms was $1.255 million, a $789K difference. Few buyers will be able to navigate such a wide price gap, and as a result buyers who feel they need to have two bathrooms may have to consider alternative locations.
Average square foot pricing in the Back Bay also shows the bigger the condo, the more expensive the space within it becomes. According to my breakdown of sales for 2011, condos from 500-999 square feet, sold on average for $699 a square foot. But condos that were 1000-1499 square feet sold on average for $743 a square foot. Unlike bedrooms, we’re not figuring the cost of the additional amenity, every square foot from 1 to 1499 is re-priced to $743. Back Bay condos 1500-1999 square feet went on average for $899 a square foot. And the Back Bay condos over 2000 square feet cost on average over $1,000 a square foot.
In other areas, more might cost more, but in Back Bay more cost MORE!