Boston’s Real Estate Rule of Altitude
David Bates / September 7, 2011-10:38 pm
Can a condominium’s value be a function of it’s height? A review of two years of citywide two-bedroom condominium sales shows that often the higher up you go, the more you pay. In that collection of data, second floor condominiums had higher median sale prices ($359K) than first floor units ($330K). Fourth floor condominiums had higher medians ($550k) than third floors ($386k) And when you got to the fifth floor and above, which in our market connotes an elevator building and modern amenities, it was a completely different value game ($740K median).
In our fair city, however, third floor condominium sale prices can sometimes be an exception to the real estate rule regarding altitude. Jay Plasteras, an agent with more than 25 years of experience, explains that in the Back Bay the “second floor bar none is the most desirable.” He notes that while the second floor provides owners a sense of security versus the first floor, that floor also tends to have higher ceilings, more ornate details and bigger windows than the other floors in Back Bay buildings. In contrast, most third floors are just not as nice as second floors. As a result, median sale prices for two-bedroom condominiums on Back Bay third floors are 14 percent lower — not higher — than the median sale price for second floor two-bedrooms.
In other parts of the city, as well, third floor condominiums may be higher than second floor condominiums, but second floor condominiums have higher median sale prices than third floor condominiums. Yet the reason for it remains ambiguous and the disparity itself seems below the radar to most in the know about real estate values. In Beacon Hill, a review of five years worth of condominium sales showed that the median sale price for third floor one- and two-bedroom condominiums was 10 and 12 percent lower, respectively, than the median for second floor one- and two-bedrooms. Yet when apprised of the discrepancy in the numbers, Pauline Donnelly, a well-respected agent in the neighborhood, attributed it to “random quirky numbers.”
A review of five years of sales in the Fenway area also showed third floor one-bedrooms have a median sale price 8 percent lower than second floor one-bedrooms. There, too, Michael Grappo, a top agent in the area, could not think of a reason for a third floor discount and echoed a similar sentiment as his Beacon Hill peer, calling into question the quality of the data set.
Yet the matter persists; one must wonder, is there something that buyers know that agents and the rest of the community don’t? Will buyers not travel up that extra flight of stairs unless there’s an incentive (like a discount)? Maybe. Consider this: While there are many neighborhoods in Boston where third floor condos have median sale prices equal to or better than second floors, a review of total MLS condominium sales citywide from 8/1/09 through 7/31/11 shows median sale prices for third floor one-bedrooms was less than second floor one-bedrooms. Buyers liking a particular location –but wanting a deal–should consider taking advantage of this quirk in the real estate rule of altitude.