The first post I wrote for Redfin dealt with an odd gap in the Back Bay real estate market. Five months later, the gap is still there, and I still don’t get it.
The average MLS listing in Back Bay is $959,000 but the average sale price over the past three months has been $463,000. Beacon Hill, while stacked with the same number of seven-figure mansions and five-figure parking spots, doesn’t exhibit the same deviation.
I know what Econ Cat thinks. He thinks it’s a bubble; the result of too many would-be house-flippers over-valuing granite countertops. Those inflated figures will slowly and painfully be ground down to a reasonable price by the raw power of the market system.
But Econ Cat expects people to be dumb. I like to think they aren’t. There needs to be some other explanation, like wealthy, ignorant parents haven’t started buying money-is-no-object studios for their college-age children yet, but cash-conscious progenitors have already bought up all but a few bargain places.
Or maybe it’s that large Back Bay homes sell in groups as well-off friends/frenemies try to one-up each other. That would mean there’s a short period each year where past sales dramatically outweigh list prices, but the rest of the time, the list price/sale price ratio is in its current state.
I realize I’m grasping here, but c’mon—the people selling these homes are too rich to be so unaware of the market, right?