The developer of Folio Boston, a new luxury condominium project in Boston’s Financial District will be holding an auction for the 34 remaining, unsold condominiums.

Folio Boston is a 14-story, newly constructed building facing the Rose Kennedy Parkway, at 80 Broad Street.

Out of the 96 units, 63 have been sold. The remainder are a mix of one-bedroom, two-bedroom and penthouse units.

A minimum bid will be required for each unit. A one-bedroom currently offered for sale at $480,000 will be sold at or above its $325,000 minimum price. The most expensive unit to be auctioned, a $1.76 million, two-bedroom with a wraparound terrace on the 14th floor with a waterfront view, has a $1.025 million minimum price.

The interiors of these units are of high quality. The largest penthouse is jawdroppingly beautiful, with sweeping views of the parkway and harbor.

It seems to be just a matter of timing, with the developer looking to move on from the project, and seeing the auction as a way to generate business. At this time, it doesn’t look as though any other Boston projects would be considering such a move. Unless of course, it’s an overwhelming success.

Source: Going once … By Kimberly Blanton, The Boston Globe

A lot of people (experts, even) think the housing market is overvalued.

This had led to buyers deciding to wait it out, hold off buying a new home until prices fall.

Some of these people have never owned; some of these people are selling their current homes, and becoming renters, at least for the time being.

No one has a crystal ball. People on the sidelines are assuming that prices will go down, but they should also be watching interest rates. The higher the rate, the higher the payment, all other things held constant.

Median condo sales prices have not dropped, at all, in the city of Boston. The volume of sales has dropped, by about 25%, but not the prices, themselves.

Prospective buyers may have a long wait on their hands, if they’re looking for a bargain. It might never happen. As prices drop, interest rates have risen, making buyers’ mortgage loan payments about the same as before.

Meanwhile, they’ll have to deal with rents going up, due to the low vacancy rate.

From The Wall Street Journal:

Many bed-and-breakfasts are closing down as owners realize they can make a bigger profit by selling the home as a private residence than they do operating the business.

Rising interest rates also have made it more difficult for innkeepers to pay the mortgage and still make money.

Historically, bed-and-breakfasts have sold for four to six times a year’s gross revenues. Under that model, new owners could afford to buy a home, pay the mortgage and expenses, and bank the difference.

But because real estate values have soared so quickly, the formula no longer works. Now, such homes are selling at eight times annual revenues, and often much more. Revenues, meanwhile, are up only slightly.

We’ve seen this happen in the Boston area, in Provincetown, specifically. Owners of many guesthouses (a close equivalent of B&Bs) have decided, over the past couple of summers, to close their doors, and sell off their properties, either as single-family homes, or as condos.

The benefits: less rapid turnover of guests, meaning less congestion, and probably less damage to the town, because owner-occupants are probably more cautious, less loud, etc.

The costs: less turnover of guests, meaning less tourists looking to go out to eat and shop, all the time, meaning less tax revenue for the town.

Source: More B&B Owners Choose to Cash Out - By Conor Doughergy, The Wall Street Journal, by way of Realtor.org

From this week’s Business Week:

Economists have twisted themselves in knots trying to explain why housing prices in cities like San Francisco and Boston are so high. One theory says that the cities have better amenities. Another says that moving to these cities makes workers more productive (presumably because of the higher quality of their colleagues) so people will pay more to live there.

Lately, though, three economists from Philadelphia and New York have been pushing a completely different argument …

Simply put, a certain percentage of rich Americans would like to live for whatever reason in, say, San Francisco. But at some point, there’s no more room to build there. So the arrivistes have to pay a premium to move in. Prices go up …

What goes for San Francisco goes for other superstar cities such as Los Angeles, Boston, New York, and Seattle, say the authors …

The authors sum it up this way: “Living in a superstar city is like owning a scarce luxury good.”

Hmmm. Well, this writer’s blog entry sure made me feel wealthy and privileged, I don’t know about you. And, I only own a one bedroom apartment!

Full story: San Francisco, Boston, and Other ‘Superstar Cities’ - By Peter Coy, Business Week, by way of Matrix - By Jonathan J Miller

Original study: Superstar Cities (.pdf) - By Joseph Gyourko & Todd Sinai and Christopher Mayer