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In the last couple of years the Boston condos market has seen rapid fluctuation, sizzling and rapidly appreciating one year, and then slowing down the next. In August 2005, the Boston condos market was being ranked as the #1 most vulnerable housing market for potential price declines by Kiplinger's Personal Finance and the PMI Group. In later reports, The PMI Group increased their probability of declines in Boston even further, even as other metro areas took the top spot. Over 11,000 Boston condos have been sold in the last few years, on a constantly downward market. Demand for new units remains strong however, and supplies remain tight despite an unprecedented building boom.

Foreclosures are rising sharply in Greater Boston and Massachusetts. There were more foreclosures in the first nine months of 2006 than in all of 2005; Massachusetts is on track to break the all time record in 2006.

Despite the lower sales, the prices for Boston condos continued to rise, though at a slower rate than that of previous years. The market for downtown Boston condos remains stronger than the market for single-family homes, despite the general slowdown.

These Boston condos remain desirable, because supplies are limited and many demographic groups, such as aging baby boomers and young professionals, prefer smaller units in urban settings. But the downtown Boston condos market does not mirror the suburban slowdown. A great deal of construction is under way in the South End neighborhood and buyers are eagerly committing to these new Boston condos.

However many of these new transactions have not yet been recorded as actual sales, since they can't close until the construction is complete. Some sellers weren't lowering the prices or there were a lot of back-and-forth-negotiations, until there was a period that most Boston condos routinely sold at asking price. Condo sales, although lower than 2005 and 2004, were still at their 2003 levels, which were at historic highs, at the time. 3,903 Boston condos were sold in the city's 12 downtown neighborhoods in 2005, compared to the 4,586 Boston condos sold in 2004. In the South End, 820 sales closed in 2005, down from 1,015 in 2004. In the last two years properties have been taking longer to sell and prices have softened up, this was a reality which the sellers weren't quite ready to accept, but they were forced to.

Boston and Massachusetts are the typical exceptions that people use to qualify their statements when they say that real estate prices don't fall. Boston and Massachusetts prices have fallen in the past, even in nominal terms (when adjusted for inflation, the fall is even more pronounced). Bear in mind that even if prices decline merely by the same percent that they have in the past, the leverage (a.k.a., margin or mortgage) used to purchase the homes must be taken into consideration - the substantially higher number of zero down and negative amortization loans will leave a lot of people with heavy losses and negative equity.

To compensate for property that fails to sell, real estate agents in Boston are falling back on the deceptive practice of canceling the listing in MLS and then creating a new listing so that the property appears as new to the market. There were 10,606 MLS cancellations in the first six months of 2005, up from 9,722 cancellations in the first six months of 2004 and 3,736 in 2001.