Developers of luxury condos are betting demand for upscale projects will keep going up

The Boston Globe reports:

Construction costs are soaring. Real estate prices are dropping, and buyers are backing off. Sounds like a great time to build a super-expensive condominium project, right?

"We think residential prices are going to explode with a vengeance," said Robert Epstein, chief executive of the Abbey Group, which this month broke ground on a luxury condo tower on Province Street in downtown Boston, and is marketing the units at pre occupancy prices of the $700,000s to about $2.6 million.

"A lot of people who are balking at filling their housing needs may be very sorry," Epstein said.

Is this just the optimistic chirping of a developer trying to make money on a $175 million project? After all, the numbers would suggest a more cautious outlook.

Prices for condos in downtown Boston were down 6.9 percent in the third quarter of this year compared to a year ago, and the total number of sales is off by 19.7 percent, according to the Listing Information Service, or LINK, which compiles data from brokers.

Massachusetts has less jobs now than in 2001 but condo prices are much higher.Figure that one out.