Holiday Shopping: Boston Real Estate

November 13, 2012 By Leave a Comment

One of the best examples of a self-fulfilling prophecy is in the seasonality of the Boston real estate market. Every year, as Thanksgiving approaches, home sellers ask me, “Does it make sense to put the home on market now? There are no buyers looking.”

From potential home buyers I hear, “ Should we wait until Spring to buy? There are no homes on the market now.”

Yet, despite the expectations for a quiet holiday season, almost every year I am on the phone putting together a deal while checking-up on my stuffed Tofurky. This year the real estate market seasonality will be less pronounced than ever.

Both buyers and sellers will find advantages of pursuing their real estate goals during the holiday season.

Home Seller Advantages to Holiday Home Selling

Low Competition: Inventory shortage is what characterized our Boston real estate market the past few months. Newton, Brookline, Cambridge, Arlington and Brighton have all had too few homes for sale to satisfy demand, leaving many buyers still looking.

My friend Marilyn Messenger wrote a great article, The 5 Reasons the Sell Your House Now! She outlines the benefits of selling your home during the holiday season. One of the top reasons is the lower competition as many home sellers decide to wait or take their home off market for the holidays.

Serious Buyers: Marilyn also reminds us the buyers coming through a home between Thanksgiving and New Years’ are serious. These are determined buyers, who are not going out in harsh weather during overscheduled holidays to look at a home for kicks.

This year, home sellers can expect buyers who are eager, ready to buy after losing out on multiple offer situations in September and October.

Holiday Home Buyer Advantages

Fewer Buyers Looking: The worry of fewer homes on market is balanced by many buyers exiting the market and new ones waiting until 2013. Fewer buyers translate into fewer multiple-offer situations, and home sellers who are more likely to entertain your offer and work with you.

Shorter Mortgage Queue: Underwriting mortgages is taking weeks if you get stuck with the wrong bank, and closing delays are common. Much of the refinancing business will waiting until January, leaving your attorney with more time to work for you.

Homes are Ready to Sell: There will be two types of properties on the market. First, the “leftovers” from the busy fall market. These homes haven’t sold because of poor marketing or they were overpriced at critical moments. Neither of these reasons reflects poorly on the houses, but gives you an opportunity to negotiate.

There will also be new listings. Savvy home sellers want to take advantage of the low inventory and serious buyers. It’s a perfect time to match home buyers and home sellers who are ready to move on.

My advice to my clients has been and always will be to first work around your own schedule. You never know if your ideal home buyer / home seller has plans matching yours. Real estate surprises us regularly, as not everyone conforms to the same self-fulfilling prophecy, and not everyone celebrates the same holiday season.

(Coming in July 2013, an article entitled, “Boston Realtors Gone to Cape. Please Resume Your Real Estate Activity After Labor Day.”)

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Cambridge Condos Reviewed: Three Choices Priced in $400,000′s

November 5, 2012 By Leave a Comment

In almost any location in Cambridge you are a walk from something. Super chic and very pretty Harvard Square is still highly desirable, reflected in the prices. But try other squares and you’ll find value, community and a lively urban atmosphere.

I visited several condos this afternoon with a client, and here is a review of three Cambridge condos priced in the $400,000′s.

218 Thorndike Street, 2 bedrooms, 1.5 baths, $459,000. Bright two level condo with great outdoor space and garage parking. The kitchen is small but updated and pleasant. Bathrooms are neutral and bedrooms spacious. The garage is not attached to the building, but hey, it’s garage parking in Cambridge. This condo is part of a 59 unit complex built in the 80′s. The hallways leave something to be desired, but the reasonable condo fee can be attributed to a minimalist building.

The living space is on the main level, and a spiral staircase leads downstairs to the two bedrooms. Although slightly below grade, the space is sunny. Private deck and patio / garden, central air, storage and in unit laundry for convenience and comfort.

Located minutes from Inman Square, Lechemere, and Kendall Square.

401 Washington Street, 2 bedrooms, 1.5 baths, $424,900. Central square condo a walk to so many conveniences and restaurants. The condo is in a house undergoing complete renovations. This house obviously needs a total makeover. Once you are in the condo, you’ll find original floors from 1894, nice details and floor plan, with a total renovation.

The office doesn’t count as a bedroom, which is a great bonus. There is plenty of light through the over-sized windows. The view is of the house next door, which is very close. Working for this condo is the location, the old charm met with new renovations. But you’ll have to take a bit of a chance buying this condo now, as you have yet to see the building’s outside and common space finished.

11-15 Boardman Street, 2 bedroom 2 bathroom, three units ranging $439,000-$549,000. Totally renovated in and out, beautifully done. These units are modern meeting all the current trends of a dark hardwood floor, stainless steel kitchen with white marble and tile, and glass tiled bathrooms.

The first floor units are bigger, and feature a finished basement with cork floor, perfect for a family room, play room, or huge home office. The bedrooms are spacious, one in the front and one in back. The middle of the condos is the main living area with an open plan kitchen, dining and living area.

The top condos are similar, without the basements, smaller living areas, and the second bedroom is smaller. Parking included. Located in Kendall square, you’ll love these condos if you want something new and open.

Search Cambridge Condominiums Priced up to $600,000

 

 

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Doing the Numbers: Brookline Real Estate Months of Supply

September 27, 2012 By Leave a Comment

“Months of supply” in real estate is the closest thing we have to a forecasting tool. The months of supply measures how long it would take to sell the current number of homes on the market. Low inventory, means demand exceeds supply, hence rising prices are a logical expectations. Anything under a three months supply is considered low inventory and a seller’s market.

Brookline’s condo market is extremely tight! There are 72 condos on market, which is just over 1 month of supply. I’ve included a chart breaking down months of supply by price range for Brookline condos. You’ll find the $300,000-$400,000 range with low inventory, with about two to three weeks supply. The $500,000-$700,000 price range has only at about two weeks supply.

The slowest Brookline condo segment is in the luxury $1,000,000+ market. But it is still robust!

Next, single family homes. There are 70 houses on the market in Brookline, which is 3.6 months of supply. Brookline’s house market is a seller’s market, not as strong as the condo market, though. In most price ranges, inventory is between 2-3 months of supply, with few exceptions. The popular $800,000-900,000 price range has only a three week supply of homes. Buyers in this pricing category are having a tough time finding a home that delights.

Brookline’s luxury house market is a different story. Six months supply of homes priced $4,000,000-$5,000,000, and 21 months supply of homes priced $5,000,000+. This market has different standards, thought, and a house in this category is expected to take longer to sell.

The statisticians among you will tell me there are all sorts of issues with the measurements, but it is the best way we have to look at the current inventory of homes and get a sense of where we stand. For me, anecdotes are great, just not enough.

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Boston Real Estate Prices Going Up: Danger of Under Pricing Your Home!

July 23, 2012 By Leave a Comment

When home prices are going up, and going up fast, you should be concerned about under pricing your home. Boston real estate prices have been coming out of the slump, most prominently in the last few months. And as more sellers are getting ready to finally sell, under pricing can be a problem.

It is hard to imagine discussing the danger of under pricing just a couple months ago. But then I saw it done to a condo in Brighton. The condo, two bedrooms plus parking in an excellent building in Cleveland Circle, was barely on market before the seller accepted an offer. Because it didn’t close, I don’t know the final sale price yet.

I am so sure this condo was under priced because two comparable condos were off market just as fast, even though they were priced 30K more – about 10%.

There are two reasons the condo could have been deliberately under priced. First, the seller may have been under duress to sell quickly. Second, the seller may have been advised an under-pricing strategy to encourage multiple offers and thus have higher bids.

I don’t know the seller’s motivation, frankly. But I speculate a third reason the condo was under-priced – lack of knowledge on current market conditions. Brighton condos have been flying off market as first time home buyers are ready to buy, and there is very little inventory. The fast turnaround limits an agent’s ability to price accurately on recent sales.

The only way for an agent to know about this market pressure it to go to the jam-packed open houses with buyers writing offers on the steps of buildings. If the agent didn’t come to see Brighton condos in open houses in the past two months, accurate pricing would be almost impossible.

I hope, and expect, the condo sold well over asking. I’ll keep you posted.

For an accurate and free market evaluation of your home, click here.

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Newton Houses Take A Dive…Time on Market Dropping Fast!

July 6, 2012 By Leave a Comment

Market time for sold houses in Newton is dropping fast. In May 2012 the average days on market for a single-family house in Newton was 64 days, less than half from the recent peak in January 2011 of 155 days.

May of 2012 has many similarities to the peak of the housing market boom in May 2005. Time on market was almost the same, just over two months. Average sale price is in the mid $900,000′s, and the number of sales is around 50.

But similar numbers are not necessarily results of similar conditions. Buyers are less exuberant and more cautious, and sellers are still waiting for better market prices.

The buyers who are moving are the ones who must. Buyers who have less pressing needs are taking their time. In 2005, my sense was of greater urgency, a fear of missing a home, of pricing rising too fast, or mortgage rates going up.

Some agents say conditions are the same, I disagree. Multiple offers and shortage of homes make it seem so. But don’t forget we’re in a different economy. Today, many potential sellers are unable to sell due to loss of equity. Mortgage regulations leave sub-prime buyers out, and you need more than a pulse to qualify for a loan.

If you believe conditions are as they were during the boom then brace yourself because we all know what happened next. Instead, this is just the start of a new cycle and more needs to change to return the confidence of seven years ago.

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The #1 Deal Killer for Newton and Brookline Houses

July 2, 2012 By Leave a Comment

Last Spring market, which ended roughly a week ago, looked something like this: buyers want to buy, sellers unsure they want to sell, plenty multiple-offer situations and many deals falling apart mid-way to closing. This is the nature of a market with rising prices.

Homeowners, believing prices will rise, stay on the sidelines and don’t feel a need to sell their homes. On the flip side, there are not enough homes on the market to satisfy all the buyers, who are bidding up the prices of homes.

But many of the home sale transactions don’t make it to closing, or at least not without some disappointments and fighting. The dreaded appraisal is the culprit!

The appraisal is a third party evaluation of the home which the bank requires for a mortgage approval. An appraiser comes to the home and compares it to recent sales. In our market, the appraiser has a difficult job because there may not be enough recent sales of similar properties, and the price buyers are willing to pay is higher than it was just a few months ago.

Because of the formulas, regulations and rules the appraisers must follow; their evaluation is often coming short of the offer price, which the buyer and seller already agreed upon. What does this mean? Here’s an example:

Four offers are submitted on a house in Newton, and the best offer was accepted at $800,000. The buyer agrees to pay a 30% down payment, $240,000 and submits a mortgage application for a 70% loan, $560,000.

The appraiser uses the limited recent sales data for similar houses nearby, and comes up with an appraised value of $750,000. The mortgage company will still fund 70% of the appraised value, but now this number dropped to $525,000.

Once of several things may happen next:

  • The buyer may demand the price reduced to the appraised value. Why should he pay more than that?
  • The buyer can make up the difference in cash.
  • The buyer and seller can negotiate a price between the $800,000 and $750,000. The buyer will pay cash for anything over $750,000.
  • The buyer and seller may terminate the agreement, (if there is an appraisal contingency in the agreement, which I’ll discuss in another posting).

Whatever the decision, it is never a romantic time during a real estate transaction process. Both parties are usually upset – buyer fearing he is over paying and dreading the added cash expenditure and seller annoyed she is making less than expected. This is especially disappointing when there were several offers, four buyers is willing to pay more than the appraised value!

Five years ago appraisals were rarely a problem. But are and will continue to be an issue everywhere prices are going up, inventories are low, and buyers are ready, willing and able to buy.

Buyers and sellers must prepare themselves for the appraisal. I’ll discuss that in upcoming posts.

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Brighton Condo Inventory and Time on Market

June 21, 2012 By Leave a Comment

This is not the first post I am writing about Brighton condo market getting tighter. A few weeks ago I wrote about dwindling inventory of condos available for sale and the huge drop in time on market, which I named, “Brighton Feels like 2004.”

Inventory and days on market go hand in hand. These indicators are usually interpreted as the homeowners’ belief in immanent rising prices. Time on market fell from 70 days on market in May 2010 to 33 days on market this past May.

Steady downward trend, with lower peaks and lower valleys.

Time on market for sold condos in Brighton.

 

If the claustrophobia in your Brighton condo is getting a bit much, give me a call at 617-291-0323. This may be your opportunity for a move-up.

 

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The Truth About Open Houses

June 1, 2012 By Leave a Comment

Home sellers: why are you pinning high expectations to open houses? Is this your idea or your agent’s? It is a mistake to think open houses are an important marketing strategy for your home to sell. Open houses are not so important. They haven’t been for years, since about 2006 in my opinion.

The real function of open houses is for agents to pick-up buyers. The majority of buyers walking through your house on Sunday afternoon are in the early stages of their home search. This makes for an excellent way for agents to meet buyers who are often unrepresented. The buyers usually expect this, as they are shopping around for a buyer agent, and for general neighborhood and market information.

The buyers coming to your house are shopping, but not for a home…not yet. When they enter the stage of readiness to buy, they’ll book a private showing.

Why have open houses lost their purpose as a main showcase for your home? First, let’s blame (or thank) the internet. With all the media available, buyers are able to learn a lot more about houses online. They don’t need to see fifty houses to learn what the market has to offer. Instead, they can view videos, pictures, floor plans and neighborhood information anytime, on a handy device, from anywhere.

Second, with the slow market of the past few years, buyers are less fearful of losing a home. If they can’t get to a home on Sunday, they’ll come see it on Monday or Thursday. There is more inventory and homes stay on market longer. What’s the rush?

But open houses are not a total waste of time for you. You should have your agent (or team member) host an open house occasionally. Open houses are a great way learn about the market. Agents share information about about open house traffic to gauge what is going on locally. In open houses we also hear honest feedback direct from buyers, which can be very helpful.

So don’t nix the open houses completely. Adjust your expectations instead, and ensure that the open houses are not your listing agent’s marketing tool of choice.

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Brighton Feels Like 2004

April 30, 2012 By Leave a Comment

Looking at the Brighton real estate market numbers I feel like I’m time traveling back to 2004. Not enough inventory! Instead of anecdotal stories I will give you actual multiple listing service statistics.

In researching the difference in our local Brighton, Brookline and Newton trends versus the National real estate trends, I came across these year-over-year figures for Brighton, and I simply had to share them.

The average time on market for Brighton properties went from 89 days to 45 days comparing March 2011 to March 2012. Market time has cut in half! Prices are pretty much flat with median home prices going down from $248,000 to $250,000 in the same time frame. But the number that I find most interesting is the number of active listings on market. On March 31, 2011 there were 118 homes on market. On March 31, 2012 there were only 68. A 42% drop in inventory.

I can go on and on about statistical insignificance of all sorts of numbers the National Association of Realtors provide, and the numbers we real estate agent give to prove a point. But the drop in Brighton real estate inventory is sufficiently large that it can’t be ignored.

Is everyone sitting on the sidelines waiting for something to happen before they can sell? It’s happening, folks. The market is tight; A six week average market time and a lack of inventory sends me back to my early days of real estate, when every new listing was attacked by a mob of first time home buyers.

These days the mobs are smaller, more educated, and less prone to overbidding, but significant changes are underway from the slow, sleepy, depressing market.

Even if you are not buying or selling in Brighton, this information is important to you. A couple weeks back I wrote about how the Brighton real estate market is a leading indicator of change. This market is dominated by first time home buyers, who set off a chain of real estate events.

I’m not saying everything is fabulous, only that change is in the air.

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The Only Reason for Not Selling Your Boston Area Condo

April 17, 2012 By Leave a Comment

I’ve been writing a lot about how this is a great time for Brighton (and most of the Boston area) homeowners to sell their condo. But I own a condo in Brighton and I am not selling it. It is only fair I give a balanced view and tell you the only reason I think you should not sell your Brighton or Allston or Somerville condo.

Rents are going up, occupancy rates going down. This is a great market for landlords. That’s it. That is the reason to not sell. But there are two caveats. You need to want to be a landlord and you need to be able to afford to buy without selling.

Being a landlord is not terribly difficult and I enjoy most of it. But many people are uncomfortable with the idea of other people having rights to their home, collecting rent, and being responsible for the condo remotely. A bigger issue for some is the risk of not getting the rent and still having to pay the mortgage and condo fees. That’s a risk you must be comfortable taking or you are going to be miserably anxious.

Next caveat is in regards to your financial ability to buy. Real estate purchases require larger down payments and they have stricter mortgage guidelines. You need to have the cash to make the down payment, AND you must have enough income and assets to offset the debt and expenses of the rental condo to obtain a mortgage.

Can you get through these two hurdles? If so, I am the first to say DON’T SELL your Brighton condo! Enjoy your income property for years to come. I believe it will prove a superb investment.

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