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Luxury Condo Market in Boston and Brookline

Residential real estate is in short supply in Boston and Brookline, there is no question.  This week’s Wall Street Journal had an article about the first time home buyers getting squeezed due to the low inventory and surging prices around the country.  Greater Boston is no exception.  

The pressure on the younger buyers is coming from the lack of inventory and surging prices.  But while the home market gets more expensive, developers seem to be putting much of their effort into luxury property.

Despite the opportunity in entry level and mid-level housing, luxury properties have been the focus of developers in Boston and Brookline, which may soon lead to an over-supply in the high-end market.

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Looking at the Luxury Condominium market in Boston, defined as condominiums priced $1,500,000 and higher, here is a snapshot of three points in time:

  • On April 19, 2015, there were 112 luxury condos on the market, with an average of 96 days on market.
  • Six months ago, October 19, 2015, there were 144 luxury condos available in Boston with an average of 98 days on market.
  • April 19, 2016, there are 166 luxury condos on market with an average 104 days on market.

As of mid April 2016, there is nearly 6 months worth of supply, which means if no new listings come on it will take current inventory six months to sell.  This doesn’t count the projects in the pipeline, only those listed on Multiple Listing Service.

The population growth in Massachusetts, and Boston in particular, will eventually absorb these properties and the coming supply of properties….eventually.  But expect the luxury market will soften in the meantime.  Luxury home buyers are faced with options in the City, both in the variety of condominiums but also with the additional incentives of luxury rental properties popping up all over Boston.

All this luxe development is in the face of the shortage and decreasing inventory of entry level and entry level and mid-level housing for the young Bostonian population.  

For condos priced under $1,500,000, the inventory of condos has shrunk 16% since last April, from 426 condos available late April 2015, to 357 condos on market 2016. This reflects approximately five weeks of supply, (to distinguish from the 6 month supply of luxury condos).   The market is much tighter at prices below $1,000,000.  

In Brookline, MA, where luxury condos are priced $1,200,000 and higher, the market is significantly smaller.  But the trend is similar.  Luxury condos in Brookline have a five month supply of inventory, while the rest of the market has a five week supply.

As the majority of the condo market trend in Brookline and Boston continues to tighten, the luxury market is more balanced and tamed.  The very high end becomes soft and fluffy, while housing becomes less affordable to the first-time home buyers in Greater Boston.
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market analysis

Brookline Real Estate Market 2015 Summary

It was a hot hot hot market in Brookline in 2015, as predicted.  What was not predicted was that the inventory would barely budge.  This pushed the prices higher as demand outstripped supply yet again.

brooklineCondominiums account for the bulk of the transactions in Brookline.  Average prices increased by 8%, the same as the average price increase the previous year.

Year Number of Sales Average Days on Market Average Sale Price
2013 541 26 $689,000
2014 496 37 $744,000
2015 521 31 $804,000

The single family housing market in Brookline is also suffering from a shortage, which pushed the average price up by 11.8% in 2015.  The average price of a single family house in Brookline now exceeds $2,000,000.

brookline house

Year Number of Sales Average Days on Market Average Sale Price
2013 179 80 $1,544,000
2014 169 83 $1,803,000
2015 175 71 $2,015,000

 

Days on market for houses are much longer than in the condominium market, but probably skewed by the length of time it takes to sell the higher end homes, where prices are $3,000,000 and up.  Those houses alone average 155 days on market.  So, the 71 days on market average to sell a house in Brookline overstate the majority of the market, which is much more nimble at lower prices.

What to expect from the Brookline real estate market in 2016?  A similar condominium market, but with about a 10-15% increase in inventory, and a slightly smaller increase in price.  The single family market will also see a tamer increase in prices, but still a robust market.  The higher end may see a bit more inventory and thus will slow down.

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Real Estate Prices in Brookline MA: Single Family Trends

125-Rockwood-Happy-Hollow-Brookline-MA-2

Picture from HookedonHouses.net.

Brookline MA has one of the hottest Massachusetts real estate markets.  This has put the pressure on prices on both condominiums and house and a fast-paced market.  Houses, though, don’t sell as fast as condos.  Most of the single family homes are considered luxury,  with on-market time of six to nine month common.  In fact, one Brookline house has it’s three year anniversary this month!

Currently there are 32 single family homes on market in Brookline, with a median price of $2.36 million.  This time in 2012 there were 51 houses on market with a median price of $1.79 million.

This day seven year ago (2007), there were 60 single family homes on market with a median list price of $1.7 million.

House Prices in Brookline MA

In the table below you will find the four quartiles of home prices in Brookline MA.  This table represents only zip codes 02446 and 02445, and excludes Chestnut Hill. (Quartiles are a way to group the homes into four categories of prices so we can analyze changes).

The median price of the bottom quartile of houses in North Brookline is almost $1.8 million, while the median price of the top quartile is almost $5 million.

Looking at the differences in these house, the most expensive houses are substantially bigger, at 8900 square feet. This is nearly double the size of the bottom least expensive houses. They also have double the number of bathrooms, but only one extra bedroom, on average.

BrooklineMA HousesTrends

What accounts most heavily for the difference in prices of Brookline MA houses is land.  Look at the column of average square feet of land. The least expensive homes average about 10,000 sf lot size. But the most expensive homes average nearly two acres! This is nearly EIGHT TIMES as much land, or 778% more.

House Prices in Chestnut Hill MA

Houses in Chestnut Hill MA, (which is part Brookline plus a part of Newton and a small slice of Boston), have a similar trend to those in North Brookline.  The disparity between house prices is about $3.13 million.

The least expensive houses are a bit smaller than half of the size of the top quartile, and have half the number of baths. But the difference in average lot sizes is substantial.  The largest homes have a parcel which is on average 546% bigger than the smallest homes.

The trend of days on market is predictable: cheaper houses sell faster – there is more demand.  Yet even though it takes a long time to find a buyer for the luxury homes, their prices are still on the rise.

Chestnut Hill MA House Prices

Land Scarcity

The scarcity of land in Brookline is well known.  Land values are driven by two things. First, our love and appreciation for a private yard.  Many buyers for a single family house in Brookline are upgrading from a condo, and thus the yard is highly coveted.  (Yours truly can relate).

The second reason is the potential for subdivision or building new houses.  Building houses in Brookline is a lucrative business, if one can get it.  Some lots can be subdivided which currently may have one small home on them.  With house prices in Brookline  high and rising, it is no wonder land is so highly valued.

Want to stay ahead of the curve? Click on the link and sign-up for my weekly Brookline MA real estate summary report where you will learn the market trend.  It’s free!

Brookline MA condos

Brookline MA Real Estate: 2012 Condo Market Summary

Brookline MA real estate didn’t suffer as much in the downturn as the majority of communities.  Still, we see a substantial pick-up in the condo market.

Brookline MA‘s condo market is known to be spread over a wide price range.  The condominiums in Brookline come in a variety of styles, settings, types of buildings and sizes.  The condos make up of the overwhelming majority of sales with Brookline’s mostly urban setting.

The market picked up with a nearly 20% increase in sales, and 20% plunge in market time.  Depending on the price range, the Brookline MA condo market has less inventory than demand, pushing prices up.

2011 2012 Change
Number of Sales 473 559 18.2%
Average List Price  $578,000  $584,500 1.1%
Average Sale Price  $562,000  $575,000 2.3%
Median Sale Price  $490,000  $500,000 2.0%
Average Days on Market 75 60 -20.0%
Average Sale Price / List Price 97.2% 98.4% 1.2%

 

 

Brookline MA condos

 

Search Brookline MA Condos for Sale

Doing the Numbers: Brookline Real Estate Months of Supply

“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!

Brookline Condos

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.

Pricing Your Home

Common Mistakes in Pricing Your Home in Rising Market

 

Pricing Your HomeIn a real estate market with rising prices, pricing your home can be a bit tricky.   I meet some home sellers who think it is easier to price a home in a rising market, but that’s not necessarily true.  The risk of mispricing is always the same, and leaving thousands of dollars on the table is at stake.

Prices are just starting to inch up around the country, but as usual, Boston real estate is a bit ahead in this regard.  Many of Boston’s neighborhoods and immediate suburbs are enjoying visibly higher home prices for some months.  And the vibrant market has encouraged many who’ve been waiting to sell.

So how much is your home worth now?  In pricing your home, ensure you receive top dollar by avoiding the following common mistakes.

Looking at sold home prices online.  Sold home prices are a great place to start your research on your home’s value, but there are some issues.  Although the information is public and generally accurate, it can be misleading when using the mapping features of Zillow or Trulia.  A house nearby of similar size could have sold for a vastly different price than what your home is worth.  Unless you know a house well, it is dangerous to compare it to yours.

Furthermore, don’t confuse recent sold home prices with the “Zestimates” on Zillow.  Those are generally useless in Newton and Brookline, and many parts of Boston.  I’ve written about my reservations about Zillow as a data source before in my article, “No More Zestimates for Newton and Brookline.

Pricing too high.  You may think pricing a bit high in a rising market is not a big deal, but remember, we are just coming off a pretty ugly real estate slump.  Market is just starting to perk-up, buyers still hold some cards.  First-time home buyers are moving the market, and they are buying on a tight budget.  There is less negotiation, so do not assume that if you price high, you’re leaving “room to negotiate.”  Instead, you’re leaving room to sit on market and wait for an inevitable price reduction.

Pricing too low.  Some real estate agents will tell you there is no danger in under pricing a home because there will be multiple offers, and you’ll get the full value of the home as buyers bid up the price.  Bologna.  Agents say this because a cheaper house is easier to sell.  There is a strategy involved in multiple-offer situations, and it involves some thought.

Generating a multiple offer situation is never a guarantee, and can be risky when you are depending on the multiple offers to bring you the full value of the home.  Here’s a post I wrote about the dangers of under pricing.  A neighbor of one of my properties under-priced for a quick sale, and after the bidding war, the condo sold for about 10K short of top dollar.

Asking the wrong agent.  Real estate is not neurology, but it does require expertise.  This expertise is labor intensive, including looking at homes, meeting with buyers, writing offers, learning the market, reading the news, etc.  Ask the wrong agent, and you’ll get the wrong answer.  Speak with local agents who seem to know what they are talking about, preferably more than one if you have reservations.  A competent agent will be able to give you a price or a price range, with some precision and confidence, and back it up with recent sales and inside knowledge.

Input from a professional will always be the best place for you to price your home.  Make sure you don’t get caught up in the mistakes outlined, and you’ll sell your home for top dollar in no time.

If you are curious about how much your home is worth, click here.

 

Today’s Home Selling: Listing Agents as SEO Expert

Selling a home used toListing Agent Finding Buyer be characterized by three activities: putting up a yard sign, hosting an open house, and advertising in the paper.  Some agents did this extremely well.  If selling your home was that simple, no wonder so many people chose to sell homes by themselves.

These days, selling your home is a lot more complex and requires a new level of sophistication.  Listing agents need to be search engine optimizing (SEO) experts.  Most agents don’t understand this yet.  Brookline Realtors, Newton MA real estate agents, and Boston real estate in general often lag behind in these matters.

According to the National Association of Realtors, 88% of buyers use the internet in their home search, and I bet that number is even higher in the Greater Boston Area.  Where else would you begin any search for anything? When you are finding answers to your queries, it means someone has taken the time to put content together and optimize for you to find.

Home searches are not just beginning online, but they continue online as well.   Buyers don’t stop their search as they get closer to finding their home.  Photos, floor plans, videos and information is reviewed and used to make shorter lists of homes to see.  Online home profiles are used to compare and contrast homes and to make final decisions as well.

If this is how buyers choose to consume information, it is the listing brokers’ responsibility to feed that information accordingly.  A successful online marketing strategy for a home has two functions.  First, to be found by as many targeted buyers as possible.  To be easily found is great, but quality trumps quantity.  I would rather have five visitors to the home who are qualified, ready to buy, and are the right fit for the home than 25 visitors who are browsing and curious.

The second function of a successful online marketing strategy for a home is appeal.  Your home needs to look amazing online.  Professional photos, floor plans, complete information, and a video all help.  More than ever the preparation for a home sale is important so the photographs and videos inspire the buyer to schedule an appointment.

Incomplete information may have been acceptable in the days when the buyer’s agent was the gatekeeper of information, but no more.  Any listing agent who’s marketing plan focuses on open houses, yard signs, and advertising is missing the point, and a good chunk of good buyers for your home.

How did you find your home?  How long ago was that?

Five Things Buyers Should Never Say During a Showing

There are some things a buyer should not tell a listing agent (agent representing the seller).  A good buyer’s agent will coach you a little as to what to say and not to say during a showing.  If you are unrepresented, it is more difficult to avoid the trap of having a long winded conversation with an inquisitive listing broker.  With a buyer’s broker representing you during the showing, you are more likely to be left alone or the listing agent may not even be there (ideal).

But for showings with the listing agent present, (unfortunately the majority of home showing appointment in Boston, Brookline and Newton), here are the top things you should never ever say that will weaken your negotiating for home price.

  1. Don’t tell the listing agent what other homes you are considering.  “We just came from 12 Blueberry Lane and we’re going to 43 Cranberry Drive next.”  NO!  This is as good as telling the listing agent your price range and much of what your needs and wants.  Furthermore, you make it easier for her to compare and contrast the properties, which you should do on your own, with your broker.  You are setting yourself up for a sales pitch you chose to avoid when hiring a buyer’s agent.
  2. Do not share any financial information.  This may seem obvious but you’d be surprised how much information you are willing to give up when someone simply asks.  It’s human nature.  Even if you are an all cash buyer, shush!  Pre-approved with 30% down, shush!  Still in the process of the pre-approval, double shush!  Your agent and mortgage broker work hard to keep all this information confidential, please do the same.
  3.  Do not talk about your price range.  That is a wonderful way to reduce your negotiation leverage.  Your price range represents what you believe you can afford, and if the listing broker knows you can afford more than you offer, it is easier to squeeze a little bit more out of you.  The negotiation will be about affordability rather than value.
  4.  Don’t say you love the house, or even appear as much.  The best negotiation card a buyer has is the ability to walk away from home.   If you go gaga for a home and make it known, the listing broker will know you want it and you are likely to pay more.
  5. Do not discuss the timing of your move.  This is another negotiation card, so don’t give it up.  First you want to know the seller’s plan in order to figure out if you can accommodate it – and probably save thousands.  Inflexibility is worth money – and the greater the inflexibility, the more money the opposite side of the transaction saves.  If you have very rigid plans, especially if you have another home on the market, keep it to yourself until you know the seller’s plans.

When you go to a showing with a listing broker present, treat it as the first step to negotiation, because it is.  Don’t share your personal information or excitement about a property.  And don’t be offended if your astute buyer’s agent interrupts you mid-sentence when you are talking to the listing agent.  She’s saving you serious money!

(If you are in the early stages of searching for a buyer’s agent, check out my post for William Raveis Real Estate’s blog, Five Questions to Ask a Buyer’s Agent Before You Hire“).