Multiple offer poll results

It seems like the sweet spot for pricing is definitely in the 300-350 range.

This was an interesting survey. Although the sample size is small it does show some insight whats going on right now. First off, the sweet spot is in the 300-350 range. This is the price range for the first time homebuyer with a household income over 100k. If the household does not make over 100k then a 10-20% would put them in this price range. Secondly, I can't not go off this survey alone for this comment but more from personal experience. If a house is in good shape (i.e., no major work like needing a new roof) decent size (over 1500 square ft) within 495 but outside 95 then the house will most likely go within a week or two. This is what I have observed. As you get closer to 95 that sweet spot may be somewhere between 330,000 and 370,000.

Now, the reason why things are slow is because the money has dried. It is true that people with a lot of cash to put down say 10% or more and have a good income (over 100k a year household) can get decent financing. But I don't believe a lot of people have 40,000-80,000 laying around (or at least enough people to get the market moving again). The mininum you need right now is 5% down (3% with FHA) but that is still around 20k for down and you need another 10-15k for closing costs. So with an FHA loan at 350k with 3% down you are looking at close to a $2800 month mortgage payment with principal, interest, taxes, PMI, and home insurance. This would put you in say a 3 bed 1.5 bath 1500 sq ft house. That's no chump change to be paying for almost a basic single family home in an average town in the greater boston area.

Another thing that I notice wheneve my wife and I see a house that we like I check it out on www.masslandrecords.com. About 75% of the time the sellers are so leveraged that they can not sell the place for a couple % below asking without having to bring money to the table. Most of the time the refinancing occured to 2005 and 2006. These just aren't people who bought this decade either, these are people who bought in mid 90's.

So there is truth to whoever commented there is really not much available housing stock within the 495 belt. A good percentage of people cannot sell at what the property is really worth so they hold out and hope for the best. It is going to be slow crawl to the bottom which will be be led by foreclosures and short sales.

www.masslandrecords.com will only tell you the amount of loans approved, not the amount of money outstanding (that I know of). We have a $200K HELOC that shows for our property; have had since we initially financed, but never ever touched - it still shows up. We'll keep it for good fortune. If you were to go by what you see on that site you would assume we had NO room to negotiate (if we were selling), in reality we would have plenty.

Just a word of caution.

I noticed the same thing about our records on masslandrecords.com - a HELOC we've never tapped. Interesting website however. :-)

Yeah, there's no way to know what people have utilized from their HELOCs if anything.

I consider us fortunate that my husband and I as first timers were able to save up 20% for downpayment as well as additional money for closing costs. However, I realize that this is not the case for the vast majority of homebuyers. This allowed us to keep our monthly payment lower - I don't know how couples with a 100K or under income are able to make a $2800 mortgage payment every month.

BTW: George, I think your estimate for cc's is off - it's more like 10K and under for closing.

George,

As a first time home buyer I can say that you've described us to a tee. And you're right...we want a SFH for our first home (skipping the condo step since we were priced out of the game in 2003-2005 and unsure if we were going to stay in Boston besides) and we make a good income in the $110-115K range. We're looking at FHA loans mostly and saving up as much as we can...but its definitely not chump change. Unfortunately, for Suffolk County the limit for a MassCommunity loan through MassHousing is $110K and with our pay increasing coming up, we just got priced out of that option---you can actually get 0% down with these loans still, but the interest rates are considerably higher.

For the market to recover, I think its going to take buyers who don't have a home to sell to lead the way---but some prices really need to drop. There's a bungelow I love, but the sellers bought it in 2004 for $359K and have it on the market at $409K. It isn't worth it though and I doubt they'll go below their mortgage. My husband and I pretty much avoid properties purchased during the boom because we find its a waste of time. And we vet the properties on masslandrecords before we schedule a viewing too. There's a lot of inventory and time is precious, but, there really is a shortage of well priced, well kept up, non "as-is" homes out there.

Unfortunately, you dont seem to have a statistically significant sample size for really meaningful results.
The scant data does back up the intuitive thought that the high end (700K and up) is more price insensitive than the lower end.

Thanks for the folks who commented on the HELOC's. I learn something new everyday. But to add to the previous comment about refinancing, I noticed people have refianced and cashed out. I am seeing a lot of cash out refinacings on the masslandrecords website. I do see quite a bit of HELOC's and the values I am seeing for those are around 25k and lower. I don't think I have seen anything like that on the 200k level in my price range.

I think the truth is that a good amount of people who are selling don't have to sell. I think they would like to and they are seeing what the can get, but at the same time they can afford to wait so they keep their prices high. I also think there are an equal amount of people that have to sell whether it be job relocation, estate sale, or somthing else in that category. You are seeing that people in those situations where they need to sell cutting the deals and keeping the market moving. The real wild card are the foreclosures and short sales. They have seem to have hit the poorer towns and cities hard so far. But I think there are a lot of people in the various levels of middle class towns in greater boston who at the end of their rope. If the economy really sinks they way many economists think then you are going to to see foreclosures and short sales expand from those fringe towns to more of the middle class towns. This is when you will actually see a free fall in prices. Until then it will be a slow ride down.

It is interesting that the sweet spot on hot micro-markets and multiple bids are for entry level single family homes. I'd bet that there is a bit smoke and mirrors happening here from agents.

I'm fascinated by two other data points. First, there appears to be an up-tick on this activity for the spring market - although I have to wonder if it is because of recency of memory and who is in the market and looking at this blog. Also, the responders appear to be very urban - two parking spaces but don't need a garage. This seems FTHB thinking. The thought of a plowed in car in the winter is a nightmare!

Thanks Rona for the data. Interesting.

Rona,

I was grabbed by questions 1 & 3 b/c they spoke to something I've wondered in the past. I think it would be interesting to poll what people's motivations are to read and post on this blog. My gut said it would be predominantly home buyers trying to educate themselves followed to varying degrees by real estate professionals, home sellers and lastly observors. Obviously the poll was only for those recently active in a negotiation, but I believe those questions shed light on posters' motivations and allowed readers to put posts into better perspective. Thanks

All the talk about "micro-markets" obscures the fact that we are, after all, talking about a very small number of properties. No one is claiming that every property in Arlington or Newton is swamped with multiple offers. It's also interesting that the activity reported peaked in April, and sank in May and June.

I think it would be interesting to poll what people's motivations are to read and post on this blog. My gut said it would be predominantly home buyers trying to educate themselves followed to varying degrees by real estate professionals, home sellers and lastly observors

I'm not so sure observers are such a minority on this blog. After all, we are talking about one of the two key financial crises facing the US economy right now--the other being the rise in commodity and energy prices. There is a lot of interest in the state of the housing market right now.

I would be interested to know how you control for the validity of the information provided. Considering that over 50 of the 60-odd respondents (not looking at the data now but I believe those are the rough numbers) chose not to provide the address of the property involved, couldn't this all be made up? Couldn't one real estate agent from, say, Arlington or Brookline simply answer multiple times and claim that houses there are getting multiples and selling in a week?

I'm not saying this data is in fact skewed, but rather that I'm hesitant to give it any weight or importance because Internet surveys are always open to shills. Seems like real data showing days on market and sale price are the best way to understand what's happening in the market.

beedee, your concerns are valid, considering another poster admitted here to answering multiple times to skew the data on purpose! However, look at the survey another way: not as direct evidence of competitive bids, but simply as a suggestion of where to look for the evidence.

I have a poll up now about prices of renovations and experiences of fixer-upper and old house owners. I'm going to run that one for a while (about two weeks) because of the holiday.

Next, I will design one about who we are. I'll get that one going next week. It is a good question.

These polls are very informal. They are subject to monkey-business. However, I am pleased with the results of the first one. It rang true to my experience in the spring market. I am hoping the renovation one does as well.