Buying and selling
In the summer, I keep my thermostat set at 55. Occasionally, there are fluky nights in August when it gets cold. If the house gets below 55, I’ll wake up in search of an extra blanket and I will not be a happy camper. This Monday night, it became "autumn." The temperature seemed cold enough, when I came home, that the heat might kick on. So, I looked at my thermostat. Yep. 55. I kicked it up to 61. It didn’t go on overnight.
It made me wonder, what an ideal temperature? I tend to like it a little on the cool side, unless it is damp. So, we keep the thermostat on 61 at night and up to 67 in the daytime, when we’re home. I know some people like it warmer. What do you set your thermostat at?
My buyer-clients tend to be rather energy conscious, so they tend to notice when there is only one zone in a big house. It's a good idea to have this in mind all year, but, more people notice this time of year.
Zoned heating, if you operate it in a way that avoids waste, can significantly reduce your heating costs. Zoning makes it possible to avoid running bedroom heat when no one is in there all day or running living room heat while everyone is sleeping is a waste. With programmable thermostats, using zones is pretty easy.FULL ENTRY
The number of home for sales in Greater Boston is down significantly, falling more than 20 percent over the past year, a new report by Zillow finds.
And the biggest shortage is among lower-priced homes, with inventory for the bottom tier of homes for sale in the Boston area dropping 21.4 percent over the past year. That's followed by a 20.3 percent drop inventory drop in middle-tier homes and a 19.1 percent drop in the number of high-end homes available for sale, Zillow reports.
The drop in homes for sale in Greater Boston is a little higher than the national average, with a 19.4 percent decline in listings over the past year.
First-time buyers are likely to feel the crunch first given the bigger drop in inventory in the lower tier - sorry, not defined by Zillow but I'm checking.
That's particularly bad news. After all, starter homes in the Boston area are already something of a joke - it's often a choice between a fixer-upper closer in and a house in better condition beyond 495.
Ultimately, people vote with their feet - by where they choose to live. And by that measure, suburban living is back, a new study finds.
While the hipster hotspots such as Davis Square are almost exclusively urban, the majority of new households in Greater Boston are being formed in the suburbs or in suburban-like areas within various city lines, according to a just released analysis of postal service data by Trulia.
In the Boston area, urban neighborhoods saw growth of .27 percent in new households from September 2011 to September 2012, while less dense, more suburban areas grew at more than twice the pace, by .63 percent, according to Trulia.
In fact, only five of the 50 major markets tracked did the number of urban households grow faster over the past year than their suburban counterparts, a group that predictably includes New York and Chicago as well as San Jose and Memphis.
I blogged a couple days ago about a 1950s cape in Woburn that "fishwood," a regular on the comment board of this blog, is looking to sell.
In theory, it could be a nice opportunity for a first-time buyer or young couple looking to start a family.
It needs work, but the renovations are manageable and the price is right - fishwood is looking at selling his roughly 1,400 square foot cape for $275,000 and letting the next owner polish it up.
But are the Gen Y'ers out there simply too demanding? Even just plain spoiled? Can today's buyers get over the fact that fishwood's cape probably lacks granite countertops and stainless steel appliances to see the potential of a diamond in the rough?
Here's what "rebadad" had to say:
I am a South of Boston agent and about half of my buyers are young (under 35). Believe me when I say, they are wonderful customers, but they totally lack any imagination. They cannot see potential. They want it all, and they want it now. If I was the owner of this property, I would definitely do the upgrades (stainless, solid countertops, etc.). It will sell the house!
Wow, looks like that nasty real estate downturn is finally history now. What a relief!
At least that's what a big majority of real estate agents and a growing number of homeowners across the country think, a new survey by HomeGain finds.
After years of pessimism over the direction of home prices, real estate sales folks are finally once again seeing the sunny side of things.
In fact, the numbers are pretty amazing - 80 percent of real estate folks and 62 percent of homeowners see prices going up over the next two years. By contrast, just 5 percent of agents and 14 percent of homeowners polled see home values going down between now and 2014.
At an open house, I expect to find a sign-in page. This sign-in page benefits the agent doing the open house. It gives him or her a way to contact potential buyers about this property, and frequently, some other property. My clients know to sign in as my client. It serves as “agent repellent,” since the listing agent (or whoever is running the open house) should not be contacting my client after the open house to sell him or her some other property.
A sign in sheet does not especially help the seller’s property security. Anyone who is coming into a house for nefarious reasons is not going to leave legitimate information.
When I go into an open house with a client, I expect to see a sign in sheet. Occasionally, there is no sheet because the agent doesn’t seem to care to collect names. But recently, I met an agent who is using his laptop for sign-ins. He had a sheet (probably in Excel) and asked people to sign in. Do you think this could become a trend? Do you think it should?
On the “no” side, I tend to think that people are reluctant to give out their email, generally. I am more reluctant on line, are you? Websites that ask too much information make me surf elsewhere. Do you react the same way? So, when I enter my email into someone else’s computer, it felt like the act was somewhere between on line and on paper. I am not sure this is going to catch on. What do you think?FULL ENTRY
For everyone bemoaning the lack of half-decent homes below $400,000 inside I-495, meet "fishwood."
A regular on the comment board of this blog, fishwood just moved to Connecticut with his wife and children to take a new job.
Now, as he settles into a new $275,000 house down in the Nutmeg State, he's faced with the dilemma of what to do with his 1,400-square-foot, 1950s cape in Woburn.
Fishwood pretty clearly realizes he will have to sell in the below-$400,000 end of the market, but that still leaves a big question: Should he fix it up and try to sell it or simply treat it as a "dump" and slap it on the market as is?
Yes, sales are up across Greater Boston, but it's a tale of two markets out there.
Sellers with the most desirable homes are fielding multiple offers, but many others, especially if their homes have a blemish or two, are taking a bath.
Roughly a third of all homes in the Boston area are still selling for a loss, according to a Zillow report over the summer.
Just take Lauren in South Weymouth, who I first blogged about earlier this year.
Lauren bought her three-bedroom Cape back in 2008 for $300,000 and put it on the market back in February for $309,000.
Instead, she recently wound up selling her 1,394-square-foot, 1950s cape for $280,000. And that's after pumping $25,000 into various upgrades since she bought it four years ago, from renovating the bathroom to new windows and a new heating system.
In a final concession to picky buyers, Lauren ditched the nasty, mustard colored carpet that had been a major turnoff while repainting the stairwell to give it a lighter look.
Here's a link to the listing.
The looming federal "fiscal cliff" could snuff out the budding real estate recovery unless Congress gets off its duff and acts soon, a report just out this morning warns.
If Washington fails to hammer out a compromise on the nation's mounting debt obligations, a series of draconian budget cuts and tax hikes will kick in next year.
Economists are already warning of another recession should budget Armageddon erupt, but the real estate market would go right over the fiscal cliff along with it, contends market tracker Clear Capital in a report out this morning.
"We've turned our focus to the impending fiscal cliff," said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital, in a press release. "With forecasted gains of 2.2% over the next six months, the threat of the fiscal cliff could throw a wrench into the recovery."
That's local economist Michael Goodman's take on the steadily dropping number of homes for sale on the market.
Co-editor MassBenchmarks, the influential journal that tracks the Massachusetts economy, Goodman is an associate professor and chairman of the public policy department at the University of Massachusetts Dartmouth.
And Goodman contends that sellers holding for higher prices down the road is major factor behind the dwindling number of for-sale signs.
Overall, the inventory of homes for sale across the state plunged 22 percent in August and has dropped seven in the last 10 months, the Massachusetts Association of Realtors reported last week. There was a seven month supply of unsold homes on the market at the end of August, a dramatic shift compared to August 2011, when there was nearly a year's worth of properties languishing on market.
"Press reports ... are leading some buyers to believe if they hold their homes off the market until later, they will be able to get a better price," Goodman told a breakfast meeting of the Corridor Nine Area Chamber of Commerce out in Westborough. "You are starting to hear anecdotal stories of people fighting over properties."
After blogging weekly here at BREN for three years, Sam Schneiderman, Broker-owner of Greater Boston Home Team, now posts here on the first Monday of each month. Today, Sam discusses the return on the investment in home renovations.
There are lots of ways that home and condo owners can spend money improving their property. Some will be smart investments and others will never return the investment.
Many owners think that when the time comes to sell they will recoup all of the money that they put into renovations and upgrades, but that is not often the case.
I categorize renovations and upgrades as follows:
- Energy efficiency upgrades and/or replacements that will reduce utility bills (i.e.boiler/furnace replacements) or enhance comfort (i.e. insulation). Replacement windows enhance comfort in addition to conserving energy. These improvements make a home’s resale more appealing and begin to pay back their cost almost immediately. There are also rebates, tax credits and incentives available from time to time.
- Cosmetic upgrades (i.e. paint, siding or hardwood floors) that are often done when ongoing home maintenance is required, but just as often done to personalize the property to the owner’s taste. When done as part of the maintenance cycle, some of these projects don’t cost as much out of pocket and some of them (i.e. paint or siding) prevent potential damage.
- Lifestyle and convenience modifications and additions (i.e. adding bathrooms, closets or living space) often done to better suit the lifestyle or needs of homeowners. These are often big ticket items that might not pay back all of their cost unless they are done to correct a deficiency in the property (i.e. adding a first floor lavatory in certain markets).FULL ENTRY
Given all the run-down, overpriced homes for sale in Greater Boston, choices are limited.
So if you want to snag something below $400,000 inside the 495 beltway, you are going to have to do some work - or pay someone else to do it.
That's where the flippers come in. Rundown homes and foreclosure specials are a flippers delight - it's how they make money. And a lot of people are in the game right now, particularly small-time investors and brokers.
Here's a link to a pair of dudes from Boxborough who were recently featured on A&E flipping homes in Lynn and other North Shore towns. The duo's efforts were also chronicled in the local papers as well - here's a piece from the Lynn Journal.
Frankly, I'm inclined to be suspicious - why pay a big markup for fresh paint and redone floors when you can do that work yourself, or, for that matter, contract out for less? At least you know what work was actually done - and hopefully have a better sense of the quality.
Ouch! That's the rather harsh assessment of the Greater Boston real estate market by a disgruntled buyer.
After failing to find any home he liked under $400,000, fleetian had this to say on the comment board on my post about rising interest among buyers in lower priced homes.
We found a bunch of trash in this price range. Some was dressed up and some was not. My landlord is the big winner as we will stay in our nice apartment until we can afford something nicer.
Well I guess it depends on what your definition of what "trash" is.
Boston-area home prices continue to rally, rising just about a percent in July, according to the latest Case-Shiller report.
But far more interesting is where prices are heating up - in the mid and lower end of the market.
The gold standard of the real estate tracking business, Case-Shiller focuses on repeat sales of existing homes.
And right now prices are rising significantly faster in Greater Boston on homes listed below $401,000 than for those at the high end of the market, Case-Shiller's July report finds.
When you read an MLS sheet, where do your eyes go first? After the price and address, many consumers go to the remarks section, the pictures, or the map. Where’s your first stop? I have found that, for many of my clients, ruling out happens before reading the vast majority of the listing sheet.
When they go to the next level, the next things they check are the floor plans -- if there are any -- and the presence or absence of additional features (How big is the biggest bedroom? How many indoor parking spaces? Is there a bath on the first floor?) What do you do?
Since the remarks section of the listing sheet is marketing, sometimes it goes a bit astray. Most of my clients have no patience for hyperbole. Exclamations points turn them off; they are looking for a place to live, not a BFF.
Agents learn early on that the listing sheet is a factual document. Agents get into trouble with consumer fraud laws if their description does not match reality, in fact. But, what is fact and what is opinion? There are way too many things that live in the grey area. There are descriptions of quality and descriptions of fact. Take this sentence fragment: “…spacious kitchen with granite counters and stainless steel appliances.” Spacious is opinion; granite and stainless are facts (or not.)FULL ENTRY
It's easy to blame bankers and real estate agents for the housing mess. But maybe it's also time to take a good hard look in the mirror.
Karl Case and Robert Shiller recently collaborated on new research that looks at the power of belief in driving up home prices.
The dynamic duo, founders of the vaunted Case-Shiller housing index, laid out their case last Friday before a Newport hotel hall packed with mortgage bankers.(OK, blaming the buyers also probably went over well given the audience, but I will leave that for another post.)
Here's an observation from Case - as reported by Banker & Tradesman - that gets right to the point.
"It's the people who have the highest willingness to pay that drive the price," Case said.
Think about the implications of that - it's pretty frightening. It's not the savvy buyers sticking with a budget who are driving this train.
“I am SO confused” That’s what a buyer (a stranger, not my client) said as he went down a spiral staircase into another finished room in the basement of a house extension. Really. Verbatim. He said: “I am so confused.” I generally don’t talk to other buyers at open houses, but I was in a mood. This was the last house of five that I showed this Sunday. I said, “If you think this one is weird, you should see [name withheld.]” The stranger said he drove passed it.
I wrote about this before, in 2008. Those houses are still out there, obviously. And I’m still seeing them.
I see strange layouts mostly in older homes. When homeowners make changes, it is generally an improvement for them, so they don’t always notice how awkward the end product is.
When a room is added or a porch converted, doors get stuck in odd corners, hallways get maze-like or there are sudden steps up or down. Then there are those “captured rooms” where you cannot get to the room without going through another room. It’s particularly odd when you must pass through the bathroom to get to a bedroom or to the basement or into the house from outside.
Then there are the non-room rooms. These are “bedrooms” too short to put a bed into. Attic “rooms” with doors, but ceiling heights about five feet – these are sometimes called “study nooks” when they should be called “storage.”FULL ENTRY
Paul Morse made a career of renovating old houses. Some have problems that come as a surprise to the homeowners. Today, he tells you about a few of the most common ones.
Buying an older home is a lot like buying a used car in a private sale. You can have it checked out by an expert, but there are no guarantees that something won’t wear out or malfunction – and no warranties if they do.FULL ENTRY
I’ve worked with homeowners who bought homes with leaks that were temporarily hidden by paint, insulation that had settled so much that it was virtually nonexistent, and basements that turned out to have serious water problems. The prior owner or home inspector may know of and disclose the potential for future problems. When the seller doesn’t know or doesn’t tell, the new owner is in for an unpleasant surprise.
A few years ago, the National Association of Home Builders conducted a study on the life expectancy of home components. Here are a few highlights:
• A foundation should last forever, but termite proofing will only last about 12 years
• HVAC systems last an average of 15-25 years with proper and regular maintenance
• A slate roof can last 50 years or more; a roof made of asphalt shingles lasts an average of 20 years (although it may be less with the tough Boston weather)
• Wood windows last longer than aluminum – 30 years versus 15 to 20
• Stairs and custom millwork should last a lifetime
• Kitchen faucets should last about 15 years, but a whirlpool tub could keep going as long as 50 if you don’t use it much
• Decks could last 20 years, depending upon the materials used
Oh my, it was a bad day for the housing bears!
A torrent of positive housing market news tumbled forth Wednesday, with both sales and housing starts up markedly.
Sales of existing homes leaped 7.8 percent, according to the National Association of Realtors. It was the biggest jump since the home buyer tax credit ginned up sales back in May 2010 and it beat economists' expectations, Reuters reports.
And Massachusetts and other New England states are right in the middle of this rebound, according to a separate report sent out by RE/MAX of New England.
Massachusetts home sales jumped 21 percent, year-over-year, in August, with pending sales rising 25 percent. The median price of a single family home in the Bay State inched up 1 percent, to $310,000, RE/MAX reports.
Meanwhile, housing starts also jumped, rising 2.3 percent for an annual pace of 750,000 new starts.
Still, before the housing bulls get carried away here, let's put some of these numbers in context.
That's the subject of a crucial but little reported tug of war going on between the fledgling Consumer Financial Protection Bureau and the real estate industry.
The National Association of Realtors is furiously lobbying against a range of new regulations it contends will further restrict the flow of credit to prospective home buyers.
Some of this stuff is a bit arcane. That said, a provision being mulled by the fledgling new federal agency - one that would cap how much outside debt a prospective buyer could bring to the table - is anything but obscure.
The new federal consumer bureau wants to cap the amount of debt a prospective home buyer could take on to 43 percent of total income. The norm is typically 36 percent.
If you are staying put this fall, you are not alone.
In fact, you are part of a growing trend that threatens to lock down the real estate market, on both the buy and rent side.
For home buyers, dwindling inventory has already become a major issue and is only getting worse. Buyers too often are forced to battle it out in multiple bid situations for the few half decent, well-priced homes out there.
Now renters hunting for new digs are running into the same problem as well, with not much to look at.
So says Trulia in a new survey that compares the cost of buying with renting in the nation's top 100 metro markets.
And Greater Boston is supposedly right in the middle of this trend, with buying now a much better bet economically than renting in both the city and in the suburbs as well.
Still, while I have no doubt that soaring rents have once again made buying a more attractive option, I am having a hard time getting my mind around Trulia's numbers, which seem overly aggressive.
On the North Shore, buying is now 52 percent cheaper than renting, for a saving of $1,176 , while in the western suburbs, the differential is about $1,000 a month in favor of buying, for a savings of 45 percent.
In Boston, buying is now 41 percent cheaper than renting, for a monthly savings of $918, Trulia says.
I wouldn't go as far as to say you need to read the print here, but the devil definitely is in the details when it comes to such seemingly too-good-to-be-true numbers.
Herbert Simon was a pioneer in artificial intelligence. His famous comparison is that mind acts like a pair of scissors. One blade is the brain, the other is the specific environment. The mind, when functioning at its best, is interacting with the world. He and many followers of AI studied how the mind works, how it learns, and what is in the way of learning and effective functioning. So, what’s this got to do with real estate?
A computer model for artificial intelligence is a machine that will play the same game for thousands of hours memorizing outcomes in huge numbers. Eventually, the program has enough experience to be a champion. That’s how Deep Blue - a computer - beat Garry Kasparov - a chess Grand Master. The computer could analyze two hundred million chess moves a second, whereas the human brain of Kasparov was considering five per second. It was a close match, why? Because Kasparov knew which of the smaller number of moves was most relevant to the situation. Human brains are designed to understand patterns. Grand Master Kasparov knew chess patterns better than Deep Blue. So what’s this got to do with real estate?
House hunters see about 20 houses before buying one. (Some less, many do see more.) As an agent who has seen over 10,000, I’ve noticed the patterns. I share them with my clients, so that they learn them for themselves.FULL ENTRY
One Saturday, recently, I saw two houses. They had a lot in common, but my clients’ reactions were night and day. Do you react to the emotional feel of a house? Does it distract you from looking at its nuts and bolts?
The first house was a sad house. The owner had gotten old in place. The presence of the old woman was in everything in the house, from the personal items to the stuck-in-time décor. It had fairly good light, but too many curtains. It was clean, but cluttered by items that immediately say “old person.”
The house was good-quality, 1960s vintage. (It could be worse, you know!) It was big on beiges and yellows, wood floors under carpet, good quality tiled bathrooms with ceramic sinks, and wooden windows with storms. Everything was serviceable. Updates were done as they were functionally needed, like addition of central air conditioning, replaced boiler, replaced appliances in the kitchen, fans added to the bathrooms. The yard was mown, but the landscaping had gotten overgrown over the years, so it had a wild look.
My clients stepped away thinking this was a sad house, but they turned more pragmatic and considered its potential. In the end, they ruled it out.
The second house needed a lot of updating, but it was a happy house. It had an elderly couple living in it last, but had been cleaned out and staged for the showings. What made it happy was that it was spotlessly clean, it had good light, and had an exceptional garden that was in bloom with late-blooming perennials. It had an even worse, dated yellow bathroom, a dated kitchen (from another era I can’t quite name), old windows with storms, some significant deferred carpentry work needed, an older heating system, and a wet basement.FULL ENTRY
The housing market is better off today than it was four years ago.
So argues Jed Kolko, Trulia’s chief economist, who surveys the housing landscape across the country and comes away encouraged after looking at how bad things were back in early 2009, when President Obama first took office.
By the time Obama gave his inauguration speech, housing prices across the country had collapsed, falling nearly 30 percent.
Over the next three years, home prices dropped another 7.5 percent, before reversing that trend over the past nine months. As of June, prices had rebounded 3.6 percent, Kolko notes.
By the time we all head to the polls this November, home prices should be just 2.2 percent below where they were when Obama first took office.
“When Obama took office, prices were in free fall, and now they have stabilized,” he writes.
Attorney Richard Vetstein brings us another real estate court case. Discrimination and church doctrine crash head-to-head in a case about two men who wanted to buy a church property to build an events center.
James Fairbanks and Alain Beret, married business partners from Sutton, had been searching for the perfect property for nearly two years when they discovered Oakhurst, an aging mansion on 26 beautiful acres in Northbridge. The former retreat center, which was affiliated with the Diocese of Worcester and had been on the market for some time, would be the ideal spot for their next venture: an inn that would host weddings and other big events, as reported by the Boston Globe. When the Diocese of Worcester unexpectedly dropped out of negotiations with them in June, Fairbanks and Beret were shocked — and flummoxed. Then, they say, a church attorney inadvertently forwarded their broker an e-mail from Monsignor Thomas Sullivan, chancellor of the diocese, advising a church broker that he was no longer interested in selling to Fairbanks and Beret “because of a potentiality of gay marriages” there.FULL ENTRY
Sullivan wrote: “I just went down the hall and discussed it with the bishop. Because of the potentiality of gay marriages there, something you shared with us yesterday, we are not interested in going forward with these buyers. I think they’re shaky anyway. So, just tell them that we will not accept their revised plan and the diocese is making new plans for the property. You find the language.”
The couple has filed what could be a landmark lawsuit in Worcester Superior Court against Sullivan, the bishop, the church’s real estate agent, and the nonprofit retreat center, the House of Affirmation, alleging they discriminated against Beret and Fairbanks on the basis of sexual orientation in the course of a real estate negotiation, violating state law. A copy of the Complaint can be found on my outside blog here.
It has been open season now for years on sellers. They are a favorite target in the comments section of this blog, often derided as greedily holding out for prices that made sense during the real estate bubble, but not in today's market.
And yes, some buyers are out of touch with market realities.
But what about buyers? After all, while some sellers may very well have unrealistic, ego-inflated expectations, some buyers may not know a good deal if it hit them over the head.
Some buyers, for example, are unwilling to deviate from their rigid idea of an acceptable home, or, for that matter, an acceptable town.
And more often than not, it is the 2,000-square-foot, four-bedroom colonial.
The worst showing of the millennium, so far:
My clients rejected a property that didn’t have a chance of selling. Not because it is uninhabitable or in a terrible location, or a weird, weird style or something. The biggest handicap to this property was the person paid to show it. The listing agent.
What did he do wrong? He failed to convince the seller to prepare the property for sale. He showed the worst parts first, leaving the buyer unable to imagine living there.
Why am I telling you this?
Because, as a seller, you need to find out how your house will be shown as part of your agent interview. There should be a showing plan, including preparing the house to show at its best and a planned tour to show the house at its best. If there are tenants, a plan to show in a way that keeps cooperation is also important. On interview, if your potential agent hasn’t considered these things, I think he/she is not doing enough for you.
Buyers should be aware of showing plans, too. A good plan will create a positive impression; maybe even one more positive than the house deserves. Buyers need to stay focused on their short list of house feature “want list” items and on the house itself. A well-done showing plan distracts a buyer from features they don’t want (especially in a hurry-up.) A bad showing plan or lack of preparation can turn buyers off a good house. Under-marketed houses will become a bargain when the seller and his/her tenants are sick of all the failing showings.
When it comes to the home prices and the economy, consumers have developed a bizarre, split personality.
Confidence in the housing market is finally growing again among consumers, even as sentiment on the fate of the overall economy grows darker, according to Fannie Mae's August 2012 National Housing Survey.
Yet the same folks who were so encouraged by signs of a rebound in the housing market believe the economy is headed downhill fast.
The percentage of consumers who believe the economy is headed in the wrong direction has been ticked up steadily since January and has now reached 60 percent, Fannie Mae reports.
Go figure. The last time I checked, the economy and the housing market were pretty closely intertwined.
Here’s a peculiar thing that one of my clients is facing.
He bought a second and third floor condo in a two-family house. The condo downstairs is rented to a stable, pleasant couple. He met with the other owner before buying and was comfortable with the situation. The owner downstairs said that she would be selling down the road. Down the road happened; she approached him about selling the downstairs.
Then a problem cropped up: Fannie Mae (FNMA) does not approve loans for a buyer who wants to own both condos in a two-family house. Fannie Mae would be perfectly happy approving a loan on this exact property, were it a two-family house. My client would qualify to buy it as a two-family, but not as two condos. Since he does not want to re-do the legal work to change the building back to a legal two-family, he is going to get his loan from a non-FNMA lender.
My client is daunted. It is a two-family house, physically, but he cannot purchase it with a Fannie Mae loan because it is now legally two condos. He would own the same exact house on the same exact piece of land.
My client wrote:
[The portfolio lender] can work with me, but it would be in the bank's portfolio, not a Fannie Mae approved deal.FULL ENTRY
The interesting thing I learned is that Fannie Mae does not sponsor mortgages where owner of one unit in a 2-family then buys other unit of 2-family. I asked [The portfolio lender] how this was different than one person buying a 2-family. [The portfolio lender] agreed it was a mystery with no reasonable answer --- but it seemed like she hadn't really considered it until I pressed her… But I am also curious if you understand Fannie Mae's position on my buying a 2-family (OK) vs. buying both units of a 2-family (not OK)
I asked Missy Henriksen of the National Pest Management Association (NPMA) about how to prepare for autumn in regard to pest control.
The leaves will soon be turning, temperatures will be dropping and the smell of fall will be in the air. As people prepare for the weather ahead, so do a number of household pests, namely rodents, spiders, ants, stink bugs and cockroaches. These pests know the best way to survive the fall and winter is to find an overwintering spot where they will have access to food and water – unfortunately, all too often, these safe havens are our homes.FULL ENTRY
As pest entry points are usually small and sometimes difficult to detect (for example, mice can slip through an opening the size of a dime), homeowners should perform seasonal maintenance checks in and around their homes to minimize the chances of a fall and winter pest invasion.
Some may dismiss these pests as merely a nuisance, but it’s important to note that they can trigger allergies, spread disease and contaminate food. Not to mention that rodents inside a structure can create fire hazards due to their incessant gnawing of electrical wires.
My FaceBook page has a bunch of pictures of smiling elementary school children in raincoats. For the past week and a half, the “back to school” pictures are showing up. It seems to have rained on the first day of school on a couple of different days in a couple of different school districts. (Some districts started last week, some this week, and some are not open yet.) The children look happy, whether they are headed off to classrooms in Newton, Medford, Lexington, or Fort Lauderdale.
With the opening of school, I come to expect that Boston Magazine will publish its annual school review. There is rarely much difference in the top 50 list. There were no surprises in the top ten. The schools that make the top twenty or so are pretty consistent.
In 2011, the top 10 were:
My client often ask me for measures like these when they are choosing a town. I keep them available. But, I also suggest that they test-drive any town they don’t know before house hunting there.FULL ENTRY
Home sellers are getting more confident. Or at least they are raising their expectations.
Asking prices jumped 2.3 percent across the country in August, Trulia notes in its latest monthly price and rent report. When foreclosures are taken out of the equation, that number increases to 3.8 percent.
It is the biggest year-over-year increase since the good old days before the Great Recession!
Greater Boston asking prices are rising as well, though at a somewhat slower place, jumping 1.7 percent in August.
Still, Boston area home prices never saw the massive declines that markets like Miami, Phoenix and Las Vegas experienced after the real estate bubble burst, so the increases, while smaller, are nevertheless significant.
In fact, the days of bargain hunting appear long gone now in the Hub and its suburbs.
Today, BREN goes to the toilet. When I wrote about open house and showing security for sellers, I also mentioned that some people are very grossed-out about toilets. Some buyers, like JenDiBa below, can’t get passed it. Some sellers, too, find it an insult for a stranger to use their private toilet without permission.
JenDiBa wrote: Once we went into the upstairs bathroom while touring a house with an agent. We went to flush it and found it had been used (#2) but not flushed - presumably used by the owners! We were so disgusted it was really hard to get past it when thinking about this house!
Are you someone who would lose all objectivity about a house once you realize the sellers didn’t flush when finished in the bathroom? If so, are you equally offended by smelly laundry or piles of dirty dishes? How about cat-vomit?
My clients make up nicknames for houses they have seen. Usually, it will be the street name or something like the blue kitchen or the porch. I bet that Jen and her partner called this house toilet or named it for what was in that toilet.FULL ENTRY
Our loveable tech guy Frank has been house hunting for the past four years while renting a condo in Woburn with his wife.
Frank is not looking for his dream home - but rather a half decent abode for something less than $400,000 that he can start a family in. A diamond in the rough, as he puts it.
It's been quite a journey, to say the least. Frank got laid off during the recession, but bounced back and found a new job without any serious financial damage.
He's fumed at pricey new construction in Woburn and had more than one of his below-the-listing-price offers spurned, sometimes rather rudely.
Frank even got a real estate license in order to get easier and quicker access to homes he might be interested in.
But with rents going up, up, and up, Frank says he realizes now is the time to make the jump.
Now Frank believe he has finally found the house he has been looking for all these years in an unnamed town - not one, he assures us, that begins with W - but first wants to get the advice of the bears on this blog.
"This is key for me, my RENT will NOT go down, in the coming years," Frank writes
A while back, we were discussing home inspection. Lance and nZone disagreed:
"The best time to do inspection is before the drywall goes up. Anything after that is just 'opinion' and 'speculation'."
Not true. Most contractors are consistent in their work (either consistently sloppy or consistently meticulous). The workmanship found outside the wall is usually similar to that found inside the wall. A discerning eye can draw informed conclusions about what is hidden by examining related items that are visible. This is what separates an excellent inspector from the average drone.
Bad inspectors offer opinion and speculation... Good inspectors point out subtle details you might have otherwise missed and help you connect the dots.
What are some of the outward signs that a good inspector looks for?
Workmanship: Lance mentioned the pattern of workmanship. I agree, yet slightly disagree with him on this. He is right that bad workers or bad supervision leave their mark on a property that can be seen by a discerning eye. However, in most renovation projects, I find that the builder “cheaps out” someplace. It is sometimes a glaringly obvious choice of materials, like cheap doors in an otherwise expensively appointed project. Sometimes, a different contractor did one part of the project; that part is significantly better or worse than the other work.
So says Redfin in a troubling new survey of buyers in 19 major metro markets across the country, including Boston.
Fewer than half the buyers out there - 46 percent - actually believe it is a good time to be house hunting, according to the online brokerage firm.
That's a big shift from the first quarter, when hopes for deals and bargains was much higher among buyers as the spring sales season approached. Back then, 56 percent said it was good time to buy, Redfin notes.
However, probably the most dramatic change is in buyers' expectations of where home prices are headed. The number of buyers who believe home prices are headed up has nearly doubled, to 61 percent from 32 percent in the first quarter.
So what's made home buyers so glum?
The magic date, September first, approaches. Tenants without a lease and landlords without a tenant are making their final decisions. The overriding question is: Is September first do or die in rentals? Are you a tenant who slept on a couch for months because you couldn’t find a place to rent after September first? Are you a landlord who had a vacancy for months because you didn’t find a tenant by September 1? I am convinced that most of the area right around Boston functions on the academic schedule, and that the suburbs are less tied to it, but are still affected. But is it as bad as some make it out to be?
Many landlords who allow tenancy-at-will leases ask for longer notice in the off-season. When I discuss leases with my first-time house buyers, I ask them what their leases say. I often hear things like, “my landlord won’t let me move between November and the end of March, but I can move after that.” I don’t get into the legality or the paperwork; the understanding is that they are expected to stay through the winter and they intend on honoring the agreement. Sometimes, what they think the lease says makes no sense to me, so I tell them to talk to an attorney about what they signed. Have you known arrangements where there is a tenancy-at-will for part of the year?FULL ENTRY
So how much should you earn before buying a house and starting a family? Well for a certain drussian, a homeowner and family man here it the Boston area, the answer is simple: $200,000.
And if nothing else, his Scrooge-like comments the other day on my post about the high cost daycare in Greater Boston certainly stirred the pot!
To be accurate, he was referring to family income and what a couple brings in together. Still, in drussian's view, you are financially irresponsible if you buy a home and try and start a
family here in the Boston area on less than $200,000.
And if you opt to procreate before hitting that golden mark, well don't come crying to him about the high cost of day care and college!
I got a call from a listing agent asking me, “Did your clients use the upstairs bathroom?” Odd question? Not really. Sometimes, things go wrong in bathrooms. The things that go wrong are plumbing issues and theft. My clients did not use the upstairs bathroom. The agent then asked if my clients were ever alone in the house. I said no.
I said that I did use the downstairs bathroom while they were in the yard. Then I asked, “Is there something wrong with the plumbing?” She said no. That means that something went missing in the upstairs bathroom.
I know and respect my clients. However, I do know where they are in the house when I am showing it. It is my job to protect the house and my client’s reputation. In doing so, I protect my own reputation.
This is a public service announcement to anyone who is selling their house and inviting the public into open houses:
Remove these things from plain sight: jewelry, cash, prescription medication, and anything else valuable and small. Bathrooms are an easy target for theft, since it is not so weird for someone to close a bathroom door and use the facilities quickly. (Closing a bedroom door would attract attention.)
If you own valuable antiques that are fragile, put them away.
Westford, Lynnfield and Medfield are among the Greater Boston suburbs that have become magnets for families with school age children, or so says Trulia.
The online real estate site put out the list this morning. It focuses on the ratio of school age children, age 5-9, to preschool kids 4 and under. Here's the theory: Towns with a high ratio of school age kids to younger, pre-school children are places where parents move to in search of better schools when their children were ready for kindergarten and grade school.
OK, it seems a little simplistic. Still, I'll hand it to Trulia, for it's also an interesting way of cutting the numbers. And, if nothing else, the whole exercise has yielded an interesting and not implausible group of supposedly popular school districts, from Westford to Weston.
Wouldn't seem to be much for the real estate bears to growl about right now, with all the key numbers pointing up.
Certainly latest piece market reports, both local and national, can't be simply brushed aside as a fluke or self-serving propaganda by real estate boosters.
July homes sales were the best since 2005, soaring nearly 27 percent, The Warren Group, publisher of Banker & Tradesman, reports this morning.
The Massachusetts Association of Realtors reported a similar 22.7 percent jump in July sales in its monthly report.
Nationally, all 20 cities tracked by the Case-Shiller index saw price gains in June over May, with Boston posting a 2.5 percent increase, though Hub prices were essentially flat year-over-year.
Still, there are more than a few reasons to be cautious, though it may be hard to for the bears out there to get worked up into full roar. I guess we will have to see about that.
If you are the modern, two-income couple, how much home you can buy depends how old your children are. Believe me, I've been there.
Daycare centers in Massachusetts on average charge nearly $15,000 a year to care for an infant full-time while mom and dad are at work, according to a new report on day care costs across the country.
For just one child, that's $1,250 a month.
And if you have twins - well you can do the math!
For parents, it's like shouldering an additional mortgage payment.
In fact, day care costs weigh more heavily here in Greater Boston on prospective home buyers than anywhere else in the country, with Massachusetts No. 1 in the cost of daycare.
Here's what a new report on the child care expenses across the country just put out by Child Care Aware of America.
For all those who think the median home price in the Boston area will never hit three-quarters of a million dollars, look westward.
Not long ago San Francisco seemed almost affordable again, with Bay Area prices having plunged 41 percent from their peak in 2006.
No more. Home prices in San Francisco surged nearly 4 percent from April to May, according to the latest Case-Shiller report, leading the country.
And the median home price in the Bay Area is now a hefty $705,000 and climbing.
OK, you might say, that's crazy California, not New England, it can't happen here.
But San Francisco and Boston have quite a bit in common when it comes to real estate and the economics that drive prices relentlessly skyward.
Do you consider the staircase size when you think about renting or buying? For safety, stairs should be even sizes. Variations in height -- even a little bit -- make it easy to trip. Stair risers can be as small as about four inches, making a very long, but not steep stairway. I don’t see many of those around here because they take up too much room. At the steepest, stairs should be between seven to a bit under eight inches high. Eight inch stairs are pretty steep. For moving, the problem is generally that the stairway is either not very wide or has a turn in it. This makes it hard to get large objects up or down.
When I was renting, I moved a lot (That is one of the joys of renting; it has great flexibility.) I owned a living room set that could be taken apart and carried in and out in pieces. So the hardest thing to move in and out was the mattress and box spring.
I remember the adventures I had helping friends get their furniture into second floor apartments. I learned early about the porch trick: That’s when you put the couch on the roof of the moving truck, then hoist it onto the porch and in that door. That’s what hardened by resolve to get an easy-move couch.
Renters, what are your moving stories? Pet peeves?FULL ENTRY
I had an unusual honor this year. I was hired by a home inspector to be his buyer’s agent. The reason this is an honor is two-fold. First, home inspectors see hundreds of agents in action. Why’d he pick me? Second, most home inspectors know a lot more about houses and about the process of buying one than the typical buyer; so many do not hire buyer’s agents at all.
One of my clients gave me the nickname “the house geek.” I am frequently described as “nerdy” by my clients. What I am nerdy about is not Big Bang physics, but houses. Most of what I have learned, I learned from following home inspectors and contractors around houses. I think that’s why I got hired by the inspector. I’ve been following him around and actually learning something.
When I told my staff that I’d been hired by the inspector, they were intimidated. “What can you tell him about a house?” they asked. First of all, I was hired to find a house for a whole family. The inspector has a wife and children. Their opinions matter. They would be looking at the livability of the house, not just the structure. I had a good bit to tell them about a house.
What I found most interesting about working with my inspector-buyer is that he stopped being an inspector. He had his “husband and father” hat on when he was looking at houses. I did have things to tell him about houses. He didn’t notice things about storage, flow, or sound privacy that I spotted.FULL ENTRY
Here's a pretty stunning number: Just under half of all homeowners under 40 are struggling with underwater mortgages.
The stat comes from Zillow's second quarter report on negative equity. And the numbers are even higher when you look at homeowners in their early thirties, a full half of whom are underwater.
That number, however, steadily drops with age, with just under a third of homeowners in their late forties underwater and just under a quarter of those in their late fifties buried under more mortgage debt than their homes are worth, according to Zillow.
More than a few desperate homeowners, stuck with underwater mortgages, chose to walk away during the darkest days of the real estate downturn.
Soon a whole cottage industry quickly sprang up, with the term "strategic default" coined by boosters eager to give the whole trend an aura of respectability and intelligence it certainly didn't deserve.
Yes, the strategic defaulters were simply smarter than the rest of us. And they certainly saw themselves as superior to all those poor chumps who chose to hang in their, making payments on homes even though the market value had temporarily dropped amid a national economic crisis.
But with home prices finally stabilizing in Greater Boston and soaring in once hard-hit markets like Phoenix, Las Vegas, San Francisco and even Detroit, who will have the last laugh now?
Really, I'm not kidding. That's anyway what Money Magazine says.
Newton got a fair bit of attention after coming in No. 4 this year on Money Magazine's list of the best places to live in across the country.
The Garden City is behind only idyllic sounding Carmel, Ind., Eden Prairie, Minn., and McKinney, Texas.
But apparently overlooked was the fact that Newton came out No. 1 on another, related list Money also released yesterday, "The best places for the rich and single."
Really, here's the writeup.
Median family income: $145,639
Move to Newton to meet someone rich and famous. Matt Damon and Louis C.K. grew up there. Amy Poehler was born there. Media magnate Sumner Redstone still calls it home, and even though he's pushing 90, he still is on the market.
For a little nightlife, head next door to Boston or catch some local culture from one of Newton's two symphony orchestras. Go incognito with your future celebrity sweetheart at a secluded spot along Crystal Lake. Or go public and shout your love to the world beneath Hemlock Gorge's Echo Bridge.
Not sure about the single part, but you do need a few bucks to buy in town.
The median home price in Newton was $750,000 at the end of July, The Warren Group reports, while rents in the city are typically near the top of local surveys.
I frequently run into buyers who cannot abide mice. Just the thought that a house may have mice is enough to send them scurrying away. (The people, not the mice.) Field mice are a nuisance, for sure, when they get into your food. They pose a bigger problem if they chew at your electrical wires.
I frequently see mouse traps or what is euphemistically called “mouse dirt” or “mouse droppings” in basements, garages, and attics. The little furry guys like to nest in fiberglass insulation. (You’d think they’d get itchy from it.) When I see the little tunnels in the insulation, I point it out.
I also see mouse-prevention measures in houses. People put steel wool in openings where mice are coming in. I remember that remedy from my childhood. (We had mice two or three times that I remember.) Sometimes I still see the steel wool fix under sinks or in corners near where heating pipes come up.
Mice are fairly easy to get rid of with traps or poison. It is also important to figure out where they are getting in and seal it up. However, if you see one mouse, there are more. If you ignore them, there will be even more.
If you think mice are cute. Think again. One may be cute, even two of three. But mice reproduce at a rate of 5-10 litters a year with an average of 6-8 little ones per litter. Getting rid of mice early is the most humane thing to do.
Exterminators say that the presence of a cat does not deter mice. The wild mice have figured out that domestic cats do not pose a threat to them, if the cat is not the mousing-type. I don’t know how they know (the exterminators or the mice.)FULL ENTRY
The real estate market is finally getting back to normal after a downturn in prices and sales on par with the 1930s.
That's been the mantra lately of real estate market watchers.
Frankly, I've been guilty of spouting something like that.
But that does not take into account the massive backstop to home prices the federal government and even more importantly the Federal Reserve are providing right now.
Today's bizarrely low interest rates are not some economic freak of nature, but rather the product of the Fed's multitrillion-dollar monetary manipulations.
And rock bottom interest rates, a key prop that prevented housing prices from completely falling through the floor, are now subsidizing the recovery as well.
Unlike the bubble years, today's buyers, especially the hardened Boston-area variety, are definitely not willing to pay whatever it takes to snag a home.
And there is little sympathy for sellers who overpaid during the bubble and are now stuck trying to sell their house in 2012 at prices last seen in 2005.
Here's what one frustrated buyer, isitfriday, had to say on the comment board the other day.
Have seen so many houses for sale for what they sold for at the height of the market. I said it once and I'll say it again- I am not paying for your mistake!FULL ENTRY
Buyers, when your Offer is accepted in competition, you may have doubts about whether the agent lied to you about other Offers. Phantom Offers (made up or exaggerated competition) happen, but they don’t really work, if you keep your eyes open.
By NAR standards, Realtors™ cannot make up Offers, they are required to tell their fellow Realtors ™ how many other Offers are on the table and whether any are from the listing office. The price and terms of other Offers is confidential information. If the listing agent believes it is in the seller’s interest to disclose that information, the listing agent may do so, with the seller’s permission. (The agent does not need the buyer’s permission.)
If you were in a bidding war, and lost, comment and tell us what property. For the properties below, I know there were more than one Offer because, our clients were not the winning Offer. What I do not know is whether the final sale price was the price on the accepted Offer, or whether it was changed after home inspection or appraisal. I also do not know what contingencies were on the winning Offers.
OK, this is definitely not a good time to be a buyer here in Greater Boston.
The few half-decent homes that hit the market too often wind up with multiple offers, leaving a larger number of overpriced dogs in need of work - or a location change - to pick over.
Let's face it, the drop in homes for sale is fast becoming the top challenge facing the real estate market in Greater Boston.
The latest Redin numbers show a 37 percent plunge in Boston-area homes on the market in July compared to the same time last year, the Globe's Jenifer McKim reported Sunday.
This spring, I spent a lot of time talking my clients off the ledge. They were annoyed and frustrated by bidding wars. They needed advice to determine which houses are likely to sell immediately, and which had seller’s agents who were playing games. Although there are still some bearish voices who growl that it is all made up – that there are no bidding wars and all prices are going down – those bears have not been out in the metro-Boston market.
The biggest problem is that the supply of housing that matches current demand is low. There is a surplus of housing that does not suit current buyers. So, with uneven demand comes uneven prices. It is the high-demand housing that is sending buyers to the ledge. At the same time, there are run-down places and places in B, C or D locations that are sitting around waiting for some buyer demand. Buyers, with or without agents, have the task of knowing which kind of housing they are looking at.
Experience in the 2012 market:
On the same day, these two Offers were negotiated. These two properties were within ¾ of a mile from one another. The demand zones are very sensitive. What is acceptable condition varies, too. Neither of these properties has closed yet, so I can’t report on final sale prices. (example 1 is still for sale.)
One buyer had an Offer on a condo in very nice condition in a C+/B- location. The asking price was roughly $20,000 over market value, in my opinion. My client made a market-value Offer of $19,000 below that inflated asking price, best and final. The seller’s agent called to ask if the “best and final” was negotiable, and that the seller would not accept an offer less than about $5000 below asking. “The seller doesn’t need to sell,” she informed me. I double checked with my client, then called back to let the agent know that “best and final is best and final.” My client moved on. The seller doesn’t need to sell, and the seller won’t sell…
The other buyer put in an Offer on a two-family in an A- location in lousy condition. Their final Offer was $26,000 above asking price in a bidding war. The market value was about $10,000 below that, in my opinion. They didn’t get the house. The listing agent reported that their Offer was way at the bottom of the pack.FULL ENTRY
By the time this posts, I will have spent the night at the Erving State Forest, camping out with my eight-year-old son and my two daughters, six and four.
Hopefully it didn't rain overnight.
The state park is one of the better kept secrets out there, hidden off Route 2 on the approaches to Western Mass, with lots of picturesque tent sites with a nice woodsy feel. You can definitely see the stars and it's not overrun with huge RVs.
Camping is one of the most affordable getaways around. My wife Karen and I are also fans of home exchanges - here is a post I did recently on our house exchange with a family in Quebec.
So there's my theory on vacationing - spend a little money but avoid investing in something expensive and illiquid, like a house, or just expensive and hard to park, like an RV.
Basically, rent or barter, but don't buy, is my theory.
It's hard to find a bargain, especially in perpetually overpriced Greater Boston.
But how far would you go to snag a half decent house at a big price reduction? Would you still buy it if you knew it was the scene of a horrific murder, suicide or some other tragedy?
I could deal with the haunted house nonsense - sorry, but I am not a believer in the paranormal.
I guess I would have a harder time dealing with a house that had been the scene of a real tragedy as opposed to imagined ghostly visitations.
Not everyone is as squeamish, though, with real estate brokers in the business of selling stigmatized properties estimating as much as a 25 percent reduction, depending on the notoriety of the house, according to this AOL Real Estate article.
Predictions of a rebound in home prices are taking on a life of their own, far outstripping the actual evidence on the ground.
Just a few months ago, conventional thinking among economists and housing market watchers had pegged the real estate market as a perpetual loser.
Now everyone is scrambling to predict an imminent rebound in home prices.
That is everyone but Robert Shiller, co-founder of the vaunted Case-Shiller home price index.
The Yale economist was one of the first to call the housing bubble. Now he is reserving judgement on whether the latest housing rebound is for real.
I never thought I'd see the day when the median home price on Nantucket dipped below $1 million.
Long after the real estate market began to tank in 2006, prices on the seemingly gold-plated resort island, a favorite of the corporate elite, just kept going up.
No more. The median price fell to $925,000 at the end of June, down from $1.1 million in June, 2011, reports The Warren Group, publisher of Banker & Tradesman.
And in a sign of the times, two foreclosures were also listed for June, including a duplex at 8 Anna Drive that had last fetched nearly $1 million in 2006.FULL ENTRY
After blogging weekly here at BREN for three years, Sam Schneiderman, Broker-owner of Greater Boston Home Team, now posts here on the first Monday of each month. Today, Sam discusses the issues involved when lenders disregard buyer’s contract dates for mortgage commitments:
Good closings are anti-climatic. Buyers and sellers sign papers, attorney records the deed and mortgage(s) at the registry of deeds, buyers move in and live happily ever after. It seems simple, but...
...to have a good closing day, many people have to do many things perfectly. The closing attorney must resolve any title problems. Buyers must obtain the correct funds to close. Sellers must pay all property-related financial obligations at closing. Attorneys need to have an accurate settlement statement with these items plus all closing costs, including any brokerage fees, title and insurance fees, escrow funds and other amounts needed to close. Figures are collected from multiple sources and must be accurate.
The figures must be approved by the buyer’s lender before they deposit the mortgage funds in the closing attorney's conveyancing account so that she can pay off the seller's obligations and pay the balance, if any, to the seller. (With short sales, the seller’s lender(s) must also approve the numbers.) The entire financial transaction is ultimately presented on a HUD-1 settlement statement that buyers and sellers must sign at closing.
Aside from the financial pieces that fit together, the seller may have to complete repairs which the buyer's lender may want to inspect before closing. At the final walk-through, the property should be as it was at the home inspection. Unless the parties agreed that tenants, sellers, or their belongings can remain in the house after closing, they need to be off of the property along with their trash. Not all sellers get this.FULL ENTRY
Let's face it, if you are middle class here in Greater Boston, lots of space is a luxury you probably can't afford.
No, it's not the same in many other parts of the country. One of my brothers bought a nice spacious colonial in a suburb of Chicago - a little dated but all cosmetic - for less than the $280,000 Karen and I shelled out for our Natick fixer-upper back in 2002.
If you want a big new house here in the Boston area, you are going to have to pay for it.
When it comes to home design, too often big is just plain ugly, especially with new construction.
Let's face it - we positively lust after big houses in this country, with Greater Boston no exception to the rule.
In fact, teardowns have become the primary form of new construction in a number of affluent western suburbs. Today's hot-shot, two-income professional couples apparently can't imagine finding happiness in anything less than 2,500 square feet.
It increasingly means that old capes, ranches, split levels and even colonials are getting bulldozed to make way for newer and too often bigger and uglier houses.
Compared to the rest of the world, where 1,100 square feet is considered spacious, we are definitely an outlier.
I was reminded again about how the rest of the world does things during the recent home exchange that my wife Karen and I did with a family in Quebec City.
I can’t get away from real estate, even when I try. My summer reading included a collection of short stories called Other People We Married by Emma Staub. In the story, this section hit a nerve for me. I have clients who think this way. I don’t think it is good for them. Do you agree with Claire? Do you think real estate is who you are?
… Before they moved to Cobble Hill, Claire and Matt talked about real estate as much as they talked about themselves. Who are they, they would ask: a one bedroom with an office. A half bath? Were they a decorative fireplace or a breakfast bar? When Claire got pregnant, things got more clear. They were a two-bedroom, one-and-a-half bath co-op on the garden floor of a brownstone. Rosemary [the cat] could lie in the sun, the bricks baking her black fur. They were a family of four. Everything was going to be perfect, just like in a magazine: gloss and impossible.
This kind of thinking leads to trouble. No real estate makes life perfect. There is no single perfect place for someone. I do, however, agree that criteria changes dramatically when there is an expected or already-born infant in the picture. Did that happen to you? Did you suddenly turn into a “two-bedroom, one-and-a-half bath…”?
In a general way, identity and real estate are connected. Density is a personal choice based on matters of personal space and privacy. Some people are “city” some “country.” There are beliefs imbedded in these decisions about living close to other people, about what children need, and about what city living means for opportunity and class status. Many of my clients have a hard time making the transition from city to suburban. Some have problems from suburban to city.
Well so contends a new report just out this morning. After years in which renting was the better financial option in the Boston area, the balance has shifted back to buying, Zillow finds.
On average, renters who opt to buy a house in the Boston area reach the break-even point after a little more than four years now, pulling away financially after that. The analysis is based not just on a comparison of home prices to local rental rates, but also includes taxes, purchase costs, appreciation and maintenance, Zillow notes.
Of course, it all depends on where you live. If you buy in Weston, where the median price is $1.3 million, it will take you more than 13 years before you hit the break-even compared to what you would have spent renting.
But you can now reach break even in just a few years in many other towns across the Greater Boston market, an area defined by Zillow as stretching out beyond I-495 to include a swath of Southern New Hampshire.
You snooze, you lose.
One of my old Herald editors loved to dish out this snappy piece of advice when a competitor scooped us.
And homeowners sitting on the fence, waiting until the perfect market comes along before they take they plunge, might consider whether they too are choosing the wrong time to doze off.
Boston area home prices rose 2.4 percent in May over April, according to the latest Case-Shiller report, just released yesterday.
Year over year, prices were down .1 percent - essentially flat.
The double dip in home prices now officially appears to be over.
But prospective home sellers don't seem to have gotten the memo yet.
Too many are still sitting on the sidelines, worried about taking the plunge and driving inventory levels to record lows.
And as more trouble builds in the world economy, sellers should consider the idea that time actually may not be on their side.
I developed a habit because of an urban myth. Since it is not a problem to anyone, I just keep doing it. The habit: I turn on an overhead light at any pre-closing walkthrough, even if it is broad daylight.
Why do I do that? There is a story that I heard at least a half dozen times when I was new in the business. It always happened to a cousin’s brother-in-law’s ex-wife’s sister or some such impossible-to-trace source.
A seller was so unhappy with the outcome of a sale that he removed all the toilet paper and all the light bulbs from the house before closing. He then scheduled the closing for 4 PM, leaving the new owners in the dark and without bathroom material. I also heard it as 4 PM on a Friday of a holiday weekend, when it would be hard to get light bulbs and toilet paper.
It has to be a myth. I have had clients who closed on places with no toilet paper, but I have not seen spiteful removal of either paper or light bulbs. However, it is an instructive example of the line between personal property (chattel) and real estate. The light bulbs and toilet paper are personal property, just like furniture and stuff on shelves in the kitchen. The seller is supposed to remove them before closing. Most don’t, as a courtesy to the buyer.FULL ENTRY
I recently poked fun at Coldwell Banker for making Brookline No. 6 on the ten hippest places to live in the country.
Quite a few agreed, with some arguing that, with the exception of an oasis here or there in the South End and the like, we are just not very hip at all here in the Boston area.
Frankly, I'm heartbroken, having harbored delusions about Greater Boston's hipness for decades now. Just kidding, I could care less - the less hip the better, as far as I am concerned.
Here's what the rest of you had to say on the subject - it's great stuff.FULL ENTRY
OK, that's an exaggeration. But the Hub and its suburbs are not the top destination for overseas buyers.
A ranking of the 100 largest metro markets in the country by Trulia puts Boston at #35 in terms of interest by foreign buyers. Middlesex County, home to the western and a good part of the northern suburbs, weighs in at No. 44.
In my book, that's fairly mediocre, especially given all they hype over the years about Boston's supposedly international appeal.
I always thought we were a top destination for wealthy Middle Eastern oil princes and the like, but I guess there are more welcoming, warmer and cheaper cities to buy in.
So who's looking for homes in the Boston area?
That's what Zillow.com's latest home price report suggests.
The report, just released this morning, predicts Boston area prices will fall along .7 percent through the second quarter of 2013. Still, there are signs of short-term improvement, with prices having risen month over month for the past four months, though some of that probably has do to with the spring selling season.
Nationally, prices are forecast to rise 1.1 percent during the same time period.
Here's another sobering stat - 31.1 percent of all homes sold in the Boston area in June sold for a loss, according to Zillow.
I get a lot of press releases that are advertisements for products or services. I pay attention to only some of them. Most of them, I ignore. I saved this one because it was a great example of the sales pitch for efficient building. I don’t know anything about these condos beyond this release and a glance at the MLS sheets.
(West Roxbury, MA) June 22, 2011- The Mayo Group, developer of energy efficient Gordon's Woods, located in West Roxbury, MA has gained Energy STAR certification after extensive testing by the United State Environmental Protection Agency. Kerri Bonarrigo Residential Sales Director for The Mayo Group, Developer of Gordon's Woods, says, "Gaining Energy STAR certification has been extremely important to this project. The air quality and overall indoor environment within our buildings is much healthier compared to non-certified residences. In addition, our residents will save significantly on monthly utility bills and HOA fees while the building itself will retain greater value over the long-term." Energy STAR certification means that Gordon's Woods conforms to strict rules for energy efficiency that make the condominiums at least 15 percent more efficient compared to homes built according to the 2004 International Residential Code. Energy STAR certified homes include additional features that conserve 20 to 30 percent more energy than the average home. With 42 unique units...
The trend toward energy efficiency is here. Over the next ten years or so, I expect that we will see more and more properties advertised as energy efficient or fully insulated, or otherwise touting their smaller energy footprint. But how well is it really selling? Although my clients care about efficiency, they aren’t willing to pay extra for ultra-efficient new construction. Unless the place is great in other respects, the place gets rejected on price.FULL ENTRY
There are a lot of misconceptions, and sometimes even outright rage, against real estate agents on the comment board of this blog.
Frankly, it is somewhat notorious for it.
But one false idea is that agents are holding out of the highest price, looking for that big bang.
Maybe some are, but it isn't necessarily all that successful a business strategy in a field that rewards volume. After all, if you want to sell a lot of homes, you had better make sure they priced to move.
All too often, though, agents are stuck with sellers who think they know what's best when it comes to pricing their home, and that, of course, is often a lot more than the recommended listing price.
It can be painful to realize all that money spent on renovations won't get you the big jackpot you had been looking for, or that the location you thought was prime instead was over hyped. But then again, that's life - get with it or be prepared to sit in a house that won't sell.
It's actually a pretty crucial question given the current state of the housing market.
Buyers jumped off the fence this spring big time, but they too often wound up frustrated by the lack of choices out there.
Even as the market has improved, the number of homes on the market in Greater Boston has plunged, falling more than 19 percent since July 2011.
So what's behind this dearth of decent homes on the market?
When we met "Josh" this spring, he was trying to figure out whether to sell a rental property in Jamaica Plain that has been in the family for decades.
The plan was to bolster his parents' retirement income through the sale of the two-family, but Josh wasn't sure whether it was the right time to sell.
The house is in a great location, between Centre Street and the Jamaica Way near an elementary school, but Josh worried that the older bathrooms and kitchens were in need of some touching up.
He had some great questions.
1. At what point in the market continuum does a home's intrinsic value (location, location, location) rise above its flaws (old kitchens and bathrooms)?
2. Is it worth trying to time the supply/demand curve to maximize our potential; or do we simply list it now and see what the market will bear?
I argued back in that he should wait - the market is on an upward trend and the pricing will only get better. (OK, given events in Europe and sluggish job growth here, I am rethinking that advice, but that's a post for another day.)
Josh was smart enough to go with his gut and test the market. As it turns out, that "test" yielded a buyer ready to pay up in a matter of days.
My general take on real estate around Boston is that there are many variations, but there at typical properties in each size/style range. There are many two-bedroom condos and three-bedroom houses. In some towns, four-bedroom houses are the norm. In some areas, everyone has two or more parking spaces. In some places, everyone has two garages. If you are looking to buy or rent something that is not unique, there are more choices.
But, how should you look at unique properties? Are they a good thing or a bad thing?
Smaller than typical: There are fewer two-bedroom houses than three-bedroom houses. Two bedroom houses are unusual. They are also somewhat unpopular because anything less than three bedrooms is just too small for the typical house-buyer or renter. Unique, in this case, is a negative. The same negative holds true for one-bedroom condos outside of dense urban areas (where they are more common.) Scott published yesterday about the push for single-person housing. I am not keen on seeing those come up for sale, or resale.
The reason I bring this up is that I frequently get asked about whether is it a bad decision to buy a one-bedroom or studio condo or a two-bedroom house. The potential buyer thinks the space is enough for his or her lifestyle, but is concerned about resale.
Since demand is lower on houses with two bedrooms because people who want to be able to accommodate more than two people in the house prefer three bedrooms. People without children can use a house with two bedrooms, but having three is not a negative to them. Many people who buy houses want to have room for a hypothetical child or guest and still have an office/messy room. So, three-bedroom houses have a larger group of buyers. Buying a smaller house is cheaper, but the resale will also be lower.
Get ready to plant a for-sale sign on your lawn. Wall Street is now predicting a big surge in housing prices is right around the corner.
Analysts at JP Morgan Chase are forecasting a 12 percent jump in home prices across the country over the next four years.
Interesting prediction from a bank that just blew $5 billion in an epic trading blunder, but that's a story for another day.
There's been a lot of speculation about a potential slowdown in home sales this summer after a roaring winter and spring.
But the latest numbers so far aren't backing the idea up.
Pending sales of homes through the end of June were up nearly 30 percent statewide over June 2011. They were also virtually unchanged from May as well, suggesting no meaningful short-term shift in momentum either, the Massachusetts Association of Realtors reports this morning.
All told, there were well over 5,000 pending sales in June and in May as well - the first time there have been two 5,000-plus pending sales months in a row since MAR began tracking the stat a few years ago.
It's the 14th straight month that pending sales have increased year over year, the real estate group says.
Last week I wrote about the usual lull in residential real estate buyer activity in Eastern Massachusetts that generally runs from July 4th through Labor Day, and how it seems to have started a few weeks early in 2012.FULL ENTRY
If we do slip into our typical sustained July-through-August lull, Boston Metro area buyers likely won’t be faced as frequently as they were between March and early June with the unhappy choice between offering above a property’s asking price and/or waiving inspection and mortgage contingencies, or walking away from pursuing a home they love. (As I and others have written in this space, waiving these contingencies is, for most buyers, a very dangerous and anxiety-inducing practice.)
In any market, it’s in a buyer’s interest to buy when there is less competition. Typically, as I’ve written before, the best time of year to negotiate on a home purchase in Massachusetts is between Thanksgiving and mid-January. At that time of year, sellers and their agents are generally grateful for any buyer attention, and if the sellers have a deadline, they will be more motivated than in the Spring when hope is eternal there will always be another buyer if the one today doesn’t make a great offer.
The vast majority of Boston area sellers believe they are getting a raw deal, with their homes significantly undervalued by the current market.
Yes, I know what you are thinking, cry me a river, but that's apparently how many local homeowners feel, reports HomeGain in its quarterly survey of local real estate agents, sellers and buyers. (I recently took at look at the national results - today I am doing the local numbers.)
Roughly 70 percent of real estate agents say their sellers believe their homes are underpriced, often by as much as 30 percent, HomeGain reports. Only 20 percent of agents say their clients are content with the price their home is listed at.
By contrast, the buyers who check out these properties online or at open houses see things quite differently. More than 80 percent of local agents say their buyers believe the homes they are seeing on the market are generally overpriced, often by as much as 20 percent, according to HomeGain.
Despite resurgence in sales activity during the first half of the year, buyers and sellers across Greater Boston remain as divided over price - and as frustrated with each other - as ever before.
So who's right here? I'm inclined to side with the buyers in this dispute, but what's your take?
Several of my clients have jobs where they work one or more days at home. This creates a need for not only a pleasant place to park a desk, but also a good cell phone signal. It has become part of the checklist for buyers in the past couple of years. I don’t really want to get into which carriers are the best or the worst. I have found problems with every carrier one place or another within my real estate territory.
Dead zones are not necessarily just in remote areas. I used to work with a lawyer in Lexington center who reported that there was a dead zone there for a major carrier. He had to change his carrier, mid contract.
Did you check your cell signal before buying? If you didn’t, did you regret it? Where are the dead zones and with which carrier?FULL ENTRY
The plunge in housing inventory across the country is one of the biggest under reported stories out there right now, Calculated Risk opines.
The number of homes and condos on the market dropped more than 24 percent across the country over the past year, the respected economics blog notes, citing stats from the DeptofNumbers.
And the Boston area is no exception. Going directly to the source, here's a nifty chart that shows the local trend. Homes and condos for sale have fallen more than 19 percent since early July 2011.
The 23,865 listings on the market represent one of the lowest levels of housing inventory over the past six years. By comparison, back in July 2006, more than 44,000 homes and condos were for sale in the Boston area.
And if anything, the inventory crunch is only going to get worse, with the market headed into its traditional summer slumber.FULL ENTRY
Such is the indignant refrain heard across Greater Boston and country from homeowners unable to get a grip on real estate reality.
Increasingly bullish on prices, homeowners are haggling with their real estate agents over the value of homes, a new survey finds.
More than 77 percent of agents and brokers surveyed by HomeGain during the second quarter reported having disputes over homeowners believing the recommended listing price just didn't do justice to the true value of their properties.
It indicates a disturbingly high level of overconfidence, even entitlement among homeowners. And, if anything, this belief that one's house is somehow exceedingly special and can't be judged by ordinary market metrics may only be headed up given present trends.
While agents could previously point to a declining market to try get a more workable price, that task is becoming more difficult as signs point towards a turnaround in prices after years of declines.
Most years, the residential real estate market has a noticeable lull in buyer activity that generally runs from July 4th through Labor Day. The general consensus is, unless a buyer is up against some deadline to move, such as the start of the school year or by a date certain, enough buyers go away on vacations, or head to the beach or head to the hills on weekends that there is a significant drop in attendance at open houses and for appointments to look at property.FULL ENTRY
So we also usually see a slowdown in the number of homes being brought onto the market and in the number of open houses at this time of year. We also experience a slowdown in the number of buyers requesting information or appointments, and from new buyers entering the market. This slowdown almost always starts just before or after July 4th and ends the weekend after Labor Day.
It wasn't all that long ago that sellers were bemoaning the lack of serious buyers.
But with sales picking up and multiple bids becoming a fact of life now in some of the more coveted towns and neighborhoods inside Route 128, some sellers are starting to feel as if they can call the shots, notes Alex Coon, head of Redfin's Boston market office.
And one big factor bolstering this cockiness, arrogance, or whatever you want to call it, is the red hot rental market.
Sellers, especially in coveted urban neighborhoods in Cambridge and Boston, are threatening to simply pull their home or condo off the market and rent it out if a buyer fails to meet their price expectations.
Today, Sam discusses the issues involved when lenders disregard buyer’s contract dates for mortgage commitments:
When a buyer applies for a mortgage, the lender is given the commitment date that the buyer and seller have agreed to in their offer and/or the Purchase and Sale agreement. At that time, the loan officer should be able to tell the buyer if it is realistic for the lender to deliver the commitment on time. This is important because if the lender cannot deliver a well underwritten commitment letter by the commitment date, the buyer must go back to the seller and ask for an extension. If the seller says no, the transaction is either terminated and the buyer gets the deposit money back but has no home to buy or the buyer can stay in the transaction and risk losing deposit money if the commitment does not come through.
Most lenders try to deliver commitments on time, however, some are notorious among active real estate agents for not be able to deliver on time and/or close on time. As a result, sellers are often advised by their listing agents not to accept offers with pre-approval letters from such lenders.FULL ENTRY
If you are making money flipping houses, I want to hear your story.
Big-time investors are snapping up whole neighborhoods now in some of the nation's more distressed real estate markets.
Check out this article on Oakland, where more than 40 percent of foreclosures have been snapped up by investors.
The Boston area has certainly had its share of foreclosures, yet nothing along the lines of the mass distress seen during the bad old days of the housing bust in Las Vegas, Phoenix and Miami. (Nationwide, foreclosures made up 26 percent of sales in the first quarter, according to RealtyTrac. By comparison, foreclosures accounted for just 12 percent of all Q1 sales in Massachusetts.)
That said, there are lots of smaller, mom-and-pop operators out there, snapping up foreclosed ranch houses in Framingham or Marlborough as well distressed triple-deckers in Dorchester, Roxbury and Mattapan.
In fact, it's having a bigger impact on the local housing market than many realize, especially with inventory levels of unsold homes dropping.
Here's more evidence that making $100K is definitely not what it used to be.
Check out this Bankrate piece - it details all the hits the once mighty sum of $100,000 a year has taken over the past three decades, from rising health care costs to insane leaps in home prices.
In fact, you need to pull down more than $172,000 today to enjoy the same buying power you would have had back in 1990, Bankrate notes.
It is not uncommon for me to receive showing instructions that include “do not let the cat out.” Most of the time, I don’t see the cat; it’s under some bed someplace. Occasionally, the cat is leisurely lying on a bed or sofa awaiting adoration. Rarely, but sometimes, it is yowling in a crate. (It is more common to have dogs barking in a crate.)
Last week, I showed a condo with a particularly friendly cat. Keeping him in was a chore, since he was right at the door trying to get our attention. To add to the problem, my client is afraid of cats. Having the cat jumping up on the furniture to get petted was not at all appreciated by her. She was startled coming in a room a couple of times, as he playfully pounced around the corner. This was clearly friendly behavior, and I am sure his owners find him charming. But for cat-averse people, this behavior seems aggressive.
He distracted from the showing and may have cost the seller a sale. I spent a lot of time playing with the cat so he’d leave my client alone. At some point, she was too uncomfortable to really see the place.
The same thing will happen with a dog barking in a crate, or worse, a little dog jumping on a buyer. It is distracting to most people and terrifying to those who are uncomfortable around cats or dogs.FULL ENTRY
Don't mortgage yourself to the hilt. Avoid the temptation to stretch and buy a house in an outrageously expensive suburb to get your offspring into one of the "best schools."
That's been my advice - and I'm sticking with it. Still, if nothing else it has stirred up a nice little spat on the comment board of this blog.
Here are two very different takes from a pair of readers - both are teachers and both admittedly know a whole lot more than me about the inner workings of our local schools.
Thirtysomething argues that the schools with the best reps - typically in the most expensive towns - have earned their reputation for a reason. There curriculum is so far ahead of the pack that they don't get stuck in test drilling mode that plague average districts.
But in the end, its school culture that may count the most, he argues.
By contrast, jpmur84 notes that most Massachusetts schools are a step or two above their counterparts across the country. Stop worrying about getting into a town with elite public schools and make decisions on what you can afford to buy.
Two or three unit condo associations (generally in formerly multi-family houses) have a condo board of two or three, with each unit having a trustee. In medium size associations, some maintain a one-unit-one-vote process -- with all the owners having a say in large repair decisions – and some elect trustees from among the owners. Large associations have elected trustees who are empowered to make some of the decisions for the association.
Whether there is an elected condo board or a condo board made up by all the owners, some associations hire a company to do common area tasks and manage repair projects. Other associations opt to do the work themselves or owners volunteer to supervise the people who do repairs for the common parts of the building.
I discuss these different types of condos with my buyers who are considering a condo. The space matters, but so does the decision-making process that manages the place.
And one potential life saver may be new immigrants.
Here's a link to a study by Albert Saiz, a University of Pennsylvania economist, who argues that cities with rising numbers of (legal) immigrants see both home prices and rents go steadily up.
Saiz even has it down to a formula. Looking back at the housing market between 1983 and 1997, the good professor finds that housing prices rose 1.7 percent for every percentage point in population growth in a major metro area driven by new immigration.
In fact, even if the job market continues to stink, demand by new immigrants for housing will drive a recovery in home prices, while further pushing up rents, contends Gary Painter, research director at the University of Southern California's Lusk Center for Real Estate.
Here's what Painter was scheduled to say to a conference of home builders today, according to a press release sent out by the university.
The budding comeback in homes sales has hit a new milestone.
Sales of single-family homes in Massachusetts have bounced back to levels not seen since the Great Recession sent an already declining market into a tailspin.
May home sales were up more than 27 percent in May over the same month last year, the Massachusetts Association of Realtors reports this morning, while The Warren Group pegs the jump at 35 percent.
But the real news is what the numbers say about the direction of the long-suffering real estate market, which finally appears to be clambering out of the deep trough it plunged into after the near global economic collapse of September 2008.
The 4,445 homes sold in May surpassed both May 2007 and May 2006 as well, when 3,884 and 4,200 homes were sold, respectively, in those months, according to a comparison of numbers from past monthly reports on the MAR website.
Well in my somewhat eccentric view of education, absolutely not. Paying a big premium to buy a home in a town with an elite public school system could be a big waste of your hard-earned money.
I'll take an intellectually curious child with a love of reading any day over some test-taking drone at a big name public or private school.
Sadly, it's possible to graduate today from a reputable college and be woefully ignorant when it comes to the basics of world history, science, literature and economics.
School is valuable for the socialization - learning to show up on time, follow directions, make friends and develop your social skills and personality. That can happen anywhere - your child doesn't need to go to school in a W town or at a prestigious private school to figure out that.
If you are house hunting in Greater Boston, this is far from an esoteric debate - home prices can be hundreds of thousands higher based on the competition to get into a town with highly ranked schools.
Judging by the comments on my recent post about the benefits of buying a house in an "average town," I am happy to see I am not alone in my views.
I particularly loved this comment by DCU:
It's not a choice of "send your kid to the most elite public school in Eastern MA" or "your kid is going to spend the rest of his life in prison".
Apparently some renters say they are willing to give up quite a bit to buy their "dream home."
That's what a new survey by Century 21 Real Estate claims - obviously given the source it is somewhat self serving. That said, some of the findings are interesting.
One of the most controversial: 10 percent of renters surveyed by Harris Interactive on behalf of the real estate firm said they would cut back on contributions to their 401 (k) in order to buy the home of their real estate dreams, whatever that might be.
As part of the “what else can go wrong” series, today I write about seller’s remorse.
Recently, I worked on a purchase where the seller delayed the Purchase and Sales Agreement for almost two weeks because, as her attorney put it, “this is emotional.” In the process of waiting for the seller to come to emotional terms regarding selling her big house and moving into something smaller, I thought a good bit about seller’s remorse. Because I only work on the buyer’s side, I don’t get to see seller’s remorse up-close and personally. I only see it second-hand. There are many reasons for seller’s remorse. It is occasionally financial, but the really bad cases seem to be mostly personal.
What is remorse and why does it happen? When someone makes a big sale -- whether it is selling a house, selling a car, or giving away favorite clothes that are past their prime – there can be a moment or two or three that one regrets losing the object. When the object is a family home (a house where a family lived for a long time), selling the house means losing the site of the family memories.
Boston has landed near the top of a list of major metro markets across the country where low inventory appears to finally driving up home prices.
Boston comes in No. 11 on the stinky inventory list, having seen the number of homes on the market drop 37 percent over the past year, as of June 19, according to a new report by Movoto Real Estate.
During the same period listing prices of home on the market in the Hub - the report doesn't seem to dip deeply into the burbs - has risen 11 percent to nearly $300,000.FULL ENTRY
Sure, everyone wants the best for their children. But mortgaging yourself to the hilt to buy a rundown house in a town with "great schools" seems a dubious gift to your offspring.
Lisa's search for a half-decent house in some of the more expensive towns north of Boston sparked quite a discussion on the comment board of this blog.
Pregnant and expecting her first child in September, Lisa and her husband are yearning to leave their Melrose condo and buy a single-family.
But months of searching for a three-bedroom in Melrose, Wakefield and Andover in the low- to-mid $400,000s have yielded only frustration, with Lisa and hubby after getting outbid more than once.
Sadly, much of the advice offered to Lisa on the comment board of this blog was outright rude and in some cases downright mean as well - but believe me that will be a subject for another day.
However, sorting through all the chaff, there was this short but sweet bit of advice from ProperBostonian, who contends (rightly) that Lisa's search is too narrowly focused.
In the current marketplace, a seller has to sell a property three times: to the buyer, to the appraiser, and to the lender. That's because appraisers are more conservative today than at any other time in my 18-year career, and appraisals are gone over with a fine-tooth comb by lenders. That has led us to where we are today, where buyers, sellers, agents, and even appraisers can be anxious about appraisals.FULL ENTRY
Here's what I now do to prepare myself and my sellers' properties for the appraisal:
I always tell my sellers to prepare the property for the appraisal appointment just as they would for a prospective buyer. This includes:
a) Having the place in showroom condition and hotel-clean. Appraisers are mostly concerned with numbers and condition, but they're human, too. A property which gleams make a good impression on everyone.
b) Leave all the lights on so rooms are bright when they walk in. Again, this makes a much better impression than a dark and gloomy room.
More important than these emotional appeals, I provide the appraiser with reasonable comparable sales (comps) from the past six months which reflect well on the purchase price for the listing. The appraiser isn’t obligated to consider them, but the best way to make sure they won’t look at the comps you’re looking at is to keep them a secret.
Check out this latest study detailing the huge wealth hit families across the country took during the Great Recession.
Median family wealth plunged 38 percent from 2007 to 2010, down to $77,300, according to a new Federal Reserve report.
While three quarters of this plunge can be attributed to the decline in housing prices, median wages dropped 7.7 percent during the same period.
In fact, for middle-income families, the drop in earning power varies even more widely from 7.7 percent all the way up to 13.6 percent.
For the average family, overall wealth has fallen back to early 1990s levels, this Times article notes.
Welcome to the Gayborhood! That, anyway, was the somewhat tacky headline of an otherwise interesting Trulia report that recently landed in my inbox.
Trulia used census figures to track what neighborhoods across the country have the highest percentage of same-sex couples.
Massachusetts comes out with top honors. Four neighborhoods/towns landed on the top-ten list of communities with the highest percentage of same-sex female couples.
The top three neighborhoods/zip codes with the highest percentage of same-sex female couples are all in Massachusetts, with Provincetown followed by Northampton and Jamaica Plain. Wellfleet follows at No. 7.
The Boston area runs on an academic schedule, whether you have anything to do with schools or universities or not, it still affects you. You probably already noticed the lighter traffic due to the student exodus. It definitely affects me in the car and also at work. I work only as a buyer’s agent, helping people buy houses (not helping people who sell them, nor helping people who rent them.)
Renters, do you have a lease that ends in June, July, or August? Doesn’t it seem like everyone moves in the summer? After September 1st everyone is nestled in for the year, right? Today, I begin to focus one day a week on rental issues. If you have questions or stories to tell, email me.
There are two factors that create the typical pattern of a buying that revolves around a September 1st deadline. First, there is lease renewal. The second is public school placement. My suspicion is that the former is a result of the latter. Here in Greater Boston real estate buying and renting runs on an academic schedule. In other parts of the country, this is not as true. Here, peak buying season starts sometime when people perceive that winter is over, weather-wise. It runs through the spring. Then it slows down considerably after some buy and some choose to rent for another lease cycle.FULL ENTRY
Here's a "dispatch from the front" fired off by Lisa in Melrose, yet another frustrated buyer in Greater Boston.
She's tried everything - even making an offer on an overpriced fixer-upper in Andover hasn't worked. Her baby is due in September, but so far it looks like there will be no moving day this summer.
"We're totally discouraged. The market's cooling off and the inventory stinks," she writes from the condo in Melrose she had hoped to have moved out of by now.
Well if Harvard says it, it must be true.
OK, just kidding. But Harvard's Joint Center for Housing Studies is not only calling a bottom to the market, but predicting a turnaround in prices as well.
Some job growth and an economy on the mend have been key in brightening the outlook for
housing so far in 2012, the report notes. (Of course, given the latest job numbers, this trend looks pretty tentative at the moment, but that's a debate for another day.)
Here's what the Harvard center's annual report on the national housing market, due for release later this morning, has to say about where prices are headed.
Bill Kuhlman, CRS, who is the broker/owner of Kuhlman Residential describes how house resale prices change, based on changes in demand over many years. What kind of houses do you think will be most in demand in 20 years? 30 years?
Most of my clients, regardless of price range, have to make compromises of some sort when buying a home. Some will ask whether they should compromise on the house or on the location. That’s when I tell them the following story.FULL ENTRY
In late 2003, I started working as a buyer’s agent with an older couple---I’ll call them Ralph and Alice Moon---who had bought their home in 1974. A few minutes’ walk from Beacon Street and Cleveland Circle, they bought the 6-bedroom, 3.5-bathroom, 3,900-s.f. Brookline home for $74,000. This part of town was largely built up between 1890 and 1930. They were mostly grand homes of another era, with more than 3,000 square feet on 10,000—12,000 square-foot lots, in a picturesque area.
Their friends, Fred and Ethel Copa, bought in another part of Brookline that same year. This area was mostly built up after World War II and the homes and lots there were more modest in size and scope. They more closely resembled the then-modern concept of suburban life, where you lived away from the hustle and bustle of city life in a home that looked a lot like your neighbors’, and drove pretty much wherever you needed to go.
Having just gone through the Energy Crisis of 1973, people were becoming concerned with home heating costs, so the modest square footage and lower ceilings in Fred and Ethel’s house were seen as a big plus compared to the turn-of-the century energy hogs in Ralph and Alice’s neighborhood, with their extra bedrooms, open staircases, and 10-foot ceilings. So they bought their four-bed, 2-bath abode for $67,000, a mere bag of shells ($7,000) less than the cost of Ralph and Alice’s dinosaur.
Every generation gets tarred with some sort of ridiculous label that often has little bearing on reality.
Boomers were supposedly self indulgent, Xers were ridiculed as slackers and now Gen Y finds itself cast as self-entitled brats who expect the world on a silver platter.
Heck, even the so-called Greatest Generation had their doubters before World War II came along.
Of course, this all plays out in the real estate market, where the wariness of younger buyers towards major financial commitments has been ridiculed on the comment board of this blog as some sort of sign of self entitlement.
But luckily we have james-in-cambridge to set things straight.
Given the dire financial plight many in Gen Y now find themselves in, the future of the real estate market looks pretty rocky.
Massachusetts has seen a 20 percent decline from 2005 to 2010 in young homeowners, who account for about a third of the market, the story notes, citing US Census figures.
In fact, just getting into the rental market, let alone buying a home, would be a big step up for many members of Gen Y, who have been driven back home to live with mom and dad in the face of a brutal economy intent on eating its young.
An incredible number of young men and women in the 18-34 age group are still living at home or have returned after college - it amounts to roughly 40 percent, according to a recent Pew survey.
It's tough out there for buyers in Greater Boston, separating the wheat from the chaff.
There are too many fixer-uppers, with bidding wars on the small minority of homes that are well priced and well maintained.
So what's a poor buyer to do?
Well maybe hire a good real estate agent for starters.
This is heresy to the regulars on the comment board of this blog, who have made a sport of ridiculing their personal Great Satan, the National Association of Realtors and affiliate organizations.
Of course there is a lot to poke fun at, but let's get real here.
If you don’t “believe” in bidding wars, you can skip this entry. If you are a buyer and want to know what to do if you are faced with one, read on. My coverage of this spring market began early in March when I gave advice on what to do when house-hunting in a mob. I was back at the end of March with some concrete advice on how to people-watch at open houses.I am still collecting MLS numbers. So if you made an offer that was not accepted, please send that MLS number to me by email. (I will publish that list, with MLS numbers, when the ones I have are closed.)
And now, some advice from the Massachusetts Association of Buyer’s Agents:
Across the state, but even more so in the Boston area, MABA agents say they are seeing first-time buyers in competitive situations abandoning the kind of standard practices that protect buyers both during and after a real estate transaction. “The sort of risks that these buyers are taking in so-called multiple offer situations is alarming,” says Sam Schneiderman, president of MABA. (yes, that is our Sam.) “I’m not sure whether they have agents or attorneys or are going it alone, but they can get themselves into a world of trouble.”FULL ENTRY
According to Schneiderman, here are the most common risks MABA agents are seeing first-time buyers take in this market – risks that he says should be avoided no matter how attractive a deal otherwise appears.
1. Waiving the mortgage contingency
As a buyer, the mortgage contingency protects your deposit in the event that you cannot get a mortgage to purchase the home for any reason (unless exceptions are specifically noted). In a market like this, the chief danger in waiving the mortgage contingency is that the property won’t appraise for the price agreed to by you and the seller. In this case, the bank is unlikely to loan the full amount needed to purchase the property, forcing you to opt out of the deal and lose the right to your deposit or go through with the transaction and pay the difference between the appraised value and the agreed upon purchase price – assuming you have the funds to do so. Either way, having waived the mortgage contingency can be costly in the end.
It's more expensive now to buy a condo here in Massachusetts than a single-family home.
If that is surprising to you, it certainly was to me when I took another look at the most recent price report by The Warren Group, publisher of Banker & Tradesman.
The median price of a condo in Massachusetts rose to $280,000 in April, up 3.5 percent from April 2011.
That's a good $5,000 above the median price for a home here in Massachusetts, which stood at $275,000 in April.
OK, the buyers are out there and buying as the busiest spring market in years draws to a close.
But they are not always happy with the choices, especially here in still over-priced Greater Boston, home of the $800,000 teardown and $1 million-plus fixer-upper.
Redfin just surveyed home buyers across the country, including here in the Boston area.
And surprise, surprise, the biggest gripe was a lack of decent inventory.
Bill Kuhlman, CRS, who is the broker/owner of Kuhlman Residential returns today with a story about his client who chose not to participate in a bidding war and some advice about what you should know if you see the swarm at an open house.
New listings of shiny, move-in condition homes are creating swarms of interest in many cities and towns in the Greater Boston area, right now. Just yesterday, I had a buyer-client who was mulling over making an offer on an attractively priced new listing in Burlington we saw together on Sunday.FULL ENTRY
The listing agent there told me he had an estimated 150 people at his two-hour open house, which officially ended an hour before we showed up. A few straggler-buyers were still there, as well as the agent, who looked more than a little shell-shocked, lending credence to his story.
Early Monday afternoon, I was told by the listing agent he had already received 12 offers on the property, and he was expecting to receive several more before meeting with the seller last night to present them.
Ultimately, my buyers declined to make an offer. Not because of the stiff competition, but because the property had what was, for them, a fatal flaw: The second and third bedrooms were too small. The home would work fine for them in the short term, but they felt they would have to search for a new home in just a few years, and they wisely want to buy a home where they can stay for the next 15 years or more.
Without more job growth, home prices are likely to continue to stagnate.
That's the common sense verdict of Jed Kolko, Trulia's chief economist, of signs that recent home prices gains across the country are starting fizzle along with new job growth. Kolko's comments come as Trulia puts out its latest home price and rental rate report this morning.
The areas that are starting to see signs of a price turnaround, he notes, are those with more robust job markets. (Don't have the Boston numbers yet - the Trulia numbers just hit the wires at 10 a.m.)
Just when it looked like we were finally out of the woods, the European debt crisis decides to finally blow.
Signs of an improving economy have driven the recent upsurge in home sales and even signs that a turnaround in prices might be forthcoming.
But the good news is starting to fizzle out, with the debt crisis in Europe looking like a potential repeat of 2008 and the number of new jobs being created in the U.S. on a pretty clear decline.
Here in Massachusetts, our local economy and real estate market has fared better than most.
Yet we are hardly a self-sufficient island here, immune to the economic woes of the rest of the world.
Life can be pretty good in the Back Bay if you have the kind of money to buy Tom and Giselle's $10.5 million Back Bay crash pad.
If that's too rich for your wallet, breaking a million just might get you something half decent, but no guarantees.
But is it worth it trying to squeeze into a closet-sized condo in the Back Bay - or for that matter the South End or Beacon Hill - if you can't go above $500,000, let alone $1 million?
That's the world shaking question Trulia explores in an in-depth blog post on the Boston market.
This entry is for all the agents that are reading. I got his email from an agent I will call “Isabella.” She needs some advice from agents who have worked with difficult clients. She has a seller who is displeased with what would-be buyers expected to pay for their house. They cannot accept that their house is worth less than they thought it was worth.
I think the problem is one of expectations. These sellers did not believe that their agent had an accurate idea of the price. It turns out that the agent had the price too high. This double-blow has soured the relationship.
Agents, how would you turn this around? Would you quit the listing, or hang in with these owners of an over-developed house. How do you explain that neighborhood matters?
Here's the short story: Young couple moved into the home (in my neighborhood) in 2002. In 2009 they decided to remodel the home taking it from a modest 1500 sf to 2400 sf; they did this by adding a second story on the existing ranch. THEN they did everything, and I mean everything right: new hardwoods through-out, central air, Anderson windows, and gorgeous doors, beautiful accessories (light fixtures, etc), gorgeous solid wood cabinets, top-shelf stainless appliances.... Well I could go on and on, but I think you are getting the pictures.
The one thing they did not consider: our neighborhood is a very pleasant cul de sac of 1/2 acre lots with pretty capes and well-kept ranches. This remodel is a center-entrance colonial and hands down the BEST house in the neighborhood. We worked really hard on the price and I had many members of my office go through the house and give me their opinion of value. Reviewed neighborhood sales and used colonials in other neighborhoods for comparison. We came to an agreement on the price (although they wanted $15,000 more) and listed the home. It has been a month and we have been fairly popular and received one "almost" offer and then last week a firm offer.
Looking for a bargain? Head west to 495.
I compared home prices along Greater Boston's two great technology and commercial beltways, 128 and 495 for a column I do for the Globe West, Forever 128.
Along 128, Burlington, with a median price of nearly $400,000, is closing on its 2005 price peak, while Weston, at $1.4 million, has surpassed its previous high-water mark of $1.3 million set that same year.
Other 128 towns such as Newton, Needham and Lexington all saw median prices drop this past year, yet all are within 10 percent of the highs reached during the height of the housing bubble in 2005-2006.
But along 495, it's a much different story.
Is is time to bequeath our society's greatest honor - that of aggrieved victim - to homeowners who bought during the housing bubble?
Apparently some on the comment board of this blog think so now.
It can tend to be a pretty conservative bunch, so I was a bit surprised by this sally.
The underwater homeowners are exactly what I'm talking about! They were VICTIMIZED by high housing prices. You seem to think this is a good thing -- so good, in fact, that we need more of the same to "rescue" them? Not saying that is impossible, but that's simply passing the hot potato (and high costs) to a new victim.
As for those retirees, go ahead and cry me a river! If they are long-time homeowners, they've already seen a terrific ROI. You want to reinflate prices so they can suck the life blood of the younger generations to pad their retirements?
High real estate prices are bad for society. Good for banks, bad for everybody else (aside from those seeking to profit at the expense of others).
Half of all apartment dwellers nationwide are now "rent burdened."
That means they are coughing up 30 percent or more of their income for rent, finds a new report by the University of New Hampshire's Carsey Institute.
By comparison, the number of homeowners shelling out 30 percent or more of their paychecks on mortgage payments stands at a much lower 37.4 percent.
In fact, the number of homeowners struggling under heavier mortgage payments is about the same as it was before the recession, according to the study, which analyzed housing data from 2007-2010.
Stuck in an underwater condo in East Boston he is weary of, Beantown-dan is groping desperately for an escape hatch.
He figures he can now finally afford a modest home in the suburbs, but can't easily get out from under the mortgage on his Eastie condo, which is $20,000 to $30,000 above the current market value of his unit.
Beantown-dan is thinking of renting out his condo and then trying to buy - which might get him out of his current jam but would put him on the hook for even more real estate debt.
Paul Morse,owner of Morse Constructions Inc, a Boston-area design/build firm gives this advice to sellers of housing with good bones that need updating:
Are you trying to sell a house that needs cosmetic improvements? If a house has good bones, encourage potential buyers to look below the surface. As long as the bones are good, a new owner could remodel, add on, or make cosmetic improvements to correct any perceived shortcomings.FULL ENTRY
Houses with good bones feature:
Quality construction – Strong bones are solid. “Walk” the house with potential buyers, pointing out its solid feel , that it doesn’t bounce or list, have many cracks above doorways or in stairways, have sagging floor joists, walls that bow or a roof that sags.
Solid infrastructure – It’s relatively simple to replace aging roofing shingles or update plumbing fixtures, but it is far more complicated if the basic infrastructure of the home is lacking. Show them that the foundation, roof, heating, plumbing and electrical systems are in good shape. Then renovations become much easier.
Good floor plan –Look at how traffic travels through the house as a whole. You can easily renovate to make particular rooms more livable. If you are trying to sell a home with a floor plan that feels awkward, help your buyer envision the space with walls moved or taken down entirely. You may be able to get them excited by helping them see the house’s potential with a few, relatively straightforward changes.
If you owe more on your mortgage than your house is worth, you are hardly alone, even here in perpetually price-inflated Greater Boston.
Just over one in five Boston area homeowners - 22 percent - were underwater on their mortgages as of the end of the first quarter in March, Zillow.com reports.
Moreover, about half were underwater by 20 percent or less, with the rest buried under even heavier loads of debt, that, at the very extreme, is double what their homes are worth.
The suburbs just to the west and southwest of Boston - that broad arc from Burlington down through Foxboro - have the least number of underwater homeowners, according to Zillow.FULL ENTRY
Part I: Building the home music studio that won’t drive your neighbors crazy
My entry from Monday about my clients with pianos and drums brought me this email from M.R., a long-time reader:
I'm a landlord in Somerville (I have two 2-family houses), I'm a long-time reader of the Globe RE blog, and finally, I'm a basement drummer. I've spent a few weekends' worth of time sound-proofing the basement drum room in order to keep the sound from travelling to the 2nd & 3rd FL unit (we live on 1st-FL unit). I feel that windows are easily treated (which you mention in yr piece), but doors & walls are harder to treat, but are the larger problem. Especially if uninsulated, drywall or plaster walls w/ studs in between resonate like a snare drum itself & pass the sound very readily. Studio solutions to this are to double the drywall on a given wall (w/ butt-joints offset from on another), and to use "resilient channel" to hang the drywall (imagine a spring-clip to hold the drywall, rather than screwing it to the studs/joists). For doors, solid-core doors w/ weather-stripping compressable-foam around the jam is a good solution. Dense-packed cellulouse (as subsidized by Mass Save!) is a decent solution to deaden hollow cavities between drywall/plaster, where cheaper & easier-to-install fiberglass-batts can't be used (like in an attic or existing wall).
I spent small money (~$150) to drywall & insulate my basement room. There's much more that could be done for another $150 & a weekend's worth of work which would make drums on the 1st floor lightly audible, and completely inaudible on the 2nd/3rd FL. If a contractor was involved, I'd estimate a $2000 bill for double-drywalled-&-spackled 10x10 room w/ solid core door & fiberglass insulation. Attic? Due to difficult-to-drywall surfaces & spaces which take lots of blown cellulose... $8000.
Is there any other studio-building advice that you’d like to share?FULL ENTRY
What's your choice: Sticks or city living?
I'll let Twirlygirl get the debate going this morning. She and her husband have one child and love living in the city. Even as bargain prices beckon from the 495 belt and beyond, she's determined to wait until they find the right place in Boston or Cambridge.
For Twirlygirl, it's a matter of sanity and even of being able to be "good mom."
The suburbs, with few exceptions, fill me with ennui. I would be rather miserable and wouldn't be a good mom if I was living too far out, far from the ability to get into the city, far from what feels like being alive. My husband mostly feels the same way.
No mincing words there.
We are primed for a home price turnaround in Greater Boston and across Massachusetts.
And we are not talking about 2013 or some other distant year in the future, but the next several months.
That's the verdict from Tim Warren, chief executive of The Warren Group, after the release this morning of home sales and price numbers for April by his Boston-based real estate data firm and publisher.
Warren points to the combo of falling unemployment and rock bottom interest rates as the key factor behind the budding rebound.FULL ENTRY
For people who love their morning or evening shower, a wimpy spray can ruin their day. Are you someone who loves a strong shower? I, too, hate a wimpy shower. I owned a good shower head, even when I was renting. This entry is dedicated to Bruce, Sandra, and all my shower-loving clients.
When house-hunters turn on showers to check the pressure, they often do not get the information that they need. Poor water pressure can be caused by the fixture, the plumbing leading to the fixture, the volume of the water coming into the house, or more than one of these. Turning on the shower will not give you the complete answer. It is just a waste of water.
When a house hunter turns on the shower, he or she could get false evidence of wimpiness because the shower head is clogged, while the pressure is fine. If he or she buys the house, cleaning the existing head or buying a new one will fix the problem at minimal expense a bother.
He or she may also get false evidence of a wonderful shower because the head is good, but the volume or pressure in the whole house is insufficient. The shower could flow great until someone else turns on a faucet, runs a dishwasher, or flushes a toilet. Water pressure problems show up when there is more than one draw on the system.
Turning on the shower alone does not diagnose those problems.
Service Magic explains it this way:
Low water pressure usually results when you've been forced to turn on two different plumbing fixtures at the same time, whether they are the outside garden hose, the kitchen/bathroom sink, the toilet, or even the shower. Although your water pressure may be sufficient when only one fixture is operational, you'll definitely notice a drop in water flow when the second fixture comes into use.
The number of modest capes, split levels and even colonials getting bulldozed is on the rise in Greater Boston's more affluent suburbs.
Here's a pretty interesting take from a West Newton architect in the heart of teardown country, which recently appeared as a letter to the editor in the Globe.
The architect, Anatol Zuckerman would like to see teardowns replaced with multifamily housing, though to be fair, he doesn't exactly call for a teardown ban. (In fact, he makes some great observations on why it is so difficult to get towns to face up to this issue.)
Still, it's an issue that is of far greater importance than simply to the buyers with the bucks for the $1 million-plus homes that are replacing all these more modest 1950s and 60s homes.
After all, the Boston area has long suffered from a shortage of decent, reasonably priced middle-class housing and it is a trend that is only getting worse.FULL ENTRY
How things have changed. Real estate brokers who spent years trying to drum up scarce buyers are now having to sweet talk reluctant sellers into listing their homes.
The buyers are definitely out there again this spring, both here in Greater Boston and in other major metro markets across the country.
But buyers are looking for a bargain. They sense the price declines won't go on forever, yet they also want something decent for their money. And with many potential sellers still skittish and unwilling to take the plunge, there has been a growing mismatch between demand and supply.
Check out this BloombergBusinessweek article - it looks at the seller shortage across the country and how it is driving bidding wars for ready-to-move-into homes that are reasonably priced.
Locally, bidding wars out now the norm in Cambridge, Newton and Lexington, notes Redfin in this blog post that went up yesterday.FULL ENTRY
That's how Jonathan in Millbury feels about his decision to buy in Central Massachusetts.
After all, he works as a project management consultant in Kendall Square and could have easily settled for a condo in the Boston area.
But instead, he's now living his version of the American Dream in a three bedroom, 1,500-square-foot ranch he bought for the low $200,000s in 2007, complete with a "nice level yard with woods."
After reading my recent post on bargain towns below $200,000, Jonathan fired off an email asking why I had left out Millbury. (No slight, just missed it as I was looking over median price records.)
Sure, I could have purchased a condo in the Boston area. But I don't see the value of living in a condo and paying a condo fee. I like having a yard and taking care of my home. And my neighbors are awesome.
That's the latest theory on what caused the housing bubble - and it makes a certain sense.
A new Boston Fed paper takes aim at the profusion of studies and documentaries that try to pin the blame for the housing bubble on the machinations of a few greedy Wall Street types. (Thanks gmbc for pointing this one out.)
Instead, it was the average buyer, borrowing to the hilt and beyond to grab a house in the belief that prices would just keep on going up, who drove the runaway prices of the bubble years, the Fed paper suggests.
It's certainly a provocative theory - and one very current now as the real estate market starts to recover and prices in some of Greater Boston's more affluent suburbs head up again.
In fact, for all those who are feeling a bit optimistic again - including me - the Fed researchers offer a very timely warning at the end.FULL ENTRY
I’m often asked how long the process of buying a home takes. The answer is that there is no one set-in-stone timeline that fits everyone’s purchase process.FULL ENTRY
Different people take longer or shorter than average at different stages. For instance, I’ve had buyers who found the home they bought during their first day of looking. I’ve had others who took over five years.
Here is a typical home buying timeline I share with my buyers, giving them an idea of how long to expect each step to take, or when the steps should be completed.
Activity/Task -- Date
Mortgage Pre-approval -- Day 1
Search for Property -- 1–??? days
Offer to Purchase -- As soon as practical after the home is identified
Offer Accepted -- Within 24–48 hours
Home Inspection --Within 7–10 days after Accepted Offer
Due Diligence -- Prior to signing the Purchase and Sale Agreement
Purchase and Sale Agreement (P&S) --- Within 10–14 days after Accepted Offer
Submit Complete Mortgage Application -- Within a day or two of P&S (Including P&S, pay stubs, tax records, etc.)
Mortgage Commitment Letter --10 to 21 days after signed P&S
Buyer Secures Insurance Binder (n/a for condos) -- At least one week prior to closing
Set Up Utilities -- At least two days prior to closing
Closing --Typically 5 to 8 weeks after accepted offer (this can vary greatly, as needed)
There are actually a few towns in Massachusetts where you can now buy a home for less than six figures.
In a state where the median price remains a lofty $267,500, this handful of communities stands out.
The question is not whether you could get a relative bargain, but whether it's worth rolling the dice.
Buying in some of these communities could be a gamble - a few are struggling with major problems, such as the crippling loss of old industries or school systems beset with major challenges.
Yet the same could be said of many areas that are now considered hot spots in the local real estate market. There are a whole bunch of Boston, Cambridge and Somerville neighborhoods that a few decades were anything but hot.FULL ENTRY
It’s that time of year, renters. I am hearing from my clients that their landlords are pressuring them into signing up for another year’s lease. I am also hearing from people who are suddenly thinking of buying because their landlord has notified them that he or she intends to sell the house.
Showing rented houses and apartments are my least favorite kind of showing. Sellers who are home during showings create an awkward situation, but at least they are benefiting if the transaction takes place. The renter, on the other hand, has little to gain and frequently ends up moving as a result of the sale.
Not all tenants are slobs. Not all owners keep their places nice. It is a stereotype that rented places are not kept well. But stereotypes have some truth to them. I teach my clients to make an effort to tune out the personal property and personal style of the residents of a house, be they owners or renters. It is particularly hard when people are home.
On Wednesday, I showed a three-family house that had an empty apartment, where the deceased owner had lived. Downstairs was an apartment the looked like the Garment District’s by-the-pound room. The tenant, and tons of her collected stuff, was there. Upstairs, the other tenant’s place was decorated in a theme (the beach) and was clean, bright and charming. That tenant was not home. Although I noticed the difference, I was really looking at the building, which all-in-all was pretty nice.
Was your apartment ever in a building that was being sold out from under you? Were you cooperative or hostile? Did being told that your apartment was up for sale make you want to get a cat and not clean the litter box? Or did it make you self-conscious that you needed to immediately clean out your closets?
Yes, even in high-priced Massachusetts, you can buy a house now for under $200,000.
In many parts of the country where housing has long been more affordable, this would hardly be worth the notice. After all, the median price nationally is $158,100, and falling.
But here in the Bay State, with prices on the rise again in the more affluent Greater Boston suburbs and in coveted or hip urban locales, all in Boston or Cambridge, it is worth remembering that we are dealing with two very different real estate markets here.
Beyond the gilded burbs, prices have fallen a lot steeper and continue to erode.
If you want a bargain in overpriced Greater Boston, you have to look where the real estate downturn has hit the hardest.
While some of the more affluent western suburbs, as well as a few of the more picturesque towns on the North and South Shores, are seeing prices rise again, that's not the case in many of their less glamorous neighbors.
There are lots of towns now where a house can be had for less than $300,000, I noted yesterday. And while there are fewer members of the under $250,000 club, they are out there - often small industrial cities in the midst of transition or small towns that are a little rough around the edges.
I thought dreston78 put it well in his comment yesterday.
I realize no one wants to live in Brockton, Worcester, Haverhill, Methuen, Lawrence or Lowell (except for the hundreds of thousands of people that actually do) but those are some markets that have been crushed by the bursting of the bubble. A decent home can be had for under $200,000 in anyone of those areas and plenty of new/newer construction in the $300K to $350K range.
Weary of looking at worn out, overpriced homes selling for half a million or more?
The good news is that it's still possible to buy below $300,000, with a whole bunch of towns and neighborhoods with prices in the $200,000s now.
But they are not in the the posh burbs and hip urban neighborhoods everyone is beating down the door to get into - and which have seen prices relentlessly rise right through the downturn.
And more often than not, you may end up with a tougher commute - and a fair amount of fixing up to do as well.
But then again, you won't find yourself saddled with a $500,000 mortgage either.
Here's my list, drawn from the real estate records of Banker & Tradesman. Today we'll tackle the suburbs, tomorrow the world. Just kidding, next week I will look at bargain-basement urban alternatives for those frustrated with Davis Square and other overpriced, over-hyped neighborhoods.FULL ENTRY
If you don't have a bottom line number and you are house hunting here in Greater Boston, get one and get one fast.
By bottom line number, I mean a number or threshold price that you won't go beyond, at least without some very serious consideration and, if you are married or in a couple, some hard-fought debate.
Sure, everyone can benefit from this, but having a budget and sticking to it is especially important here in the Boston area. After years of tough times, it remains one of the most overpriced housing markets in the country.
So what does that mean? Well if you are in that broad range of middle-income buyers, you are always going to be tempted to stretch in order to get a more palatable house.
After all, the options for middle-income buyers looking in the $300,000-to-$400,000 range, especially inside the 128 beltway, are not likely to blow anyone away.
Are you one of the many would-be buyers who are seeing every "nice" house go off the market before you have a chance to think? Bill Kuhlman, CRS, who is the broker/owner of Kuhlman Residential gives some advice that lots of people know, but many are not following.
In my experience, whether a homebuyer has $200,000 or $2,000,000 to spend, they all compromise on one or more of the primary property-related factors that drive market value. These include location, size of the living space and the lot, layout, and condition. I rarely represent a buyer who feels like the home they buy fulfills everything they want in their dream home.FULL ENTRY
It’s my opinion that the impact of superficial factors has become increasingly exaggerated over the past few years. This has irrationally driven up demand for shiny homes relative to homes with good fundamentals in need of a little work.
If you’re a seller, you’d be well advised to invest a few thousand dollars on curb appeal and surface items with relatively low-cost improvements such as a fresh coat of paint, new kitchen appliances, refinishing the floors, and landscaping. If you’re a buyer, your best opportunities to find a relative bargain would be to look right past these things.
If you’re a buyer who’s having difficulty finding anything you like in your price range, you should make a point to include in your search homes which have been on the market 60 days or longer. If you’ve been repeatedly beaten to the punch or outbid by other buyers for the homes you like best, maybe you should focus less on new listings and focus more on those which have sat on the market for a while. You will find significantly less competition from other buyers for those.
Don’t assume there’s something intrinsically wrong with a property just because it hasn’t been snapped up in the first few weeks. The “problem” could be something as trivial as the seller initially pricing the property too high for the market.
Certainly seems so from the latest numbers.
Pending home sales surged more than 35 percent in April compared to the year before, the Massachusetts Association of Realtors reports this morning.
A total of 4,784 homes were put under agreement in April, meaning there should be a sizable sales jump when those deals close in June and July.
Still, there are always reasons to be cautious, something the numerous housing bears on the comment board will be happy to hear me say.
Today, Sam Schneiderman, Broker-owner of Greater Boston Home Team, begins posting on the first Monday of each month. Today, Sam discusses various conditions that buyers and sellers request that can become contingencies in a sale.
There are very few purchases or sales that are not subject to condition(s) that one of the parties requires to make the deal happen.
Most buyers want to inspect the property, secure a mortgage, and review condo docs, if applicable. Those buyers should include carefully worded clauses in their offers that allow them sufficient time to do those things and spell out what happens if they do not turn out satisfactorily for the buyer. In other words, buyers want to make their purchase “contingent upon” or “subject to” a satisfactory outcome of one or more of their requests.
Except for mortgage contingencies, most of the contingencies that buyers request are satisfied in advance of the Purchase and Sale agreement or at a specified time after signing it. The mortgage contingency is typically satisfied about a month from the Purchase and Sale signing. Prudent seller’s agents and sellers understand how to verify a mortgage pre-approval so that the odds are in their favor that the buyer will get the mortgage unless the property does not appraise.
Sellers can also make a sale “contingent upon” or “subject to” something happening, although that is less common. Here are the seller contingencies that I see requested most often. They are sometimes in the MLS listing, but sometimes they are not discussed until the buyer presents an offer:
- Sale is subject to seller finding to suitable housing.
- Sale is contingent upon third party approval. (This typically refers to short sale approval.)
Teardowns are back.
After stalling during the Great Recession, teardowns are on the rise again in some of Greater Boston's more affluent suburbs.
Wellesley, Needham, Newton and Lexington have all seen a jump in teardowns over the past year of older, more modestly-sized homes, I report in a Globe West story that ran yesterday.
Needham appears to be leading the charge, with 82 last year, compared to 58 in 2009.
And it is a trend that has big implications for middle-income buyers trying to get a foothold in one of the country's most expensive housing markets.FULL ENTRY
Over the past month, I have had an unusually high number of radon tests conducted by my clients that have come in over the EPA limit of 4.0 pci/l.
What does “pCi/l” mean? Pci/l means picocurie per liter of air. It is a measure of radioactivity of the air. That radioactivity has been linked to lung cancer.
What is radon? Radon is an odorless, radioactive gas that comes from the breakdown of uranium found in soil, rock, and water under houses. The house traps radon inside, where it can build up. It gets in through cracks or air gaps under the house. The highest levels will be found in the basement, then be present at lower levels as you go up into the other floors. Most household radon comes from rock and soil, and not from well water or building materials.
Second, a bit of house history:
The better insulated a house is, the less the house “breathes.” The improvements in insulation contribute to indoor radon. When we all had air leaking from our closed windows all winter, there was less chance for radon to build up in houses.
However, it is not a foregone conclusion that any house will have, or not have, an elevated radon reading. There are older houses with older windows that have a radon problem and new houses that don’t. It is also not a foregone conclusion that if the neighbors all don’t have elevated radon readings, your house won’t. One of the houses that had a very high reading recently (24 pCi/l) was next door to a recently sold house with a normal reading.FULL ENTRY
So says Trulia, which has jumped into the potentially risky business of predicting future price and rent trends.
While most of the major housing indexes track past sales, and as a result lag the market by months, Trulia contends that tracking asking prices and asking rents can offer a window to where the market in headed in two or three months.
The theory is what sellers and landlords are asking for now will end up being reflected in sales and leases in the next quarter. (Check out this Calculated Risk post on Trulia's approach, which does a great job laying it all out.)
If that's the case, then we could soon be moving from price deflation to price increases here in the Boston area, and possibly even double digit rent increases by year end.
Anyone who’s been to the homebuying rodeo often enough knows that whenever the real estate market picks up, buyers and agents should allow extra lead time when writing in the deadlines for the inspection contingency with their offer. This is so they’ll be more likely to schedule the home inspector of their choice and arrange for other inspections without having to ask the seller for an extension. But something extraordinary is happening in the City of Boston right now that sellers and their agents should be aware of.FULL ENTRY
I heard at a Boston Caucus meeting for MAR yesterday that the Boston Fire Department is currently booking smoke and carbon monoxide detector inspections a minimum of 21 days in advance. Normally I would expect to schedule this inspection in Boston within 7 to10 days of submitting the application and payment.
As I understand it, it’s not simply a matter of greater-than-usual demand. There’s a confluence of many factors, including some short-term infrastructure issues at the BFD, contributing to this extraordinary delay. The wait time may come back closer to springtime norms soon, but right now you need to plan ahead.
Certainly seems so based on Lauren's effort to unload her three-bedroom cape in South Weymouth for $309,000.
I recently blogged here about Lauren's struggles to find a buyer - she's been getting lots of traffic but no offers since she put her home on the market in February.
I suggested she replace the ugly mustard colored carpet and the advice flooded in on the comment board.
So much for that. While there were others in the cosmetic camp, the comment board was overwhelmed with suggestions that Lauren lower her price.
Instead of $310,000, she should be looking at $270,000 or $280,000, suggested fu1eye.
I wrote to Attorney Richard D. Vetstein about something I have been hearing different opinions about. I wrote:
I have been told that a back up offer cannot be presented to a seller because it is inducement to interfere with a contract in place (the accepted offer.) I have also been told that a back up offer must be presented, forthwith, like any other offer. Since I never list property, I don’t know which one is true. Can you give a legal and practical explanation for the blog?
Attorney Richard D. Vetstein answers:
I do not believe that merely soliciting and presenting a back-up offer can give rise to a legal claim for interference with contractual relations as long as the seller does not break the existing contract with the buyer. Moreover, I believe that real estate agents have a legal and ethical obligation to present to their seller clients all offers made on the property, but it is the seller’s preference whether or not to solicit back up offers once he has already accepted an offer.FULL ENTRY
Unlawful interference with contract?
Rona is worried that accepting back-up offers could expose an agent to liability for interfering with an existing contract. I don’t think she has much to worry about unless the seller tries to cancel the existing deal without legal right.
In the real estate context, the requirements to make out a valid claim for unlawful “interference with contractual relations” are the following:
• There must be an accepted and signed offer to purchase between the buyer and seller which is sufficient to form an enforceable contract under Massachusetts law;
• The competing buyer (making the back-up offer) must have knowledge of the contract;
• The competing buyer must have intentionally induced or persuaded the seller not to perform its contractual obligations, i.e, not proceed with the transaction;
• The interference was improper in motive or means; and
• The plaintiff was legally harmed.
Under this legal definition, there is liability only where the seller unlawfully breaks the existing offer/contract with the first buyer. As a general matter, merely submitting a back-up offer (and not formally accepting it) will not support a legal claim because there has been no breach of the first contract.
This spring has seen a flood of homes hitting the market in Greater Boston.
Like the recent rains, it is a badly needed inundation for a parched real estate landscape dominated by overpriced homes in need of work. It's still tough out there, but at least there are more homes to check out.
So where to look?
Suffolk County, which is mainly Boston and a couple inner suburbs/cities, saw the biggest inventory bump, rising 35.6 percent, Redfin notes.
Middlesex County, which includes the western suburbs, came in a close second, with a 32.6 percent rise in listings in March.FULL ENTRY
We are back to the 1990s when it comes to homeownership.
Nationally, the percentage of homeowners has dropped from a high of more than 69 percent in the early 2004 down to 65.4 percent at the end of the first quarter, Bloomberg News reports.
It's the lowest since 1997. And it appears to be an accelerating trend - the homeownership rate has dropped a full percentage point over the last year alone. When it comes to statistics, that qualifies as a plunge, not just a drop.
In fact, experts are predicting continued declines for the rest of this decade - at the current pace that could push the homeownership rate below 60 percent by 2020.
Yet despite the gloomy national numbers, this is one trend Massachusetts is bucking.
That's the dilemma "Josh" in Jamaica Plain is grappling with right now.
He and his siblings own a two-family in JP they want to sell in order to bolster their parents' retirement income.
The house is in a great location between Centre Street and the Jamaica Way across from an elementary school.
Josh acknowledges the house is older and needs a little touching up, but hopes that rising demand in a relatively hot market like JP will encourage buyers to open their wallets anyway.
So should he list now or wait?
For all the talk about bidding wars, for many sellers, it's still a tough market out there.
Yes, the open houses are bustling and there are clearly more people out there looking around this spring. And sales are up markedly, as I noted here a couple days ago.
But many houses are still sitting, drawing interest, but no offers, as one would-be seller in South Weymouth is finding out.
Lauren bought bought her three bedroom Cape back in 2008 for $300,000 and is now looking to sell for $309,000.
Even then, she will still be in the red, having pumped an estimated $25,000 into various upgrades, from renovating the bathroom to new windows and a new heating system.
Here's a link to the house. It comes with a good yard - a half acre, which is unusual for South Weymouth, Lauren notes.
Yet while there is no lack of traffic since she put her house on the market in February - Lauren's getting ready for her seventh open house this weekend - there have been no offers yet.
And Lauren finds herself wondering whether it's the price that's the culprit right now, or the ugly, mustard colored carpet on the second floor that came with the house.FULL ENTRY
I frequently talk to young parents who are daunted by their inability to get into the real estate market. Even with dropping prices and low interest rates, the prospect of saving for a down payment and paying our still-inflated prices seems impossible. It shouldn’t be this way, they say, we are earning a lot of money, but it just doesn’t go far enough. They have a professional income, or two, but they feel far from rich.
Whether you are a renter or an owner, the greater Boston area is a very hard place to live, economically. Housing has a big part in that. What does it say about an area, when $91,600 is our area median household income (AMI)? What does it mean for people who are starting out? For those that are looking toward retirement? For those that find themselves unemployed or under-employed? What does it mean to you, in dollars and cents?
Crittenton’s Women’s Union has developed a tool to calculate what income a family needs to make ends meet. Around here, the Economic Independence level is rather high, compared with many places in the country. Try it.FULL ENTRY
OK, calling a bottom to the now years-long decline in home prices is risky business.
Eventually someone will get it right, but predicting an imminent turnaround in prices is more likely to leave you looking like a fool rather than some market sage.
Yet the predictions keep coming, with Zillow.com the latest to roll the dice.
Zillow contends Boston area home prices hit bottom in the first quarter. Better yet, Zillow sees a .3 percent rise in prices over the next year.
That comes after a painful decline of more than 2 percent over the past year, with the Zillow Home Value Index for the Boston area now just over $300,000. (Zillow looks not just at sale prices, but also assessed values.)
At least for homes attractive enough or priced right to get an offer, yes, multiple offers may very well be the new norm.
That's what Redfin contends it is seeing in Greater Boston. Roughly 54 percent of the homes Redfin agents wrote offers on in March wound up "in bidding wars with prices literally rising before our agents' and clients' very eyes," the online real estate brokerage reports in its Boston Sweet Digs blog.
Of course, we are hardly talking about every home on the market - these are houses that had enough going for them to get at least one offer.FULL ENTRY
Many consumers, and even some real estate agents, don't understand that any conversation with an agent or with the party on the other side of the transaction can have a potential impact on the outcome of negotiations. So you (and your agent, if you’re using one) need to be on guard at all times so as not to give clues to the other side that may signal a possible weakness in your position which could eventually cost you money. Some of these kinds of statements are obvious. For example, even if it’s true, don’t blurt out to a listing agent, “We’ve looked at nearly 100 homes, and we were just about ready to give up hope, but this is the first one we both like!” But far more subtle and seemingly innocent conversations can give a seller an advantage without you being aware of it. Two simple tips:FULL ENTRY
One: Don’t tell a seller’s agent you’re relocating from another part of the country or that you have limited time to look at homes. This signals to a savvy agent you might go that last five or ten or twenty thousand dollars during your initial price negotiation, or you might not really hold out for that significant price reduction you asked for after the home inspection revealed the roof is on its last legs.
Home sales rose by more than 19 percent in March compared to last spring, The Warren Group reports this morning.
But even more significantly, it was the best March, and the best first quarter as well, in terms of overall home sales in Massachusetts since the spring of 2007, before the Great Recession hit.
So is it time to declare victory and break out the champagne? Are the hard times in real estate finally at an end?FULL ENTRY
I stand with Meliss173 who is tired of our arm-chair experts who think that there are no bidding wars and agents are duping silly buyers into paying too much with phantom offers. Yes, there are some phantoms. I try to arm buyers against such games.
There was a supply shortage last year, and there is one again this year.
It is unhelpful to buyers in the current market to deny the reality of the low supply and high demand on reasonable housing for a family within a half hour commute of Boston. Whenever the subject is broached, the parade of bears starts screaming that prices need to go down. Well, furry ones, price is not going to go down when there is a low supply and a high demand. The shadow inventory is not the inventory that young families want or need.
My company is keeping a list of MLS numbers of house and condos that we, personally, knew had bidding wars. When everything closes, we’ll put it together as a report for our clients. I intend to do one for BREN, too. If you want me to track a particular house, send me the MLS number. Please title your email “BREN bidding war.” I will wait until sometime in July, when things slow down, and check all the sales information on these so-called “hot houses.”FULL ENTRY
More homes are getting snapped amid the best spring market since the Great Recession. And sellers in Boston's western suburbs are jumping back into the market after staying clear for years.
That's what Redfin's Boston team recently found when it tallied the inventory of homes for sale this spring in Middlesex County.
The number of listings in the county, which straddles some of the wealthiest burbs in the country, is up 30 percent over last March.
Of course, the upsurge in sales, which rose more than 26 percent in February, is what has revived hope among sellers depressed after years of a dead or declining market.
Tired of being all but being called chumps on the comment board of this blog, some buyers are pushing back.
We all know the Greater Boston market is not an easy one to get a foothold in, especially if you are looking in the $250,000 to $400,000 range.
That said, there are still many solid reasons to buy instead of rent, especially if you are looking to start a family and plan to stay put for a reasonable amount of time. Conventional thinking is five years, though I'd argue at least a decade.
If you want to keep renting, go right ahead, that's great. But while it may be challenging to buy in the Boston area, don't give up on that option if that is what you want to do.
If you a $400,000-and-below buyer, and you want to stay near or within the 128 beltway, I can all but guarantee that you are not going to find your dream home. That said, there is no reason you can't find a house you can be happy with or at least has potential.
However, meliss173 argued the case much more eloquently than I am doing right now in a series of recent comments.
It's something to consider, especially with the National Association of Realtors going all out to promote its annual open house weekend on April 28-29.
If you are a seller getting pressured by your agent to take part, you might want to think it over.
Open houses are ostensibly for the benefit of sellers. But sadly for sellers, the open house can be a high pain, small gain proposition.FULL ENTRY
If you are looking at a home or selling one, and keeping one eye nervously trained on your job, you are not alone.
Yes, the economy is picking up, but anxiety about the job market is still fairly strong out in the real estate market, a new survey finds.
The vast majority of buyers and sellers across the state are either still mildly or seriously concerned about job loss, according to a monthly survey of market sentiment by the Massachusetts Association of Realtors.
Sixty-one percent of Realtors polled said their clients, both buyers and sellers, were mildly worried, while 30 percent still have significant concerns.FULL ENTRY
Some people seem to have never heard of the mortgage meltdown of 2007. They show up in my practice (usually on the phone) upset and unhappy because they can’t borrow as much money as they thought they could, and the &^%*# lender wants so much documentation. They ask whether I have a reasonable lender for them to talk to.
So, this is for people who just walked into the world of real estate and are wondering why lending is the way it is:
In the book, The Big Short, Michael Lewis explains the details of the conversion of mortgage notes into a bond commodity. At some point in the Bubble years, the way that the bonds were rated became strongly weighted on the credit score of the borrower and less weighted on the borrower’s income and ability to repay. This created a market for mortgages with borrowers who had high credit scores. Their ability to repay the mortgage didn’t much matter. When everything collapsed around this questionable valuation of notes, the banking industry tightened their standards. Some think they went overboard.
Have they gone overboard, or are they simply protecting their investor’s assets?
The truth about lending lives somewhere in between the free-for-all of the mid 00s and the tightening that started in 2007. Yes, today there are mortgage programs for people with less than 20 percent down. There are programs with as little at 3 percent down. There are several programs available. Two examples are FHA and Mass Housing. The requirements for each of these low down payment loans vary. For example: Mass Housing has income restrictions. All of these programs have credit score requirements as well as some other underwriting requirements. Check with your lender for details. Mass housing has just introduced a 3 percent down payment loan program with no MI (mortgage insurance). Rates on all these programs are the same as the rest of the market Rate.FULL ENTRY
Check out this Calculated Risk post on what's really happened with home prices.
The major real estate indexes - Case-Shiller and CoreLogic to name two - have been reporting that prices are back to 2002 and 2003 levels.
But account for inflation, and home prices in real terms have dropped all the way to 1998-2000 levels, Calculated Risk finds.
Basically, all the home price gains piled up during the reckless 2000s have vanished!FULL ENTRY
… I found something out over Easter regarding moving from a two family to a single family that I had never heard about before.
If I own a 2 family home that I plan on keeping and I am qualifying for a mortgage on a new single family home. I can only use income from one of the units unless I have 30% equity in the MFH. It’s to prevent homeowners from buying a single family home and then letting the MFH go into foreclosure? I assumed that if you rented both units, the lender would consider both rents towards your new mortgage qualification.
My quick answer was:
It is an interesting question. However, I don’t think the qualification rules are as foreclosure-related as you think they are. It could be pure income guideline at work. FNMA counts part of rental income – not all of it – toward qualifying for another mortgage. FNMA may not be willing to count the second rental income unless the owner has a lease in hand from a verified (real) renter who will be moving in at a certain date. Since it is hard to pin a renter down months ahead of time, it may be near impossible to prove one has a renter.FULL ENTRY
It is a similar problem that a SF house owner has when that owner is moving up or downsizing. Frequently, the owner cannot own both properties simultaneously because his/her income cannot carry that level of debt. Those owners need to sell their current house first, then buy the trade-up or trade-down property.
The idea that buyers are chumps, easily conned into blowing hundreds of thousands on overpriced homes by slick real estate agents, is remarkably patronizing.
Yet it is a theme sounded all too often on the comment board for this blog by some otherwise very sharp and insightful observers of the Greater Boston real estate market.
This is probably one of the toughest real estate markets in the country for middle class buyers to get a foothold in.
There are simply too many people with fairly decent incomes vying for a limited pool of overpriced, run down homes.
It was true a decade ago in the Boston market and it is true today, despite all the dramatic changes we have seen in the economy and in real estate in general over the last several years.
Buyers braving the market in the Boston area deserve empathy - not ridicule. Yes, real estate can be a racket, but why pick on poor buyers?FULL ENTRY
The idea that buyers are chumps, easily conned into blowing hundreds of thousands on overpriced homes by slick real estate agents, is remarkably patronizing.
Yet it is a theme sounded all too often on the comment board for this blog by some otherwise very sharp and insightful observers of the Greater Boston real estate market.
This is probably one of the toughest real estate markets in the country for middle class buyers to get a foothold in.
There are simply too many people with fairly decent incomes vying for a limited pool of overpriced, run down homes.
It was true a decade ago in the Boston market and it is true today, despite all the dramatic changes we have seen in the economy and in real estate in general over the last several years.
Buyers braving the market in the Boston area deserve empathy - not ridicule. Real estate can certainly be a racket, but why pick on poor buyers?
As a buyer’s agent, I thrive on the mistakes of listing agents. This week, while going through listings for my clients, I came upon a listing sheet that hasn’t been updated this year. Within the remarks it read:
1st showings to be December 27th. Get your buyers ready. Won't last.
Since it is now mid-April, I think the rush may be over and that it did last. It doesn’t seem like a bad house, but my clients have been ignoring it because it has been on the market “forever.” In a spring market, what defines “too long” or even “forever.” What do you think?
Most of my clients ignore anything that has been on the market for triple digits. They are also sophisticated enough (or I teach them to be so) that they are aware of which of the houses are relisted. A house that fails to sell in a reasonable amount of time has one of a couple of problems. If the problem is the marketing, I see this as an opportunity.FULL ENTRY
Renting is hot now. But the choices and prices available for renters still lag significantly compared to what's available on the for-sale market.
Boston area rents jumped another 6 percent in the first quarter, RentJuice reports.
That brings the average asking rent in Boston, Cambridge and the inner suburbs to $2,332 for a two bedroom apartment.
That's a pretty decent sized mortgage payment, all for a two bedroom. It's about what I pay in Natick for my modestly sized, four bedroom fixer-upper. And I have a home office on the second floor and a potential spare bedroom on the first floor, which just might come in handy someday given the ways things are going right now with my elderly parents.
You can do a lot with 1,800 square feet, if you can configure it the way you want it - something you can do if you are a homeowner, not a renter.
Asking prices are a fiction. Sellers and their agents make them up. Reasonable people get objective information based on comparable sales. Reasonable people pay attention to those sales and don’t price their house hundreds of thousands over what people are paying for properties similar to theirs. But not all sellers are reasonable. Some sellers get attached to their made-up price. As a buyer, if you are proud of getting money off an inflated price, you have bought the propaganda that asking prices mean something in the real world.
The data is out there for those of you who are skilled at mining it. So, if you are a do-it-yourselfer, here are some tips:
If you see a price is way out of whack with the recent comparable sales in the area, look for they “why.” Figure out what the price means to in the seller. If you know why it is there, you can negotiate accordingly.
If the seller bought before the bubble, he/she is counting on some profit. Do the math and know what the profit looks like to the seller.
If there is no profit, it is powerful to know the break-even point for the seller. Any of these things can explain what looks like a silly-inflated price:
Some can sell at the price they paid for it plus costs, and feel proud of not losing equity.
Some can sell at their purchase price, but lose the cost of their fees. (It feels like a much bigger loss if he/she sells for less than what he/she paid.)
Some could be able to get out without bringing money to the table, or not. Avoiding the need to bring cash makes a lot of difference to the seller. This one also may be an economic show-stopper. If the seller can’t pay to get out, he/she can’t sell.FULL ENTRY
I'd argue it's a bit of both, but let's check out some numbers.
Just looking at Boston, the number of homes going under agreement in three days or less has steadily fallen over the past three months, Redfin reports.
Roughly 10 percent of homes that have hit the market this spring in the Hub have gone under agreement in three days or less.
That's down from an earlier Redfin estimate from late March, which pegged the number at 15 percent.
Moreover, the trend appears to be a downward one, with just 6 percent of homes that hit the market in Boston in the month ending April 12 getting scooped up in 72 hours.FULL ENTRY
If you have ever gone house hunting in Greater Boston, you know what I am talking about.
These are dingy homes in need of all sorts of work, listed at prices that anywhere else in the country would command a half decent split-level or even colonial.
And they are zombies because they have been kicking around for years, coming on and off the market in thinly disguised attempts to mask the fact that no one out there is biting.
I am sure there are more than a few that came back on the market this spring as new listings, having been pulled over the winter.FULL ENTRY
Pending home sales soared nearly 39 percent in March.
A total of 4,519 homes were put under agreement last month, up sharply from 3,256 last March, the Massachusetts Association of Realtors reports.
The number of condos put under agreement was also up more than 30 percent over March 2011, hitting 1,854.
This surge in activity begs the obvious question: Will prices be headed up soon as well?FULL ENTRY
I turn my attention to the other side of this market. Today, we will discuss the tired, overpriced and/or ugly stuff that is sitting on the market begging for a buyer’s attention. This is an encore entry from spring 2008.
First, I would like to define my terms: Low-balling is when a buyer makes an offer well below what the property is worth. One can make an offer well below asking that is simply a low offer, but reflects knowledge of what the property is worth. It may come in lower than true value, but high enough that the seller will say “OK.” If the seller has to sell and the price is fair and reasonable (even if it is $5-10,000 below what it is worth,) you may get a "yes." That is the “sweet spot” that I look for when I am negotiating for my buyers. Sellers do not give huge discounts to strangers. If he/she is selling for $50K less than it is worth, they will not sell or sell to a relative.
This season, I made two offers which were $79,000 below asking. Neither was a lowball. I made one at $30,000 below that was a lowball. Of those, only one of the -$79,000 was accepted.
I strongly disagree with real estate advice that says offer some percentage below the asking price. This makes no sense because asking prices are a fiction created by the seller and his/her agent. Asking prices change. Here’s a quick example that I did at random. These are original asking prices, the final asking price and the sales price of single family homes that sold in Natick last month [spring 2008]:
Original asking price...Asking price at offer...Sale price...Days on the market
145,5... 145,5... 135.. 13...
299,9... 254,9... 250... 319...
325... 312... 295... 65...
349... 339,9... 330 ... 71...
359,9... 339,9... 330... 52...
359... 359... 325... 111...
365... 365... 361... 8...
389,9... 389,9... 385... 4...
429,9... 429,9... 420... 5...
465... 429,9... 411... 192...
439,9... 439,9... 437... 8...
499,9... 469,9... 426,250...311...
479,9... 479,9... 460... 177...
489,9... 489,9... 450... 32...
499,9... 489,9... 455... 57...
515... 515... 485... 16...
525... 525... 475... 15...
689... 650... 650... 201...
675... 675... 680... 39...
709... 709... 664... 71...
965... 899... 865... 206...
1025... 1025... 1020... 2...
I do not see a pattern here. Do you? Is there a percentage off that makes sense? No. The reason is that in order to make an offer effectively, you need to do the research or hire an intelligent agent to do it for you. You must negotiate from market value, not from asking price.
The sources of information are out there, but do not count on the automated evaluation tools to do what a person can do. US News and World Reports showed just how wrong the popular tools are. Do-it-yourselfers should go to the Registry of Deed sites, the town sites and do a lot of drive-bys. If you have not seen the properties you are comparing your target house to, you are at a distinct disadvantage, because condition is a big value changer in our old housing stock.
Tomorrow, I will be getting into some details about how to position a low offer.
Bidding wars are back, and not just in Greater Boston, but in other markets across the country.
Just ask the Hensleys, who felt compelled to include a family portrait along with their $270,000 bid for a three-bedroom home in suburban Seattle. In fact, they also included a letter describing how the house, which backs into a wooded hillside, would be perfect for their growing family, BloombergBusinessweek reports.
They even threw in $10,000 more than the asking price. Here's a quote from the Hensleys, which I have lifted from the story.
"We understand there is going to be fierce competition in the offers made for your house but Carina and I both felt very strong about letting you know what it would mean to us if we were given the opportunity to live in your gorgeous and charming house," wrote Matthew Hensley, 33, a credit union branch manager whose wife is a dental hygienist.FULL ENTRY
Hip urban or boring suburban - where would you rather live?
What started as a comparison of the merits and demerits of affordable but lunch bucket Quincy with Davis Square, the hipster capital of Greater Boston, has mushroomed into a debate over urban versus suburban living.
After hearing about the delights of living in Davis Square from Franksmartin, frustrated suburbanites are having their say - and then some - on the comment board.
Living out here in Natick, the capital of supposed suburban dreariness, I know which side of the argument I fall on. Yes, we are not hip, but we like it that way. After all, if you have small children, you are not out bar hopping or trying out a different restaurant each night, unless it's a diner or an IHOP.FULL ENTRY
Asking rents in the Boston area jumped a whopping 9.2 percent during the first quarter over early 2011, Trulia reports.
Hub apartment owners didn't quite lead the nation in their zeal to cash in, but they came close, with asking rents jumping 12.1 percent in Miami in 11.1 percent in San Francisco.
It is a wallop to the wallet of local renters that comes even as home sellers in the Boston area finally get a firmer grip on reality.
Meet Franksmartin, an unabashed cheerleader for living the life in hip urban neighborhoods like Davis Square.
When I knocked the idea of paying hundreds of thousands more to live in Davis or Cambridge as opposed to Quincy or Medford, Franksmartin, who lives in Porter Square, was ready with his zinger.
If I think it is nuts to blow money just to live with the hipsters, he thinks it's crazy to squander your money to live in some suburban bore-fest.
Now I like my Natick fixer-upper and the fact that I can walk with my kids to the center of town, which has come a long way over the past few years. It's a long way from boring.
But I'll concede that it's far from hip.
It works in the movies. But it's a bad idea in real life, especially when it comes to buying a home.
The last thing you want to do is lead with emotion when making a major financial decision.
But that's not what all those perky real estate brokers out there want you to do - they want you to get all warm and fuzzy and forget about the numbers just long enough to get hooked.
So it's hardly a shocker to see Coldwell Banker releasing a survey that plays up the idea that buyers are leading with their hearts instead of their brains.FULL ENTRY
This is Sam Schneiderman, Broker-owner of Greater Boston Home Team's 150th blog post on BREN. As of this entry, he moves to posting on the first Monday of the month. Today, he discusses the role of the lender’s real estate appraiser in a typical real estate transaction.
The role of an appraiser is to provide the lender with an unbiased estimate of the value of the property being financed by the mortgage. The appraiser will be assigned by the lender or an appraisal management company that the lender uses. As one of the lender's costs in the transaction, the cost of the appraisal is usually passed on to the buyer. Although the buyer is paying for the appraisal, the appraiser is working for the bank.
Lenders use independent appraisers to assure that the property that they are lending on is worth enough to secure the loan if the borrower defaults. If the appraiser's estimate of value is less than the contracted purchase price, the lender will probably not lend on the property at that price because it affects the loan's security and the borrower’s loan to the value ratio, which is used to determine the loan program, interest rate and whether or not the buyer will need private mortgage insurance.
Appraisers that perform appraisals for real estate transactions that involve government money must be licensed by the state. In practice, virtually all lenders use licensed appraisers.FULL ENTRY
OK, that is pretty ridiculous, but I thought I'd throw it out there to get things moving.
Mortgage rates may very well have hit bottom, as this Globe piece suggests.
Yet even if that's the case - and rates promptly sunk back below 4 percent at the end of last week - it is likely to be a long climb back up to relatively higher rates.
Freddie Mac's forecast, according to the article, sees rates hitting 5 percent, not this summer or fall, but by late 2013!
Last Sunday, at an open house, the agent there told me (proudly) that “Eighty-five parties came through last week.” When I hear that, I hear “Eighty-five parties rejected this house at this price.”
A swarm of buyers at an open house does not always lead to a bidding war. How can you discern if it is the real thing, or just a fantasy of the seller or the seller’s agents?
Commenters on this blog persist in their view that there are no legitimate bidding wars going on. They speak of dual and designated agency making it so that all agents are in cahoots with all other agents. They claim agents put shill offers on the table. They claim friends, family, and other agents act as pretend buyers...
There may be some slime-ball somewhere who actually does this, but I find it hard to believe anyone can stay in business behaving that way, especially in the age of internet communication. I do, however, agree with commenters who are saying that open houses are packed with “lookey-loos” or “tire-kickers” and also nosy neighbors.
In the spring, when demand peaks, I have less room for negotiation with seller agents, since the supply-demand ratio is not in my client’s favor. So, my “just say no to bidding wars” mantra is self-serving in that regard. I would like to see no bidding wars. That said, if you are a buyer looking to buy this spring, how do you separate the sight-seers from the legitimate buyers?FULL ENTRY
Ah, the hipness premium. Seems downright dumb and shallow to me, but I am clearly in the minority given the silly amounts of money people are willing to blow to live in a trendy neighborhood.
Take a mediocre condo or house in need of work, plunk it down in JP, Davis Square, Cambridge, or the South End, and suddenly you are talking big bucks.
But is that cramped two-bedroom really worth hundreds of thousands of more because it is in Davis Square instead of Quincy, or the South End instead of Medford?
Artiefufkin hit it on the head with this comment on my post on buying for the long haul.
"Something I've noticed about the Boston area real-estate market is that the premium for hipness seems to be irrationally high," he writes. "It simply isn't rational to pay an extra $200k for a condo simply so that you can walk to cool restaurants rather than having to drive 10 minutes or take a 10 minute subway ride."
Today, I would like to remind you that, like the poor, bidding wars are always with us. From my first moments at BREN, I have been advising buyers to keep the presence of bidding wars and the articles written about them in perspective. Below is an encore of an August, 2010, entry:
Bidding wars were the topic of my very first entry here at Boston.com/REnow. Since then, not much has changed in the thinking of most would-be buyers. They still need to be warned about how their psychology is designed to work against them when they approach a bidding war.
Grasshoppa, why is it insane to participate in a bidding war? If you establish a maximum price that you are willing to pay for a specific house and you do not go over that, what is the harm? Are you afraid you might not be able to control what you offer? How is it different than any other time a seller comes back with a counter-offer?
I am with PerrinAybarra that a bidding war can be handled responsibly. However, most people are vulnerable to what I call “The EBay Mistake.” That’s when the need to win overcomes your critical thinking about what you are doing.FULL ENTRY
Don't want to get burned by real estate?
Well then you'd better take the long view - and be a little big savvy about when you buy and sell as well.
Here's an enlightening comment from MWK, who made out like a bandit in the South End after buying in the mid 80s and then selling two decades later in 2004.
He then took his profits and bought a home in Quincy as the real estate bubble neared its peak.
Now MWK's friends are all bemoaning his bad luck.
After all, the numbers don't look good for Quincy, with single-family sales having dropped 10 percent so far this year and prices by 13 percent, to a median price of $282,375, The Warren Group reports.
But MWK is confident - he's in it for the long haul.
"I'm not saying my house will be a cash machine in a year from now, but I'll sell it eventually at a profit, I'm pretty confident of that," MWK writes.
Attorney Richard D. Vetstein reviews legal rights, and lack thereof, in regard to bidding wars.
The spring market hype is in full force with lots of chatter on bidding wars even in Natick and other towns not usually known for them.FULL ENTRY
What are the legal issues surrounding bidding wars?
There are really no hard and fast legal rules with bidding wars. Contrary to popular belief, a private seller in Massachusetts is not legally obligated to accept the highest offer made during a bidding war. A seller can be as financial prudent or as irrationally arbitrary as she wants in deciding which offer to accept. A seller may decide to forgo the highest offer in favor of a lower offer due such factors as the financial strength of the buyer (i.e., a cash buyer), because the buyer waived inspections, or simply because the buyer wrote the sellers a lovely letter about how wonderful their home is!
Legally, an offer is simply an invitation to negotiate, and provides a buyer with zero legal rights to the property. An offer does not create a legally enforceable contract — unless it is accepted and signed by the seller.
OK, it's time to stop hyperventilating over every decline in home prices as a harbinger of doom.
Yes, the long climb down in prices has been a central feature of our nation's now years-long housing market swoon.
But the double dip in home prices that began in 2010 - and appears to be continuing into this year - is finally igniting long dormant sales.
Take a look at these two numbers.
Two weeks ago, I compared the total return on investment between three stock indices and median sale prices between January, 2000, and March, 2012. Last week I reported on the performance of the Dow Jones Industrial Average (DJIA) versus the rise in the median price of U.S. homes between 1970 and 2010.FULL ENTRY
The bottom line is that the DJIA closed 13.03 times higher on December 31, 2010, than where it was on January 1, 1970. Over the same period, the median sale price of U.S. homes grew by a factor of 6.83, just a little better than half the growth of the Dow.
What it comes down to is that the rate of return on stocks has, over this particular 40-year period, far outperformed the national median sale price for homes. And you’d have made out like a freakin’ bandit if you had bought into the stock market on December 31, 1979, and sold on December 31, 1999, bookending the two best decades in the history of the stock market.
But, if you had bought an average-performing group of stocks on December 31, 1999 and sold on December 31, 2009, you wouldn’t have been so thrilled, losing over 9 percent of your investment in that decade. Worse, if you’d sold on March 9, 2009, when the Dow was at 6,547.05, you would have suffered a loss of 43 percent of your investment.
Median residential real estate prices in Boston since 1970 have significantly outperformed the national numbers. I wish I could give you the data to back up the statement, but I haven’t been able to find Boston-only data all the way back to 1970. Even with the Case-Shiller Index, which I consider to be the most-accurate measure of the performance of the housing market, I could find local information dating back only as far as 1987. (Again, I invite the research-proficient among you to find some usable data for Boston or Massachusetts home prices stretching back to 1970.)
Here's a little tip about the news business - we just love trend stories.
Better yet, we like to fool ourselves into thinking we are getting out ahead of them as well.
Hence the explosion of news stories and commentary lately on what certainly looks like a resurgent spring market, with evidence, from stats to reports from buyers, sellers, and yes, real estate agents, of a marked increase in activity.
Given we have been mired for years in one of the longest and deepest real estate downturns our nation has ever seen, if the rebound in sales isn't news, then really, what is?
However, instead of evaluating the evidence, some would rather indulge in exotic conspiracy theories about a certain newspaper, Realtors, and some of the writers who cover the industry.
Basically, we are all in cahoots, or so this line of attack goes, plotting to pump up home prices so Realtors can get juicy commissions and the newspaper industry can live to report another day thanks to more ad revenue.
Every year we have the same conversation. The “scare the buyers” article gets published and the pros on the blog say there are no bidding wars and Realtors® make it all up.
Last year, I took the time to track a pile of quick sales. Some sold over asking, some at asking, some below.
Anyone shopping near Boston is seeing high demand. Bidding wars are bad for buyers. Buyers should avoid them. My advice about how to negotiate, if you find yourself in competition, is consistent. I will re-publish that in my next entry.
I posted this in March, 2011, so it reflects fall and winter fast sales in 2010-2011. I wrote:
[March 17, 2011], I am posting some towns that are not known for their bidding wars: Natick, Medford, Watertown, Waltham and Somerville. These are all hurry-ups during the fall and winter seasons which stuck and closed. Data from MLS for the past 6 months for all single family homes with 5 or fewer days on the market.
Asking price // sale price
Even in towns not known for the hurry-up, there have been properties that sold quickly and for near asking price.
My agenda is to help buyers know what do when faced with the hurry up. My advice stands.
[next page for the data on the high-end towns]
OK, certainly not for every home, but yes, bidding wars are back this spring, along with buyers.
Check out this story by Jenifer McKim. Some buyers are clearly in a state of shock after seeing dreams of scooping up homes at bargain prices vanish amid packed open houses and intense competition.
Still, I use the term "bidding wars" loosely, for it can be a somewhat deceptive term. While sales activity is clearly up, prices are certainly not busting loose.
More importantly, there is nothing to suggest that buyers are willing or even able to pay looney prices for mediocre homes just to become homeowners.
That's what happened during the bubble years, but the key condition that enabled this madness, shamelessly easy credit, is gone and isn't coming back anytime soon.
But buyers are ready to spring, no pun intended, if they see a half decent home that seems priced half decently as well.
Back when everything was going haywire back in 2008 and 2009, the housing bears had a field day.
Every fresh report of home price collapses in Nevada, Florida and other Sunbelt States invariably triggered predictions that the Boston area, with its perpetually inflated real estate values, would soon get its turn.
But here were are, more than three years later, and a Las Vegas-style home price collapse is nowhere in sight.
That's the verdict from a Zillow survey of economists and real estate experts, just out this morning.
Home prices nationally will fall another .7 percent in 2012, revised downward from an earlier estimate of a negligible, .2 percent drop, according to Zillow's survey of 104 "economists, real estate experts and market and investment strategists."
Also taking a hit are rosier estimates of a rebound in prices in 2013, with the consensus forecast now calling for a 1.39 percent increase in home prices in 2013, compared to 1.75 percent previously.
The forecasts obviously iron out a range of responses - some individual forecasts were even more alarmist.
Economist Gary Shilling, the dean of the housing bears, expects home prices to fall another 8 percent in 2012.
OK, it's been a while since we've had a good dose of gloom - I've been in withdrawal myself given the relatively happier economic news of late.
So what's behind this new and darker outlook?
The more homes on a lot, the better!
OK, I'm not advocating high-rise construction in the suburbs.
Still, who really uses all those sprawling one and two acre lots? Such perfectly manicured lawns and their invariably stark and outsized houses too often have a lonely look, as if it is all just for show.
One of my favorites for a dense but carefully crafted housing development is Olde Village Square near Medfield center, just off Route 27. There are plans for 42 homes, featuring really neat retro designs straight from the early 1900s. Better yet, it's all built on a lot just large enough to fit one or two McMansions.
The homes are arranged as if they were part of a small village - the only thing missing is some shady trees. While the lots are tiny, the square footage inside is impressive - 2,000 to 3,000 square feet each.
Olde Village Square - alright, the name is a bit corny - isn't cheap, with homes selling from the $800,000's on up.
Not alone, the project is part of a small but growing number of so-called "traditional neighborhood developments" taking root across Massachusetts.
The jury is still out on that one. Still, by the end of this week, we will have some major clues in hand.
The Commerce Department will release numbers of home starts tomorrow, while the National Association of Realtors will report home sales data for February on Wednesday.
Topping it all off, numbers on new home sales will come out on Friday.
All three key indicators are likely to show improvement, according to surveys of top economists by Bloomberg. (Local housing numbers are due out next week.)
Monday is Saint Joseph’s Day. He was the husband of Mary, mother of Jesus. He became patron saint of families and children, and by extension, the home. When you see him in paintings and statues, he is often with the baby Jesus or has lilies or carpenter tools in his hands.
Today, I am not here to give you a Catholic iconography lesson. I am here to talk about the intersection of personal property and style and house selling.
Recently a house buyer (not a client) told me that the sellers of the house were Jewish. I asked if she had looked them up in the public record. She said, “No, there was Jewish stuff all over the house!” (This buyer is Jewish.)
In the 1990s, I was in a house (in Somerville) that had a living room with life-sized icons of Mother Mary, Jesus, and Joseph. It wasn’t Christmas. They seemed to be there all the time. My client was freaked out by it; I merely found it curious.
No matter what your religious affiliation is or isn’t, some people will have strong reactions to religiously-oriented decorating. So, my question is:
Should a seller take down their religiously-oriented decorating before selling?
Last week, Sam wrote about working with friends. Today, what happens when you are competing with friends and acquaintances? It is not uncommon for my clients to run into people they know at open houses. It is totally understandable. Sometimes it is awkward.
As parents know, when your children are babies, they will play with the children of your friends. But, as soon as they hit school, they choose their own friends. Then, the parents of your children’s friends start to come into your social circles.
Last Sunday, my client knew two out of three of the other house-hunting couples at an open house.
The thing that can hurt a friendship is when one couple gets a contested house and the other has to visit that house socially for years to come. I hear echoes of this from time to time. For example, my aunt bid on a house that her friend bought for a higher price in the 1960s. She has told me at least three times that she bid on that house, but is happier in the one she eventually bought. Do you know someone who is a frequent guest in a house that they once attempted to buy?
Is there a way to prevent hard feelings?FULL ENTRY
That is Zillow's puzzling take on rising rents here in Greater Boston and across the country.
Rents are up in metro markets across the country, even as home prices fall or stagnate.
And it's happening right here in Greater Boston as well, with rents having risen nearly 2 percent over the past year even as the median home price has fallen by 3 percent, Zillow reports.
The median rent for Boston metro is now up to $1,834, the fifth highest in the country. Home prices, by contrast, have fallen to a median price of $302,800, but are still the fifth highest in the country, according to the survey.
In both rents and home prices, we are behind only San Francisco, New York, San Diego and Los Angeles.
OK, fine, but how in the world is this good news for anyone other than real estate developers and landlords?
Last week, while examining the true costs of one client’s home ownership versus renting, I factored in the cost of a lost potential opportunity for my clients to invest their down payment in another investment rather than using it to purchase their home.FULL ENTRY
I said I’d give some information this week on the rates of return of some different investments, relative to real estate. Here is a quick and admittedly shallow analysis.
Most people would be surprised to learn that even with the softened national housing market over the past five years, values are still up 36.7 percent from the period beginning January 1, 2000 and ending March 1, 2012.
One common investment alternative to real estate is the stock market. Here’s how the major stock indeces have done between January 1, 2000, and March 1, 2012, according to MSN Money.com and the Case-Shiller report:
Dow-Jones + 18.4%
S&P - 1.0%
Residential Real Estate +36.7%
The Case-Shiller report examines resales of existing homes, so it compensates at least in part for the impact of the numbers by new construction sales, which can skew the numbers upward since there is a premium paid for new construction.
In an attempt to determine Massachusetts single-family and condo sales, combined, since 2000, I wanted to start with a base of average prices for a one-year period six months before and six months after January 1, 2000. I then compared those with the figures for single-family and condo sales between March 1, 2011 and February 29, 2012. This includes all sales of these types of homes, so any skewing from new construction is included in these figures. Since there isn’t as much new construction in Massachusetts as in most of the rest of the country, this effect isn’t as large here as in other markets.
BTW, the relatively small number of newly constructed housing units in Mass. helped protect our values relative to many areas where speculative overbuilding fueled the housing crash in markets such as Las Vegas, Phoenix, Miami, and the Inland Empire in California.
OK, it's been a very long time since we've had anything remotely resembling good news on a spring real estate market.
Maybe this qualifies: Pending home sales skyrocketed last month, rising 44.2 percent compared to February 2011, the Massachusetts Association of Realtors reports.
It even beat April, 2010, when pending sales soared 32.3 percent as home buyers scrambled to get deals in place before the $8,000 federal tax credit expired.
It is the 10th straight month that pending sales have increased.
"For the first time in generations, the American dream of homeownership is being threatened."
That's straight from the National Association of Realtors latest ad campaign - you know the one in which the cute kid tells grandpa he'd like to own a home just like his someday. Trying not to be a party pooper, Grandpa, softly responds "I hope so" as he gazes worriedly at the moving truck across the street.
Here's the scene, as transcribed by nZone in a recent comment.
Kid: "I'm going to have a house like this when I grow up".
Grandpa: "I hope so" (long pause) I hope so".
NAR: "The dream of homeownership is being threatened".
[another word, it is a good time to buy right now]
NAR: "Realtors, members of National Association of Realtors are here to represent you and protect homeownership".
OK, this ad gets an A for tugging at the heart strings but an F when it comes to basic logic.
"What in the world are they protecting?" nZone asks - and I couldn't agree more.
Let's just think about this for a second.
How you get paid inevitably shapes how you do your job.
One big example can be found in the financial services field. Too many people wind up in the clutches of some some big firm or chain and end up steered into financial products that an adviser is getting paid a commission or fee to push.
If your pay is largely or solely tied to commissions, you are going
to hustle like mad to sell, sell, sell.
Of course, my interest here is in homes - and the roiling discontent with the Realtor business model that is obvious to anyone who reads the comment board on this blog.
If we could wave our magic wand and shift agents across the country from commission to salary, client service would certainly go up. Beneficial or not, the number of Realtors would also drop dramatically.
Of course, like any service, you would have to pay for it.
In response to reader comments, Bill Kuhlman, CRS, who is the broker/owner of Kuhlman Residential writes about how much more (or less) someone sold their house for, compared to what they paid for it. He is doing as complete a job as possible of outlining all of the true costs of ownership. These include the down payment, taxes, home improvements and repairs, preparing the property for sale, broker fees, insurance, etc.
Just think of Bob and Judy: A Case Study
It’s a valid criticism that Realtors® need to include all the costs, and not minimize them. So I contacted one of the couples I wrote about and got their okay to use their data in a case study to examine all the financial aspects of the purchase and sale of their home to answer the question, “Would they have been better off renting or purchasing that home?” We’ll call this couple Bob and Judy, in honor of one of my favorite early Talking Heads songs.
Warning: This article is about four times as long as my typical blog posts. But it’s a complicated subject, and I felt it just didn’t make sense to break it up into two or three posts.
On the dark side
Bob and Judy bought their home in February, 2002, and sold it in September, 2008, for $79,000 more than they paid for it. For ease of calculations, let’s call that 6.5 years. It makes the math simpler, and one month will have a negligible effect on the bottom line.
They put down $35,300, and took out two mortgages. The payment on one mortgage was $1,648 per month, and the second was $223, for a combined monthly principal and interest payment of $1,871. Multiply that times 78, for the 6.5 years they were in the home, and you get a total of $145,938.
When they bought the home, it was in decent shape, but it needed a new roof and was very tired, cosmetically. For major and minor repairs and home improvement, over the years, Bob thinks $45,000 is an accurate estimate. This includes the roof, significant repairs to the front and back porches, and a moderate kitchen upgrade, as well as a variety of smaller items like electrical work, painting, a minor bathroom upgrade, and so on.
Bob suggested I point out that $25,000 of this was done in preparing the property for a quick sale. They would probably have delayed or avoided, altogether, making some of these improvements if they had stayed in this home. He thought it was worth distinguishing between ongoing choices while staying in the home versus enhancing its marketability.
No question: $45,000 is not an insignificant amount of money to invest in one’s home over 6.5 years. That’s an average of about $7,000 per year. Some homeowners will have more maintenance/improvement costs, some will have less. Again, this is just one case study.
Property taxes were $3,264 per year when they bought, and were $4,516 when they sold. So we’ll figure they paid an average of the half-way point, $3,890, times 6.5 years, or $25,285.
Let’s assume their homeowners’ insurance averaged about $750 per year, or $4,875, total.
In buying the home, they probably spent about $3,500 in closing costs, and about another $1,000, combined, on a home inspection, a pest inspection, and a lead inspection. When they sold, their closing costs were around $1,200.
So far, living in this home has cost Bob and Judy $256,398.FULL ENTRY
In a traffic clogged state like Massachusetts, where getting to work can be a daily endurance test, maybe drive time should be the top factor when house hunting.
Our beloved Bay State is practically tops when it comes to the amount of time people spend in their cars and on trains and buses going to and from work, according to a new survey by Suffolk University's Beacon Hill Institute.
Right now, the median commute in Massachusetts is 27.6 minutes - meaning it takes more than a half hour for half the state's commuters to get to work in the morning, notes Jonathan Haughton, a Suffolk professor and a senior economist at the Beacon Hill Institute. (The drive time numbers are pulled from a larger survey BHI does ranking the business environment of states across the country.)
And when you factor in all the folks working out of home offices or the lucky few who live around the corner from the office, well the numbers start to look even more miserable for the average Mass commuter.
"It means there are a fair number of people who are taking an hour to get to work," Haughton notes.
At least one major bank is barring agents from advertising homes as "foreclosed" or "bank owned."
Basically, if you are interested in buying a house, you may not find out the key fact that you are looking at a foreclosure special until you get there and look at the paperwork.
For its part, bank in question has argued it's all in the interest of stabilizing neighborhoods and home prices.
OK, it's not like I have a lot of time these days to ponder how to spend my golden years, if I make it that far.
Like anyone in their 40s here in the Boston area with young children, I am scrambling to make a living.
Still, at least in theory, buying a home is a long-term investment. And it makes no sense to blunder forward without a thought to the end game.
So to put it another way, what is your long-term real estate plan? And does it make sense to retire anywhere the Northeast, especially Massachusetts?
This survey by TopRetirements.com on the "worst states" to retire in has gotten a fair amount of play - it seems a vehicle for selling disgruntled New Englanders on retirement communities in the Sunbelt.
Connecticut is listed as the worst state, followed by Illinois, Rhode Island, Vermont and Massachusetts. Maine is No. 9, just after New York.
As soon as a new agent gets a real estate license and affiliates with a real estate agency, one of the first things that they are asked to do is compile a list of everyone in their "sphere of influence". That list contains names of family, friends, hairdressers, dog groomers, mechanics and other service providers. Then the new agent sends announcements and calls through the list to announce their new profession and see if they can be of service to anyone on the list.
It's not very difficult to get "hired" by a real estate agency if you pass the relatively easy licensing exam and can fog a mirror. The model that many agencies use is to recruit as many new agents as possible to replace those that leave after a year or two when they find out how challenging it can be make a decent living as a real estate agent.
Meanwhile, agents that leave can work part time or decide to "hang their license" at the old office so that when they find someone interested in buying or selling property, the former agent can earn a referral fee by connecting them to another agent in their office. Using that model, it's easy to see why there can be lots of under-producing, inexperienced agents hustling their friends or kid's classmates’ parents for business.
Like anything else, the more you do something, the better you typically become at it.FULL ENTRY
The debate over whether to put a casino in Foxboro rages on.
And given the size of Steve Wynn's proposed, $1 billion gambling palace, the impact is likely to be felt across Boston's western and southern suburbs.
The question for suburban homeowners downwind of Wynn's mega proposal is whether all that gambling and retail activity will help boost local property values or tank them.
The Sun Chronicle takes a thoughtful look at the issue, looking at studies that seem to suggest a casino might boost prices, as well as concerns raised by casino critics that the data really doesn't apply to a wealthy and densely populated area like Norfolk County
I've argued that it would be naive to dismiss the snob factor - Greater Boston has more than its share of housing snobs who are likely to steer clear of any town associated with a casino.
Here's a pretty comprehensive piece by Bloomberg on the growing signs of a rebound in the real estate market.
Still, hold the champagne.
A recent Fed report offers a more cautious view of the road ahead for the local housing market in Greater Boston and across New England.FULL ENTRY
High gas prices and ever longer and more traffic-clogged commutes have sent the average family's transportation costs soaring, a new study finds.
And when commuting costs are weighed alongside monthly mortgage payments and rent payments, more and more families, including here in Greater Boston, are struggling to make ends meet, the Chicago-based Center for Neighborhood Technology finds.
Based on housing costs alone, three quarters of 900 metropolitan and "micropolitan" areas across the country would now be considered affordable to median income families. But the number of "affordable" neighborhoods within reach of the average family shrinks to just 28 percent when gas, car and other transportation costs are factored in.
With a commuter rail and subway system, the Boston area fares better on transportation costs than other metro areas with little or no public transit.
The average family within I-495 shells out $12,394 on commuting and other costs, compared to $14,928 in Birmingham, Ala., and $14,624 in Rochester in Upstate New York, according to the study.
Still, this is no commuter paradise here, either, with the average Boston-area family shelling out 47 percent of its income on transportation and housing. That's just above CNT's 45 percent affordability threshold.
Greetings from sunny Florida, epicenter of the housing market meltdown.
I've spent the last week down in the Sunshine State with Karen and the kids.
My in-laws live outside of Orlando, but managed to survive the housing crash thanks to some prudent decisions.
Mainly they avoided the temptation of moving up to bigger digs when housing prices were soaring down here.
Here's a link to a study that details how both homeowners and renters have taken it on the chin as we slowly climb out of the worst real estate downturn since the great Depression.
Overall housing costs have increased - not decreased - for many families since 2008, when the world economy came close to a replay of 1929, the Center for Housing Policy finds.
For homeowners, incomes fell more than twice as much as housing costs since 2008, according to the study.
Status seeking is bankrupting us. Or to put it more bluntly, snobbery is bankrupting us.
Elitism has been rampant for years in higher education, where parents and their offspring will borrow to the hilt to pay for an elite educational brand.
And it doesn't take too much to realize a roughly similar phenomenon has also been at work in Greater Boston and other pricey housing markets across the country, where the scramble to get into the "right town" with the "right schools" drives many homebuyers.
Yet if you haven't already broken the bank to buy into a W town, there's time to stop the madness with a more practical look at the housing market.
In fact, it might be helpful to take a page from the new realism with which parents have been starting to view bloated college tuition costs. Harvard and other Ivies are great, but the academic rigor is not always what it seems - getting it can be the hardest part.
And for many professions and fields, does anyone really care where you went to college?
A degree is a degree is a degree - it's what you do with it that counts.
More Boston area buyers would be better off taking a similarly hardheaded approach when weighing the pros and cons of various communities.
Today, the Center for Housing Policy published Housing Landscape 2012. Here are the highlights, or should I say low-lights:
Nationally, nearly one in four working households spends more than half its income on housing costs.
Despite falling house values, housing affordability worsened between 2008-2010 because incomes declined over this period. (Housing cost increased for renters, but decreased for owners over this period.)
Massachusetts falls right on the average, with 22-24 percent of working households with severe housing cost burden. This figure is basically stable over the past three years.
Do you hear what this is saying?
One out of four working households spends more than half its income on housing costs.
Let’s look at this with numbers attached to it.
A person working full time at minimum wage ($8) earns roughly $16,000 a year. ($8 X 40 hours X 50 weeks)
Spending one-third of one’s income is generally considered a bearable housing burden. One third of that $16,000 a year is roughly $440 a month. For $440 a month, it’s hard to rent a room anywhere in the Boston area. Half of that income is $667 a month. You can rent a room in a multi-bedroom apartment for that half of the income… maybe.
A couple, both working for minimum wage can spend $880 at the one-third level, but you can see why they are likely to stretch to spend $1333 to have a place to live without other roommates.FULL ENTRY
It is certainly tempting to stretch in a high-priced market like Greater Boston.
But are buyers who stretch and overpay, say $500,000 for a home that was listed at $475,000, essentially selfish, driving up prices and wrecking the market for everyone else?
I'd argue that is a bit of a stretch - a harsh judgment on buyers fighting for a foothold in one of the nation's most difficult housing markets. But clearly not everyone agrees with me on that.
Here's an excellent analysis of stretching - and how it can distort prices - by James in Cambridge.FULL ENTRY
Sellers have been dangerously oblivious to the market downturn, no more so in the Boston area, where every home is just so special that no ordinary price will do.
"The market may be down, but not my house" has been the refrain of more than one seller confronted with the reality of a less than stellar market.
But a new Coldwell Banker survey of nearly 700 agents across the country points to signs that sellers may be finally getting with the program.
As I wrote last week, you can’t predict how a seller will react to an offer, despite what you know of the seller’s circumstances. If you decide how to proceed based on what you know or surmise about a seller or a seller’s situation, you may end up being more timid or more aggressive than is called for. This could cause you to pay more than you otherwise might have, or to lose out entirely on a property you might otherwise have gotten at favorable terms.FULL ENTRY
Take the circumstances surrounding the purchases of two homes I was involved with several years ago. These homes were about a mile apart, and the deals were put together within several months of each other.
In one case, my buyers were the first to view a Winchester home, on a Thursday morning. In the other, an Arlington home had been listed for over seven months, and had gone under agreement three or four times, only to have the buyers walk away each time.
Both sets of sellers were sets of three adult children who had grown up in the respective homes. In both cases, the parents had passed away, the estates had gone through probate, and they were selling nearly empty properties which had been vacant for many months.
The housing downturn is slowly but surely on its way out here in Greater Boston.
OK, in some towns it may take years to get back to 2005/2006 prices. Yet in many of the more coveted suburbs real estate values are untouched or even higher than they were before the bubble burst.
Stretching to buy remains commonplace inside the I-495 beltway, putting more prudent buyers, who want to stay within a certain price range, at a distinct disadvantage.
One key piece of evidence is the mismatch between median home prices and family incomes. Yes, we live in one of the wealthiest metro markets in the country, but, even so, housing prices remain at multiples that all but require some amount of stretching.
While the median family income is roughly $100,000 in Middlesex County, the median house is selling for $400,000. In fact, you can ante up a hefty $430,000 and still get out bid in town like Natick, a nice town but hardly a posh suburb.
We hear a lot on the comment board of this blog from buyers who are out there looking, but trying to stay within a certain price point.
Unfortunately, it appears to be a battle between the virtuous few trying to stick to a budget and the more easily swayed majority, seeing no other choice but to pay up to get the house they want.
Sam Schneiderman, Broker-owner of Greater Boston Home Team is our Monday guy. Today he discusses why and how he helps his buyer-clients create a home buying plan before viewing property with them.
Sam has this one question poll for you.
Most buyers start their search online and by attending open houses to get a feel for the market. While that seems like it makes a lot of sense and leads to a home purchase, I think that is like putting the cart in front of the horse.
In my experience, buyers that start by focusing on the property get easily seduced by the real estate. That leads to home buying by emotion, which is the worst way to buy. Home purchases need to be balanced by thoughtful consideration of the logical and business side of the equation to be truly successful.
If buyers are working with an agent, lack of planning confuses the agent and won’t allow the buyers to tap into their agent’s knowledge base to help the buyers achieve their goals. Couples without a plan typically have conflicting priorities and can wind up disagreeing over which house will be best for them. Some people need to look at a lot of homes, which they should if they have the time, but I’ve found that a good plan allows me to screen for properties that are likely to be a better match for the buyers so that they can define their criteria even more. Since I started coaching my buyers to create home buying plans before we started looking at properties, I have found that my buyers stay in their homes and condos longer than those who bought without a plan.
In addition to discussing financing, here are some of the questions that I ask my buyers before we beginning looking at homes or condos. The answers often lead to more questions or discussions so that we can get a really good feel for what is likely to work for them and what may not.FULL ENTRY
The $25 billion foreclosure fraud settlement sounds like a big number, and it is.
But is it possible the banks are getting off too easy?
One reason for caution is the lack of real data – at least in the public domain – on the foreclosure fraud issue.
Still, there’s a dearth of stats on widespread foreclosure fraud has been and what types of abuses were most common.
Luckily, a few intrepid local officials around the country have taken matters in their own hands.
And the results have been nothing short of startling, the Reuters finds in a roundup of some these local reviews.
Christine M. Smith of Buyers Brokers Only, LLC works out of an office in Canton. In my work around Boston, I don’t have much experience with wells. So, Christine offered her advice, so that the readers in the suburbs and beyond can drink up in good health.
Many of the Globe readers probably live in a house or apartment with municipal water. However there are plenty of homes both in more remote areas and even in some of the suburbs not far from Boston that have well water.
Buyers unfamiliar with wells need to remember that in addition to their regular home inspection, they should inspect the well. Most people remember to have the well tested for water quality. It can be tested for high levels of chemicals, minerals, radon and more. The possibilities are endless and buyers need to do their due diligence to make sure that the water quality test they are getting is comprehensive. In addition, some municipalities may require that the water be tested annually for potability.
However, buyers also want to remember to have the well tested for capacity. A well inspection is done by a separate company in the business of installing, repairing and testing wells. I recently had a buyer who considered buying a house with a well in a nearby community. She was able to find a reputable well company who came out and tested the well. They checked to see the rate of gallons per minute the well was pumping out but also checked to see how long the pump would run before the well would run dry and how long it would take the well to recover.
In talking with the well company, they told me their most common calls came from new homeowners who had bought a house with a well, had not tested it in advance and called because they had run out of water. Now, as the homeowner, it was their problem to fix.
It's easy to do in Greater Boston, where median incomes, as high as they are, are still out of whack with housing prices.
Just take Middlesex County. One of the wealthiest urban/suburban stretches in the country, it includes places like Cambridge, Newton and Wellesley, where prices may bob about, but never really seem to go down.
Median family income is high - roughly $100,000 in Middlesex County. But home prices, even after years of a down real estate market, are even higher, with the median home price of around $400,000.
For a family on the hunt for a house in the western suburbs - or for that matter across Greater Boston - it's not a question of whether to stretch. Rather, it's how much risk to take on in order to get a house that is not a complete wreck.
This Valentine's Day entry comes to you a little late, because of a couple of entries that got added last week. I find it amusing that Scott and I came at this from different angles:
Lots of people say that they love their house. My agent, Ron Rothenberg quotes an older relative who says, “Don’t love anyone or anything that can’t love you back.” I agree.
A house is a thing, made of wood and metal and plastic. It takes on its lovability from the utility it gives you and the life you store in it. Some houses are more lovable than others, for sure. But as soon as you lose perspective that the house is a thing – a means to an end – you are making a mistake. I contend that the marketing of a "dream home" is something consumers should work hard to ignore.
Open houses are designed to inspire love at first sight. If they succeed, there will be more than one ready, willing, and able buyer who has been rushed into making an Offer. Like many a love affair, the wash of emotion creates a momentum that carries the process along. Some lovers wake up the morning after wondering, “What was I thinking?” Some roll over, and look at the love of their lives.
Like a short and ill-fated marriage, house divorce (called “selling”) is expensive and an occasion for high emotion. If you don’t think it is going to last, should keep real estate dating (called “renting.”)
Here are some warning signs that the house you are in is not a keeper:FULL ENTRY
My wife went to Smith and I was born in Greenfield. And we'd both move out to Western Massachusetts with our kids in a heartbeat if we could.
Of course, there is just one little problem with that plan - money. Greater Boston is where the jobs are, not Greenfield or even Northampton or Amherst, unless you are an academic.
The jobless rate in Middlesex County, home of the western suburbs, is in the 5 percent range - almost half what it is in parts of Western Massachusetts.
Still, if you can find a way to swing it, you can find some killer home prices and probably a better pace and lifestyle than status obsessed, traffic clogged Greater Boston.
You can easily get a home under $300,000 - and in many cases under $200,000.FULL ENTRY
West as in Central Massachusetts, that is.
Get out beyond the I-495 belt and home prices drop like a rock.
Check out today's Globe story - you can land a village colonial in Athol for about what it takes to buy a Toyota Camry.
The price differential has always been there, sure. But while the real estate downturn has dented prices in Greater Boston, it has absolutely laid waste to many small towns west of 495.
Athol now has the lowest median sale price in the state, at $78,250. And, as Jenifer McKim notes in her story, many now bank-owned homes can be bought for much less than even that.
Generally, there are several towns in Central Massachusetts now where the median sale price is falling fast towards the $120,000 mark and below, according to The Warren Group, publisher of Banker & Tradesman.
What can a cash buyer expect a seller to give up in return for a quick, financing-hassle-free transaction?FULL ENTRY
I wish it were possible to give you a simple answer that applies in all situations, but it isn’t. The only correct answer is, “It depends.”
It depends primarily on the seller’s circumstances, such as their level of motivation, their current financial situation, and their experience to date with trying to sell their property, including the number of days on market.
But it can also depend on recent developments, be they personal, local, regional, national, or global; the seller’s general personality or their mood on a given day; how effectively the listing agent explains the tangible benefits to working with a cash buyer; and any number of other factors.
The fact is that, despite the many benefits of accepting an offer from a cash buyer, most sellers are merely going to weigh it in among the other terms of an offer. Being able to buy without having to kowtow to an appraiser, an underwriter, and the lender does give a cash buyer a distinct advantage, but the amount of leverage the buyer gains from it will vary from seller to seller.
OK, just call this the Valentine's Day edition.
Men and women fall in love for very different reasons, not only with each other, but when it comes to buying a house as well.
Or so says Trulia, which just released a survey of what features men and women go gaga over when looking at a house.
Let's start with the men, where the priorities seem to be grilling, football and sex, in about that order.
Whether it is a short sale, lender owned property (REO) or market sale; there seem to be many different ideas about how buyers should submit offers and how sellers should respond to offers. Today, I want to clarify some of the rules of engagement for buyers and sellers in the Greater Boston market.
Here are the most common misconceptions that I hear from buyers, sellers and agents:
All offers must be in writing.
WRONG. A buyer can make a verbal offer to a seller and a seller can respond verbally to a buyer’s offer. The important thing to know is that in Massachusetts the final deal must be in writing and signed by both parties or it is not enforceable. (Many agents and sellers won’t get involved with verbal offers for that reason.)
Counter-offers must be in writing to be valid.
WRONG. The same rules that apply to offers apply to counter-offers. (If a seller puts a counter–offer in writing, he/she may not be able to accept other offers while the counter-offer is still active.)
OK, I just love it when Realtors invoke the weather, typically when things don't go right.
Like it never snows in New England - duh - or blaming sunny summer for luring buyers to the beach instead of open houses.
But we don't have to consult a meteorologist to know that this has been an exceptionally mild winter.
And in this case, our friendly local real estate agents may be right on in attributing a big increase in pending sales this past January to the spring-like weather.
I am in a generous mood this morning, so I'll even buy the second part of the argument as well. That not only good weather, but an improving economy may be behind the rise.
While sellers across the country are piling on the concessions, not here in the Bay State.
Just 21 percent of sellers offered a sweetener to move their homes, compared to 41 percent nationally, the Massachusetts Association of Realtors reports in its annual survey of buyers and sellers.
Sellers who threw in a few goodies typically chose to fork over money for closing costs and home warranty polices, or offered a credit towards home repairs and remodeling, according to MAR.
Those of you that are already out there looking for property, do you think spring is in the air? My experience last weekend was that there continues to be a lack of decent property and fair prices out there.
I start to anticipate spring at Groundhog’s Day. But for those who don’t love marmots, the midpoint of winter is Super Bowl Sunday. Last weekend had more the usual number of early open houses on Sunday and more Saturday open houses. That way, the faithful fans could get to their drinking and praying by 2 PM. Wait until next week...
Since I am based in Cambridge, I wonder what people who don’t care about either Groundhogs or Patriots use to mark the turning point of winter toward spring. Valentine’s Day? How do you judge the point when the winter market starts turn towards spring?
There is typically an uptick in listings right after Super Bowl, even when the Patriots are not playing. Last year, there were 222 new listings in my area the week after the game. Remember that last winter, there was a good bit of snow and ice on the ground at this time of the year.
As I write this (before the game), I am wondering how many listings I will see come in next week. Do you want to venture a guess?FULL ENTRY
Even during tough times, buyers still go gaga over the surface things - fresh paint, hardwood floors, hip appliances.
And the allure of the fresh and new is particularly strong here in Greater Boston, where so many homes are older and in need of fixing up.
However, given how inflated home prices are within I-495, losing your head over a home that has been all dressed up to sell is a luxury most of us can't afford.
If you are fine paying an extra $20,000 for what amounts to a nice paint job, then go ahead, it's your life and your money.
But if you want to break into the Greater Boston market without saddling yourself with backbreaking mortgage payments, you have force yourself to see beyond hideous wallpaper, scuffed floors, dingy bathrooms and battered doors.
Today, a lawyer's look at short sales with our Attorney Richard D. Vetstein.
Sam blogged about short sales last week. I will go one step forward and predict an increase in short sales for 2012, with distressed homeowners and lenders opting for the more cost effective method of disposing distressed realty. With some early success, I’ve been advocating for a better way to legally document short sale deals. It’s better for real estate agents, attorneys, sellers and lenders alike.FULL ENTRY
The Offer to Purchase: Now the operative contract document
I am seeing a shift to making the offer the operative contract in a Massachusetts short sale transaction. And for good reason. A short sale, by definition, is subject to a critical contingency: obtaining short sale approval from the seller’s lender(s). No short sale approval, no deal.
Why should a short sale buyer and incur the expense of drafting a comprehensive (and contingent) purchase and sale agreement when there is no guaranty of getting short sale approval? Furthermore, short sale lenders will accept a signed offer from the buyer during the approval process.
When we were first doing short sales, there were many instances where we drafted up purchase and sale agreements and then the short sale approval fell through. We had to charge the client for the drafting work or eat the cost. No one was happy.
Certainly seems that way to me after reading the comments on one of my recent posts.
Having been in this situation myself, I took to heart Brendan's story about his so far fruitless house hunt in the western suburbs.
Brendan and his wife, Emily, want to say goodbye to their urban apartment and find a four bedroom, 2000-square-foot home in reasonable condition.
They'd like to start a family and are looking to spend in the $400,000 to $500,000 range.
Yet the one home he liked, in Natick, he wound up outbid on. Since then, it has been a dreary march through a series of oddly configured, overpriced fixer uppers.
Sounds all fairly typical - to me it was pretty clear that it was just another buyer grappling
with the often tough reality that you can spend a lot on a house inside the I-495 beltway and not have much to show for it.
But Brendan's story, unfortunately, and, to me, inexplicably, struck a very different chord among some of those who follow and comment on this blog.
In response to my post last week, one reader asked, “Has a Realtor ever answered ‘no’ to the question, ‘Is this a good time to buy?’”FULL ENTRY
He also asked me to list some personal characteristics that would make this not a good time for someone to buy. I’m not sure if these questions mean he thinks this is or isn’t a good time to buy, but thanks for providing me with a lead-in for this week’s post, which is really Part II of last week’s.
Here are a few circumstances which may make this not a good time for someone to buy:
1. They don't want the responsibilities of being a homeowner.
2. Their credit or finances are problematic.
3. They believe the market will move downward at a faster actual-dollar rate than the cost of their housing rental.
4. They like giving their landlord $18,000 to $24,000 a year (and up) for a decent Boston-area apartment or $30,000 to $42,000 a year for a single-family home.
5. They could be looking to pay cash for a property in an area of declining values.
There they go again, those Massachusetts liberals, now pushing for "principal forgiveness" for deadbeat homeowners.
That's been the theme on the comment board of this blog since Massachusetts Attorney General Martha Coakley the other day publicly urged federal mortgage giants Fannie Mae and Freddie Mac to start writing down the principal on mortgages held by struggling homeowners.
But I find it somewhat ironic that many of the folks who are steamed about Coakley's comments - and the fact that the state's congressional delegation is predictably jumping on the bandwagon - are often the first to blast off about Greater Boston's ridiculous home prices.
Here is a sampling Coakley's fairly modest proposal has generated.
This afternoon we learn that the Congressmen Capuano (of Somerville!) teamed with "Bailout Barney" to pen a letter to the FHFA endorsing Coakley's request of principal forgiveness for Massachusetts homeowners.
This comes at a time when "the national debt is equal to $48,700 for every American or $128,300 for every U.S. household. It is now equivalent to the size of our entire economy."
Whether you are buying or selling, I believe that a successful real estate transaction requires a team of skilled professionals on your side to give you the best information and protection.
Since most of us watched the Superbowl yesterday, let’s use football as an example.
The quarterback starts with the ball. At some point, the quarterback will either be tackled or will need to pass the ball to a teammate in a better position on the field to continue toward a goal. Good quarterbacks know that they can’t go for glory alone. They survey the field and pass the ball to the player that they feel will be able to gain the best advantage for their team at that moment or they make the run knowing that they will be protected.
Depending upon whether you are the buyer or seller, a good team in a real estate transaction could consist of an agent, attorney, home inspector, contractors, exterminators, financial advisors and/or a professional stager. The strength of the transaction is usually only as good as the weakest member of the team.
Just as a football team needs to be led by the quarterback, a real estate team needs to be led by someone who knows the game, can see the entire field and knows who to pass to at the right time. Obviously, the more often that a team works together, the better the results are likely to be.FULL ENTRY
OK, maybe this is a stretch. I'll let you decide.
But will the Pats crushing Super Bowl loss wind up having an impact on the future direction of home prices in Foxborough and in neighboring bedroom communities like Norfolk, Walpole and Wrentham?
A Super Bowl win would have arguably bolstered Las Vegas tycoon Steve Wynn's drive to build a mega casino on what are now parking lots owned by Robert Kraft across from Gillette Stadium.
But as Wynn prepares to make another offer to so far recalcitrant Foxboro officials, he will have to do so without being able to wrap himself in Patriots glory, even if only through association with Kraft.
So what does that have to do with home prices in Foxboro, Norfolk and Wrentham? Well, potentially a lot if the Super Bowl loss tips the scales against Wynn's big Foxborough casino.
The discussion about the heating system in one of my client’s condos brought an email about a different configuration.
Here’s a configuration in a newly rehabbed condo that caused problems for the people living there:
The furnace is in eaves on top floor.
Top floor vents are on ceiling.
Lower floor vents are also on ceiling.
The return vent is on top floor, on ceiling above stairway. (So heat goes from first floor ceiling directly up the stairs without reaching warming the lower level.)
There is one zone. The original thermostat is located on an exterior wall at the base of the stairway from lower to upper floor. This gave very false readings. The owners bought a wireless/portable thermostat that they keep downstairs in the winter and bring upstairs in the summer.
The condo downstairs has her heat vents on the floor so the upstairs owners don't get the advantage of her heat rising to heat up our floor.
The problem they experience in winter is that it is cold downstairs and then very hot upstairs. To resolve this, they partially close the upstairs vents in the winter to minimize the heat in the bedrooms. They had to add electric baseboard on the lower level.
In the summer, they open the vents fully to get the AC upstairs.
The other question I have is whether I should remark on solutions, like the electric heat. Is that a solution or is it a sign of a problem? I have a similar question about sump pumps. Are they a solution or a sign that there is a problem? I have concerns that some clients will rule out any house with a sump pump. This could be a mistake, since sometimes a sump pump is a solution and a house without a sump pump could have a water problem, unsolved.FULL ENTRY
Groundhog’s Day corresponds to the Pagan holiday of Imbloc. I enjoy thinking winter is half over. Have you noticed that there is daylight again at 5 PM? Happy Groundhog’s Day!
This time of year is high season for “cabin fever.” If you are unhappy with your living situation, this time of year, you are not alone. Sometimes the decision to move or not is not so simple. For those of you who are unhappy every winter, how can you know if the house is making you unhappy or the household is?
Here’s an example: Recently, I heard met a woman who recently bought another house and was selling her current one. She was surprised what went into choosing to sell her house and move to a quieter setting. She said something like this, “I liked my house but wasn’t content here. My husband and I had to figure out if there was something wrong with our relationship that we weren’t facing, or if we were just in the wrong house.”
If you find yourself unhappy when you get home, how can you figure out if it’s the house or the people in it? The key is thinking about whether you are annoyed when you are with people or when you are alone. The more you are annoyed alone, the more likely the problem is the house.FULL ENTRY
Sorry, but the great home price collapse is looking about as likely right now as a visit from the Great Pumpkin.
It's hard not to come to that conclusion even with the latest Case-Shiller report.
The picture nationally is rockier than what analysts had predicted. Economists surveyed by Bloomberg had predicted a 3.3 percent drop in home prices nationally for November in the latest Case-Shiller report.
We wound up with a 3.7 percent drop and a 1.6 percent drop in Boston metro prices.
That puts housing values back at spring 2003 levels, or about an 18 percent decline locally, compared to as much as 30 percent nationally.
However, the numbers mask the unfortunate reality home buyers sooner or later find out about the Greater Boston market. The fact is, there really are no bargains out there, just homes, often in need of work, that are somewhat less inflated in price than they were five years ago.FULL ENTRY
Today, I would like to introduce Bill Kuhlman, CRS, who is the broker/owner of Kuhlman Residential Real Estate, in the Greater Boston area. He is the founder of TheCashBuyerNetwork.com.
Though I might cover any question posed by a reader or some other topic of the day, my primary focus here will be issues of interest to cash buyers of real estate.FULL ENTRY
The term cash buyer is anyone who plans to buy real estate without using a mortgage. The term can also apply to a buyer who plans on using a mortgage, but doesn’t plan on using a mortgage contingency with the purchase contract. (This carries significant financial risk, so do not do this unless you’re absolutely certain you can show up with the money to close.)
Help me help you. Before addressing the main topic for today, my question for anyone contemplating being a cash buyer is:
How can I help?
I want to know what you want to know. Your questions will drive my content on Boston.com each week, so feel free to ask any question you like. Other topics, not specific to cash buyers, are welcome, as well.
One question I get all the time is, “Is this a good time for me to buy?” For most buyers, especially anyone planning on financing their purchase, my answer today is, “A lot depends on your personal circumstances, but if you’re in a relatively stable market, as in most communities in Eastern Massachusetts, and if you expect to be in your new home at least four years, this is probably a great time for you to buy a home.” This is especially true for first-time buyers and for trade-up buyers.
For a real estate rebound to take hold, prices don't have to soar. They simply have to get off what has been a relentlessly downward track.
There are signs that this is already happening in Greater Boston, with some towns having actually seen prices rise over the past year while others saw modest declines.
Sales are now starting to rise again, though it's a long climb up from anemic levels not seen since the early 1990s.
Crucially, more buyers may also encourage more sellers to take a chance - right now, as my Monday post noted, the pickings are pretty slim for house hunters right now.
It's hard for the market to gain traction when there is not much to look at.
Brendan and his wife, Emily, thought finding a four bedroom home in the suburbs would be a cinch.
After all, we are in the midst of a seemingly never ending real estate downturn, right?
Well yes and no.
Home sales have been skidding along at record low levels not seen since the early 1990s, though activity has begun to pick up over the past few months.
But prices in more than a few suburbs within have held fairly steady or have gone up over the past year. (I quote Brendan and look at prices in the western suburbs in this Globe West piece that ran yesterday.)
Back to Brendan and his wife, who found themselves outbid for a 1950s colonial in need of work last spring. The Lois Street home, on the market for $430,000, wound up fetching $450,000 after a short but furious bidding war.
OK, silly me. I had no idea know the federal government's latest undertaking involves a tipster hotline to ferret out complaints about bad appraisals.
It was apparently one of ten million sundry items apparently packed into the sprawling Dodd-Frank overhaul of our nation's financial system.
But, in true Washington fashion, the obscure Appraisal Subcommittee was given the mandate to set up a national complaint line, without enough money to do it.
It turns out that this ten person agency with a budget of $2.8 million has been given the job of overseeing the enforcement of tough new appraisal standards in states across the country.
That includes running the tipster line - my wording on this - which appears right now headed nowhere fast.
Here's the latest idea for bailing out the troubled housing market, straight from the Left Coast.
James Wilcox, an economist at the University of California, Berkeley, wants the federal government to guarantee homeowners they won't lose money if they buy a home.
If prices fall after you buy that Medford two-family or Plymouth ranch, the government would send you a check based on the decline. If prices fall far enough, you could get your whole down payment back.
Such a guarantee, in turn, would convince wary buyers, now sitting on the sidelines as prices continue to fall, to instead take the plunge and sign for a home, Wilcox writes in the Times today.
Sounds like a classic liberal free lunch, right? Well, not quite.
Saturday was the first snowy showy day of the year. Roads were not so bad away from town, but Arlington, Cambridge, and Somerville were pretty miserable. One agent (Arlington) bailed out of her appointment with us (we saw it Sunday.) I moved an office discussion meeting to Davis Square because I was unsure my office parking lot would be clear enough to use.
Generally, I think showing property in dismal weather is a waste of time. Safety should be first and foremost. If it really dangerous on the roads; stay off them. From a purely real estate perspective, it is hard to judge a house in poor natural light conditions. You cannot get a good sense of a house in poor natural lighting. In the middle of a storm, you don?t get to see how a house handles the storm either; that happens later.
If you are picking through the winter leftovers, there are things you can see now that you may not notice in the spring. There are also things you cannot see.
Some things to look for after the storm:
Walkways: Look for places where melting water will puddle and refreeze along walkways. These will need your attention anytime there is snow on the ground. Also notice how much sidewalk needs to be cleared. This time of year, that house on the hill is much less attractive with its 32 steps! Also corners are a lot of work.
Landscaping: snow-cover covers flaws in landscaping. You need to look more carefully, and study snowless pictures, to avoid surprise craters and rocks. An extreme version of this is a story I heard recently about an abandoned car being left on a property. The property closed during last winter and the new owners discovered the abandoned wreck after closing. (I am not sure that one passes the smell test, but it is a great image.)
Good old 1990. The Massachusetts Miracle had just gone bust and banks across New England were tottering under crazy office development and condo loans.
Well you have to go back that far to find a year when home sales were as low as they were in 2011, real estate publisher and data firm The Warren Group reports this morning.
Sales of single-family homes dropped 6 percent in 2011 compared to 2010, to a grand total of 38,994. That's just as few thousand above 1990's anemic total of 35,819 sales.
Worse, the year ended with a thud, with December sales having fallen 5 percent compared to December, 2010.
But at the risk of sounding like a born-again housing market bull, a closer look at the numbers points to some reason to hope that we'll see a modest sales rebound in 2012.
It's not uncommon to see brick or stone walls around the outside of homes. When the walls are holding up part of the yard, they are known as retaining walls.
I have seen all types and sizes of retaining walls. They range from low walls that create terraces for landscaping to the 20 foot tall by 130 foot wide stone wall that I saw last week. That one held up the entire back yard of the house (including a tall old tree.) That wall is the inspiration for this post.
When a retaining wall is located at the front of a house, it makes sense that the owner of the house owns the wall. It gets more interesting when a retaining wall is located at the side or back of the lot.FULL ENTRY
Roughly three-quarters of homeowners polled across the country say they are satisfied with owning, reports HomeGain in its latest survey.
But the reasons have little to do with prices, which have been down, but rather the traditional reasons often cited as benefits of home ownership. These include having control over the home and what types of upgrades are made, as well as pride of ownership.
Meanwhile, 28 percent are not so thrilled with home ownership, with two-thirds of these unhappy campers disgruntled over the direction of real estate prices.
Instead of the silent majority here, we have the happy majority.FULL ENTRY
When I began to write about the winter market, I drew a comment from my friend and ally, Bill Wendel. He and I met in 1992, when we had allied interest in the development of buyer agency, MABA and NAEBA. During December, Bill began writing about the winter market, including expired and canceled high-end listings.
Timing the market is not as simple as just showing up at the low-demand time of the year. There is leg-work involved in finding the properties that have not sold because they are over-priced or otherwise mis-marketed. Like jj24, successful buyers watch long-standing listings until the time is right to make a good deal on it.
This year, we realized that focusing on seller-initiated mega price reductions caused us to miss some significant savings, like price concessions negotiated by exclusive buyer agents and price reductions that effectively occur when listings expire or are canceled. Is "timing the market" really be the most effective way to get a price reduction on a luxury home in Boston or elsewhere in MA? That's a possibility, based on the success of past clients and our ongoing analysis of expired & canceled listings across Massachusetts during the final weeks of 2011.
During 20 day period between St. Nick's Day and Christmas (12/6-25/11), approximately 234 residential MLS listings priced over $850,000 expired or were canceled. As noted in our previous blog posts in this series Sellers with high end homes seemed less likely to reduce their prices than less expensive listings which often expired even though they were priced well below their assessed value.FULL ENTRY
Home ownership has been very good to Mike, thank you very much.
We are bombarded with stories these days about underwater homeowners and the never ending travails of the housing market.
You would think everyone was on the edge of foreclosure. Yet we are still talking about a small minority of market, even with the record number of bank repossessions.
Frankly, for the majority of homeowners, life goes on as it did before the big real estate bust. And for some, who were smart enough to buy within their means in a community with relatively stable pricing, real estate has turned out to be a pretty darned good investment as well.
Just ask "Mike," whose name I've changed to protect him from the retribution of grumpy housing market bears.
Among the winter leftovers, every year, are nice houses (and not-so-nice houses) that were built close to major highways, like I-95 or I-93 or Route 2 or the Mass Pike. Being near a highway will ding the price of any house. The closer you get, the bigger the ding.
In a down market, these houses get even harder to sell, no matter how nice they are inside. Yet some do sell, and resell. Belmont Hill is an example of this. I haven’t been hunting there this year, but I’ve seen many nice houses very close to Route 2 in that neighborhood. Some of those houses sell for very hefty prices even though the yards have highway noise. The neighboring houses with less noise sell for even more. But, in more ordinary neighborhoods with more ordinary houses, the houses with a view of the highway may end up on the leftover rack.
There are some things that make highway noise less intrusive. I was recently at a house that was close to 1-95. We could see the cars through the trees from the back yard. However, it was much less noisy in this back yard than it was in the street in front of the house. The house had two defenses against the sound: evergreen trees and topography.FULL ENTRY
OK gang, I am working on story for the Globe West on prices in the western suburbs. If you are looking at buying or have recently bought, email me at firstname.lastname@example.org.
For that matter, I am also interested what buyers have to say, whether they are looking in the western suburbs or not, for future posts on this blog. So if you have a story to tell, regardless of where you are looking, let me know as well.
Attorney Richard D. Vetstein explains the law developed to prevent oil spills from residential heating oil tanks.
As a buyer's agent, I have been aware of the addition of the protective sleeves on oil lines. I have been seeing more and more of them, as time goes on. (They are easy to spot, since many are bright blue or orange.) Are you still seeing out-of-compliance oil systems?
Under a new Massachusetts oil heating law which went into effect on September 30, 2011, every homeowner with an oil heating system is required to install an oil safety valve or an oil supply line with protective sleeve in their system. The cost is approximately $150 to $350 depending on the system. The required upgrade is to prevent leaks from tanks and pipes that connect to your furnace. The upgrade will reduce the risk of an oil leak so by making a relatively small expenditure now, you can prevent a much greater expense in the future.FULL ENTRY
Who Must Upgrade?
Owners of 1- to 4-unit residences that are heated with oil must already have or install an oil safety valve or an oil supply line with a protective sleeve. Installation of these devices must be performed by a licensed oil burner technician. Technicians are employed by companies that deliver home heating oil or are self-employed. It is important to note that heating oil systems installed on or after January 1, 1990 most likely are already in compliance because state fire codes implemented these requirements on new installations at that time.
At least when it comes to the battered housing market, consumer sentiment may have finally hit bottom.
Americans see housing prices finally stabilizing in 2012, predicting, on average, a modest .8 bump up in real estate values, according to Fannie Mae's latest monthly survey of the national housing market.
Some of it is clearly tied to the economy, with more people now saying their personal financial situation will be better over the next year than those predicting no improvement at all.
Roughly 71 percent said it is a good time to buy a home, up three points from Fannie Mae's November survey. However, just 11 percent believe it is a good time to sell.
Although every year is a little different, there are general patterns for the real estate year. In temperate areas, both supply and demand are at their lowest in December and January. (It is different in areas that don’t have winters.) Here in the Boston area, my clientele changes after Thanksgiving. Generally demand is down because buyers are turned off by the choices. They also have better things to do with holidays and football season. It is harder to get around if it is snowy, some prefer to stay home (true last year, but not this year, yet.)
The new people coming in are one of three types of buyers:
People who are planning ahead for next spring.
Bargain hunters who are looking for a project house.
People with a compelling need to buy (like pregnancy or a strong displeasure with their current school district.)
These are added to clients who are still looking since this autumn.
Many of the properties for sale were on the market during the autumn, or even longer. If a house doesn’t sell in the high-demand areas that I work in, there is either something wrong with the house or something wrong with the marketing.
Why buy a condo now when you might finally be able to afford a single family home here in Greater Boston?
I recently posed that question and got quite a response from condo buyers.
Some argued I am missing the intrinsic good things that come with condo ownership.
Well having just shoveled my driveway here out in Natick, this is one of those days when I wish I was a condo owner too.
If you want to own a house, that's great, but you had better either learn how to be handyman/handywoman or hire one.
Here's what CentDonation wrote:
I bought a townhouse condo even though I could have afforded a single family home. Why? Lawn care and snow plowing. If I had a single family home my yard would have been the one with waist high weeds, and my sidewalk would have been the impassable one. Also, I'm not a big hanging out outside person, so the lack of a private yard isn't as big a deal for me.
That's exactly what a proposal now being hotly debated on Beacon Hill right now would do, turning what is now a months-long process into one that could drag on for years.
But you first have to cut through a fair amount of baloney - from both the activists and the banks - to figure that out.
A coalition of anti-foreclosure activists and union officials wants to give homeowners facing foreclosure the chance to make their case to a judge.
As it stands right now, lenders in Massachusetts simply have to file a petition to foreclose if you fall behind on your payments, and, within a few months, your home could be on the auction block.
And that's more in theory than in actual practice, with state land court already so backlogged it now takes on average just over 11 months from the time of the first foreclosure notice to auction.
"Banks and lenders, through their predatory practices, put people in positions where they can too easily rip away their homes and their property," Tim Sullivan, spokesman for the AFL-CIO of Massachusetts, argued at a State House hearing yesterday, according to this account in State House News. "How do we make it harder for them to rip away the American Dream?"
OK, there is clearly a fairness issue here. But if the experience in other states that have judges review foreclosure cases is any indication, we are looking not a minor tweak here, but a pretty sweeping overhaul of the state's current foreclosure system.
If you are asking yourself this question, you apparently are not alone.
Pending condo sales plunged 20 percent in 2011, the Massachusetts Association of Realtors reports.
That's compared to a much smaller slip of just under 2 percent for pending sales of single-family homes for the year.
Condos emerged as Greater Boston's answer to the starter home during the bubble years - as a way to get into the real estate market for less than $300,000.
But as home prices in middle class and blue collar towns have slipped, some buyers who would have been forced to settle in years past for a condo have found new options in the single-family home market.FULL ENTRY
Home prices may be finally stabilizing, if not headed back up, says Clear Capital in new report.
OK, granted we are talking about pretty minimal gains overall - a projected 1.4 percent bump up for Greater Boston in 2012 compared to an incremental .1 percent increase in 2011.
But not all towns are created equal - the most expensive suburbs may just start to see prices take off again in 2012, while more middle-of-the-road towns find stability.
Now there's a long commute!
OK, just kidding about the commute, but not the move. Greyphysics, who some will surely recognize from the comments section of this blog, recently moved to Ontario after she and her husband came to the painful conclusion that Boston area real estate prices were not for them.
The couple, who work in the sciences, traded in their Boston area apartment for one near Toronto that, for roughly the same cost, is bigger, better laid out and includes everything.
So far it is a huge improvement. Our rent is about the same but includes heat, hot water, electricity and a garage parking space. No more shoveling or running out to move the car for street cleaning. The apartment is updated and perfect for starting a family, unlike most of the apartments back home. We will probably buy something someday, but there's no rush and no need for it to be in Boston.
It wasn't an easy conclusion to come to, though.FULL ENTRY
Like a lot of government news this winter, changes made to help the economy are not actual changes. They are, instead, extensions of changes already made that were set to expire. One of those was an extension of the waiver on anti-flipping regulations. (found in right-hand column)
Before the waiver, buyers were unable to get FHA-insured funding to buy houses that they intended to sell within 90 days. The prohibition was designed to stop speculators during the ya-ya years, when house prices were rising in the bubble. It’s been extended a couple of times now.
The idea out of Washington is that it should be easy to buy a distressed property, improve it, and flip it. The hope is that this will help communities with large areas of distressed houses.
FHA research finds that in today’s market, acquiring, rehabilitating and reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.
This year, I worked with distressed properties that closed in less than 90 days. From what I read from agents across the country, it does not seem like the norm. Distressed house sales still seem pretty slow, according to agent reports. Is your experience more in line with FHA’s research?FULL ENTRY
Trulia chief economist Jed Kolko is predicting big things this year for "smart cities."
They are hot, hot, hot, according to Kolko, with thriving high-tech and knowledge sectors priming the economic pump and ready to chase away the housing market blues in these lucky markets.
And our western suburbs, defined generously as the broad sweep from Cambridge to Framingham, are high on his list. As "honorable mentions," he throws in the northern suburbs, and, less clearly, Worcester.FULL ENTRY
Hi honey, I'm home. And have I got a big surprise for you! Guess what I bought today?
Those words are just dandy if you are talking about flowers or a new set of golf clubs for that someone special.
But if the gift is 2,000 or so square feet and costs $2,500 a month to keep, you may have a world of trouble on your hands.
I recently observed, from a distance, just such a bizarre scenario playing out here in the western suburbs.FULL ENTRY
I met with returning clients who plan to trade up in 2012 to begin the planning. First, I reviewed their last purchase. Did they like the property? Was there anything there that they would like to avoid in the future? Did they like their team: the inspector, the lender, the attorney?
Kudos for the condo. It served them well. It was a new reconstruction. The quality has held up well, with one exception. They blame the inspector, not the builder, for their unhappiness. Here’s what happened:
During the home inspection, the inspector noted that the hot air heating system also ran the air conditioning. The ducts were near the floor, upstairs, on the bedrooms level. The ducts were in the ceiling on main floor. The furnace was in the eaves on the top level. Because heat rises, the main level could be drafty in the winter, the inspector said. He suggested that fans might help.
My clients were never happy with the heat on the main level of the condo. Fans didn’t help. Although the inspector identified the problem, they think that he under-reported it. When they buy again, they will be using a different inspector.
I am curious about whether you agree that the inspector made a mistake by not stressing more about how the heating system, as designed, would be drafty.FULL ENTRY
After years of rising appeal, tough times are back for American cities, Boston included.
From crime to schools, the bloom is off the rose when it comes to city living, or at least the pioneering brand that involves buying a diamond in the rough on the edge of some poor but up and coming neighborhood. The folks living in the Mandarin Oriental or the Clarendon don't count - that's just living in a luxury bubble with an urban backdrop for some glamor, not real city living.
Still,my hunch is this is not a permanent shift, but economy related, but more on that later.
Here are two starkly different views of where gentrification is headed in the Boston area, culled from the comments section.FULL ENTRY
So argues one of the most respected economics blogs around.
Once inflation is accounted for, the real estate downturn has succeeded in wiping out all the price gains of the 2000s, Calculated Risk contends.
Of course, all real estate is local - there are a few tony suburbs and hot urban neighborhoods in Greater Boston that have seen prices go up, not down, during the downturn.
But that's not been the reality of much of the rest of the country - or for most of the middle of the road towns and neighborhoods around here, for that matter.FULL ENTRY
I seem to be in a minority in my outrage over the National Association of Realtors numbers mess.
As noted in yesterday's post, NAR recently owned up to overstating home sales by more than 14 percent since the real estate downturn kicked into high gear in 2007.
Basically, the trade organization reported nearly 3 million home sales from 2007 through 2010 that simply never happened.
More seriously, while owning up to the mistake, NAR has stopped short of pledging to thoroughly revamp what appears to be a flawed methodology.
That means we may very well be in for similar surprises in the future.
But reaction in the comments section was muted. Basically, no one believes NAR's numbers in the first place, so what's the big deal?
Let's not beat around the bush. The honors go to the massive screw up by the National Association of Realtors, which has been dramatically overstating the number of homes sold for years now.
In a recent release, NAR states that its estimates of homes sold across the country were off by more than 14 percent between 2007 and 2010. Nearly 3 million fewer homes were sold over the past three years, when the bottom fell out of the real estate market.
It's clear now the housing downturn has been even worse than we all assumed.
Still, it's hard not to get a kick at how the trade group reported this piece of embarrassing news.
The revision is tucked into a cheery press release headlined, "Existing-Home Sales Continue to Climb in November."
I will get the ball rolling with a few of my own. Feel free to let me have it and offer a few of your own.
I will feature some of the more insightful commentaries in a post next week as 2012 kicks into gear.FULL ENTRY
Kudos to James in Cambridge for his great analysis of the bleak outlook confronting homeowners with dreams of moving up to bigger spreads.
Basically, given the likelihood at best of anemic price increases over the next five years, hoping to cash in on your current home in order to pay for the next one could be a pipe dream.
"If you want to "move up the housing ladder," you're going to have to earn more money. Your house won't do it for you," James notes.
Great point. The other option, I'd add, is playing the old location game, taking on a longer commute for a larger house. Given ever more clogged roadways and the decrepit state of our public transportation system, that's an option you should think long and hard about before moving out to East Nowhereville.
The nights are about as long as they get. It has just started to feel like winter. Today, I bring a review of the pluses and minuses of heating systems commonly found in New England. I asked James Morrison to write up a primer on heating, for those who don't know a furnace from a boiler:
Understanding what you’re looking at will help you recognize the practical implications of the heating system in a house you may want to buy. Here are the basics:FULL ENTRY
How they heat:
Boilers send hot water or steam through pipes to radiators in each room.
Furnaces send hot air through ductwork to registers in each room.
What you see in the rooms:
Radiators hold steam or hot water. Those big old honkin’ cast iron radiators might do either, -there are lots of permutations like: baseboards and fancy-pants towel-warming racks.
Vents distribute hot (and sometimes cool) air from furnaces throughout the house. Look for rectangular, or square, or circular openings in heated rooms.
Pros and cons:
Hot water- This is the preferred and most common heating system found in New England. It is considered the most comfortable way to heat. It is also fairly versatile and relatively easy to add onto.
Steam- Steam is also comfortable, but less so. We stopped installing steam heating systems in structures just after WWII. Adding onto these old steam heating system can be (though it isn’t always) complicated. Since trapped steam bangs, it takes skill to add on correctly.
Also, the radiators get pretty hot, so some folks install radiator covers on them. Radiator covers retard the convective process, so they reduce efficiency and raise operating costs.
In most residential steam heating systems, the air vents on the radiators will hiss intermittently when the system is operating. That’s normal, but it annoys some people.
Hot air - Benefits include: the registers don’t take up space like radiators, the same ductwork can often be used for air conditioning systems, and the installation and operating cost of the equipment is low. However, the heat is appreciably less comfortable than forced hot water systems in our climate.
It's tough to buy a home around here, even if you have one or two decent incomes to work with.
And the hyped up competition to snag a home, any home, is far from the norm.FULL ENTRY
That's a crucial question for anyone hoping to eventually move up the housing ladder.
It doesn't take a rocket scientist to figure out that moving up in this market is going to be pretty tough, especially if you bought your home during the bubble years.
But what will the market look like five years from now in 2016?
Zillow.com put that question to a panel of more than 100 economists from across the country and came back with some pretty interesting answers.FULL ENTRY
Today, our Monday guy, Sam Schneiderman, Broker-owner of Greater Boston Home Team, looks back over the past year for a final wrap.
Last January, I predicted what I thought was going happen in the 2011 real estate market by saying that 2011 would be “the year of confusion and reconciliation.”
I wish I had been wrong, but I think that 2011 was indeed a year of confusion and reconciliation in the Greater Boston real estate market. Buyers and sellers were confused about what was happening nationally vs. locally. Buyers leapt into the market expecting to bargain prices and motivated sellers, only to find many over-priced junky properties in challenging locations. Statistics may show abundant inventory, but most buyers can’t find a decent house or a condo in a financially stable, well maintained association.
Successful Sellers finally reconciled that if they wanted to sell, they need to get realistic about pricing and present their home in marketable condition for their price range. Last year’s most successful listing agents began working with their seller-clients well before their property hit the market to assure a good product at a competitive price and then they marketed it aggressively to the brokerage community. The days of “pocket listings” (where agents don’t share a listing with other agents) are distant memories.FULL ENTRY
Interest rates keep flirting with new record lows.
The rate on a traditional, 30-year mortgage fell to a record 4.19 percent last week, reports Bankrate.com, which I occasionally write for. And at 3.42 percent, the rate on a 15-year fixed-rate mortgage tied a record low.
That's good news for home buyers, who can save hundreds on their monthly mortgage payments.
But too often, this fact becomes part of a hackneyed sales pitch - better buy now before rates start rising again.
Well don't fall for it.FULL ENTRY
The report card on affordable housing is in. Affordable housing has failed in 2011. As you go about your celebrations this December, consider that a full time income is not enough to rent a two-bedroom apartment for many people. For some, one full time job does not cover a median-priced one-bedroom apartment.
Researchers at the Center for Housing Policy took a look at this question: have falling home prices brought housing within reach of the retail workers who are critical to the success of the gift-giving supply chain?
Nationally, the answer is “no.”
“Despite years of falling home prices, many of the workers most visible during the holiday season are unable to afford a place of their own,” said Center researcher and report co-author Laura Williams. “And the problem is not limited to homeownership. In many cities, rentals are also beyond the reach of workers in the jobs we examined.”
None of the 210 metro areas studied in Paycheck to Paycheck offered a fair-market rent on a two-bedroom apartment affordable on a retail salesperson’s salary, and in only 2 out of 210 markets could a janitor afford the mortgage on a median-priced home. In the most expensive markets covered, even relatively high-earning mail carriers could not afford the typical rent on a two-bedroom apartment.
Elementary school teachers, police officers, and nurses join janitors in not being able to buy a house here. Nurses can’t afford to rent a median two-bedroom apartment on their salary alone. You can look up some other occupations here.
The picture is bleak when the income needed to rent a two-bedroom apartment is almost $54,000 a year. No wonder so many young people are packing in with their parents until they can get ahead a bit.FULL ENTRY
Let's face it, the real estate downturn is not all that bad.
After all, it is helping at least keep prices in check here in overinflated Greater Boston.,
But as potential buyers decide to stay put and make do with what they have, is this also spurring some badly needed creativity in home design?
So says Connecticut-based architect and author Duo Dickinson, in this piece just out in U.S. News & World Report on home design. I guess still do more than just the college rankings.
He see's home prices dropping another 1 percent across the country in 2012, followed by a 2 percent jump in 2013.
Mortgage rates will stay low through at least the middle of next year, Nothaft contends.FULL ENTRY
Here's a lesson for anyone tempted to get greedy with the listing price of their home.
Building in a big premium, far from guaranteeing a nice gain at the end of the day, instead may be a ticket to multiple price reductions. And when you do sell, you could wind up parting with your house at a sizable discount.
Certainly that's what many frustrated sellers and their agents are discovering as homes come on the market at lofty prices, only to die a death of a thousand price cuts.
And as it turns out, there is academic research out there to back up this up as well.
Consider a little known - in consumer circles anyway - study from 2002.FULL ENTRY
Barney Frank is retiring and as some see it, he is one of the big culprits behind the housing market crash.
Yes, Barney was as clueless as Greenspan during the bubble years, as were many other national leaders. But Wall Street depravity and the gutting of decades of financial industry regulations were arguably far more meaningful factors behind the collapse.
Love him or hate him, Barney is both brilliant and ready to tell it how it is. My favorite was his smack down of the Tea Party type who, at a forum on Obama's health care plan, asked Frank, "Why are you supporting this Nazi policy."
Said Frank: "Trying to have a conversation with you would be like arguing with a dining room table."
When push came to shove in the fall of 2008, Frank put himself squarely on the right side of history, helping push through $789 billion-plus bailout that saved both the banks and the auto industry from collapsing.
If you think the housing market in trouble, then what it would be like now without an auto industry and with most of our major banks in cinders?FULL ENTRY
In the transaction I wrote about yesterday, the seller’s agent disclosed that the sellers were moving because of bad health. This is a risky thing to do. It could either bring out a level of decency and understanding or it could bring out a jerk who wants to take advantage of the situation.
The previous would-be buyer was the jerk. My client benefited from his jerkiness. They got a good price on the house and a great deal of goodwill. There were complicated requests after inspection that seller accepted. Every step was done thoroughly, although a little slower than if the sellers were healthy.
I learned this lesson when I was in my 20s. I learned that decency is the way to go in life. Aggressiveness, especially when the other side has a stated weakness, will backfire. Back then, it had nothing to do with real estate.FULL ENTRY
Some fear that demanding 20 percent down would be a major shock to a housing market still struggling to get up off its knees.
It is certainly the big question amid a raging debate in Washington on whether to return to the 20 percent down rule, the long-time gold standard in real estate that was thrown to the winds during the bubble years.
Yet a new survey of what home buyers are putting down reveals we are already more than halfway there.
Amid the now years-long housing downturn, the down payment has morphed from a small or token entry feet to a substantial, upfront payment.
Nationally, banks and other lenders across the country are now asking for, on average, 12.29 percent down, according to a new report out by LendingTree.com.
Here in Massachusetts, the average is a shade below 13 percent, making us No. 10 in the country for states with the highest down payments.
I was talking to a listing agent recently about an accepted Offer to Purchase. My client made an Offer in competition that was well below full price. Their Offer was accepted and I was fishing for information about why. I believe they paid just a few thousand below what the market should bear for the house.
The agent said something like this: “Your Offer was almost as good as this other buyer who had been inching up, over and over. The sellers were sick of them.”
We started talking about where we thought the tipping point was, when the negotiation was about ego and no longer about buying and selling. I thought egos get into it after three rounds. This agent said two.FULL ENTRY
Pending sales are up - but so are cancellations
There has been a modest bump in sales activity - in Massachusetts and across the country - as we head into December.
Pending home sales posted a 5.2 percent, year-over-year increase in November, the Massachusetts Association of Realtors reports. There were initial sales contracts inked on 3,580 homes last month.
That mirrors the 10.4 percent jump in pending sales across the country the National Association of Realtors recently crowed about.(Though, to be clear, that was a month-over-month increase, as in October over September, raising some basic seasonal issues with those numbers.)
Yet how many of these deals will make it to the closing table?
Some sellers here in Greater Boston contend they are being abused by pushy buyers.
My post yesterday - My home is worth more than that! - got some pointed responses from sellers.
One commenter in particular, Temporarily, offered up a compelling defense of sellers who have done everything right, only to wind up getting walked all over by buyers who want it all, and then some.
Temporarily bought for $625,000 in 2004 and then put another $80,000 into various renovations. The bathrooms were gutted, new windows put in, not to mention a new patio and some nice landscaping work as well.
Even so, Temporarily listed at $629,000 and would have bargained down to $615,000.
Instead, Temporarily got just one offer - for $599,000.
One of the best training tools for me, as a buyer’s agent, has been to take classes designed by seller-centered real estate companies to teach agents how to “handle” house buyers. I got most of my early education in a real estate world that expected all agents to be working for the seller. That’s where I first heard “buyers are liars.”
A little history: Until the mid-00s, there was a relationship called “seller’s sub-agency.” A seller’s agent drove buyers around, opened the door and sold the house for the company that was on the sign outside. If the seller’s agent worked for the company on the sign, it was seller’s agency; if the agent worked for another company, it was sub-agency. The sub-agent never met the seller, but had the obligation to work for the best price and terms for that seller. The real estate agents knew the buyers, asked lots of questions about what they wanted, but the negotiation was stacked against the buyer.
When I first started in real estate, residential buyer’s agency was just beginning. I did a handful of transactions as a seller’s subagent, then went to buyer agency only. Although the days of treating buyers like a customer are over, legally, some of the bad attitude that the buyer is just not buying to annoy the agent, lingers. Thus, the old saw “buyers are liars.”FULL ENTRY
OK, the market may be down, but I don't care, because my home is different. It's so special and I am entitled to a nice premium, thank you very much. And don't you dare offer a penny less than the listed price.
This continues to be a common refrain among homeowners, and no more so than here in Greater Boston, land of perpetually-inflated home prices.
Despite the bursting of the real estate bubble and a near Depression, many still believe their homes are undervalued, HomeGain finds in its latest quarterly market survey.
Here's a particularly telling stat. More than three quarters of homeowners nationally - 76 percent - believe their homes are worth more than the listing price urged by their real estate agent.
Yes, personality could be the deciding factor in whether you are better off renting long-term or buying.
That's my take on new research, soon to be published in Real Estate Economics, by Eli Beracha of East Carolina University and Ken H. Johnson of Florida International University.
The title says it all: "Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?"
And the short answer, after getting a chance to read through the entire paper the other day, is that renting can indeed trump buying, at least on a purely financial basis. But it's also clear that to make renting a successful financial strategy for you, you need to have the right mix of personality and personal circumstance as well.
If you are looking at buying a home right now, whether you realize it or not, you are a dying breed.
Panicked over rising prices, first timers helped drives sales during the housing bubble, eager to grab a home, any home, while they still could.
First-time buyers made a short-lived comeback in late 2009 and early 2010 when Uncle Sam started doling out $8,000 a pop to anyone buying a house for the first time.
But we all know what happened after that. The tax credit money stopped flowing in April 2010 and first-time buyers went into hiding again, triggering the double dip in home prices we are now mired in.
Here's a pretty interesting take on some of the barriers that are keeping first-time buyers out of the market. These range from a high unemployment rate for younger workers, to skittish banks seeking downpayments that now average 22 percent.
Who is better off financially now, renters or buyers?
Homeowners long held an edge in this perennial argument.
After all, prices just kept on rising year after year. Throw in that nice federal tax break and why rent?
But that may be changing, and fast. Price increases, unless you live in a boutique town or neighborhood in high demand, have become a thing of the past.
And suddenly homeownership is no longer the savings/investment vehicle it once was. For the unwise or unlucky, it's now clear it can be one way ticket to foreclosure and financial distress.
Now researchers in academia are starting to come up with some hard numbers that could help those on the fence, wavering between buying and renting, make better decisions.
Home sales are up and prices are down across Massachusetts, new reports out today show.
Sales rose more than 5 percent in October, to 3,189, while prices fell 7 percent, to a median price of $270,000, from October, 2010, reports The Warren Group, publisher of Banker & Tradesman. Meanwhile, the Massachusetts Association of Realtors released similiar stats showing a 2.7 percent bump up in sales and a 5 percent drop in prices.FULL ENTRY
Landing a decent home can be a challenge in Greater Boston. Despite the downturn, prices remain high and decent inventory remains hard to find.
But for the lucky ones who manage to snag a house, there remains the challenge of getting to know the neighbors and making new friends. While that might be a cinch in oh-so-polite Atlanta or sunny San Diego, we live in a part of the country where outward displays of friendliness to anyone outside of a select circle of family and friends are seen as an oddity or worse, a dangerous aberration. (You know, it's the old subway rule: Avert gaze, stare straight ahead and make absolutely no attempt at eye contact or conversation.)
New Englanders are a chilly bunch, but Bostonians are even worse.
Well it's an important question to ask before you decide to liven up your holiday festivities with a few open houses.
In fact, there a lively debate out there in Realtor Land as to whether you should either keep your home on the market between Thanksgiving and January or even put it on as a new listing.
OK, there appear to be more than a few agents out there ready to try and sell your house between now and New Year's Day.
After all, times are tough in real estate right now and they need all the listings they can get.
Malls and retailers are pulling out all the stops to get shoppers in their stores come Friday morning.
And, as savvy salespeople, they know that the lure of good stuff cheap is enough to draw a crowd in the chilly early morning hours after Thanksgiving.
Now it would be going too far to say that real estate agents are taking weekend after Thanksgiving off.
I did find listings for a couple hundred open houses this weekend scattered across Eastern Massachusetts.
But I saw only a few efforts, all from past years, to try and make any connection with Black Friday - such as "Black Friday open house."
Too bad given all the shoppers who will be out on the roads come Friday.FULL ENTRY
If you are holding off on having children, you are certainly not alone in during these hard times.
The number of births across the country has fallen to the lowest levels in more than a decade, Bloomberg reports.
It follows a now well worn pattern in which couples put plans for children on hold during tough times, with the most dramatic example being the Great Depression, when birth rates fell 20 percent.
By contrast, Massachusetts has seen a decline of about 4 percent, in line with the national average.
So what does this have to do with the housing market? Well a lot.
Yes, families with children are just one segment of the housing market. That said, an expanding family can often be found behind many a house hunt, whether it's a couple making a jump from an apartment to a starter home or a small but growing family looking for something bigger.
Sam Schneiderman, Broker-owner of Greater Boston Home Team, shares his first impression of home buying reality shows.
Since I deal with the often-stressful work of advocating for buyer and seller clients every day, the last thing that I do to relax is watch TV show about home buying.
Recently, my wife stumbled across the channel that features such shows and I had time to check out a couple of real estate home buying reality shows. Here are my first impressions:
It appeared to me that the buyers in the first show were being shown property by the seller's agent until I later realized that she was actually the buyer’s agent. I was confused because of her abundant salesman-type comments about various aspects of the home and virtually no critique about the home’s weak points.
During both shows, I noticed that the agents offered very little insight to the buyers about the properties price and condition in relation to its price point and there was no on-screen discussion about the buyer’s other options. At least the agent in the second show took the initiative to show several other properties in the buyer’s price range so that they could see what they could get for their money.
I didn't see any discussion about agency disclosure, which is required in most states, to help buyers understand if they are working with a buyer’s agent, seller's agent, dual agent, designated agent or facilitator. (Those are the options in Massachusetts, where one of the episodes took place.) Hopefully, disclosures were handled before the show was taped.FULL ENTRY
OK, so where are local buyers looking as they hunt for a home they can afford?
I had Trulia send me a couple lists. The first is the top ten markets local buyers in Greater Boston are looking at, as measured by queries on the search engine.
The western suburbs - Cambridge, Newton, Framingham - are the top market in terms of searches. Buyers, even here in pricey Greater Boston, are still inclined to look in their back yards.
But after that it gets interesting, with lower cost markets like Worcester, Portland, Providence and Southern New Hampshire rounding dominating the top ten.
Check out this new report by Trulia. It puts Boston - and Washington, D.C. as well - at the bottom of the heap in terms of interest by potential home buyers from other parts of the country.
Trulia takes a snapshot of online house hunting habits and comes away with some interesting findings. In particular, the online real estate site looks at the markets potential buyers, and for that matter renters, are searching from, and then matches it up with the metro areas they are looking at.
Basically, Boston comes in No. 3 in the top 10 markets where there are lots of people looking elsewhere for new homes and apartments, but not a lot of folks looking in.
Yes, we are seeing a mini boom in new rental construction. Developers with plans for five new apartment high-rises are set to get a green light from the Boston Redevelopment Authority tonight, the Globe reports.
That should add another 1,400 units to the thousands already in construction or in the pipeline, both in Boston and the suburbs.
But don't get your hopes up that this flood of new supply will magically bring down now soaring rents. It's just not going to happen.
Downtown apartment towers are for the young and upscale and the older and wealthy - these are hardly bastions of middle and working class family housing. And while many of the new suburban rental developments may not pack the height of the urban counterparts, but they are pitched at a decidedly upscale market.
Nothing wrong with that, but there's not going to be much trickle down here when it comes to lowering rents for the rest of the market. Sure, there will be more luxury units for well off empty nesters to pick from, but it's hard to see that having any impact on apartment rents in Hyde Park or Dorchester.
Would you buy in a town that had a casino? Moreover, what are some other potential deal breakers?
This is no longer a theoretical discussion. State lawmakers last night passed a casino gambling bill. Once signed by Gov. Deval Patrick - he's on board, so no issue there - Massachusetts will be on track to get three casinos and a smaller slot hall.
The leading candidates, in terms of locations, are Palmer and East Boston. Still, given that it's going to be a competitive bidding situation, at least one, maybe two of these gambling complexes could end up anywhere.
The likelihood of a mass jail break is pretty unlikely in this day and age. That said, there can be a stigma to having a prison in town. There's a reason Walpole prison, that formidable, white walled, high security fortress, got renamed Cedar Junction. It's unfair, but the perception is there.
OK, Gerri Willis certainly doesn't mince words.
I chatted with the Fox Business Network anchor in advance of a "housing summit" she hosted on her nightly consumer and personal finance show, The Willis Report.
Willis can hold forth with the best of them on the latest housing market woes and how the sector's implosion is dragging the whole economy down.
But when it comes to doling out the individual advice, Willis, whose specialty is personal finance, is very much a housing bull.
Basically, rates are at historic lows and prices are down roughly 30 percent. If you want to buy a house, this is the time to do it. Look carefully, though, at the health of your local economy - in the end jobs and real estate are closely intertwined, she argues.FULL ENTRY
OK, to put it another way, is the media to blame for keeping buyers on the sideline?
That's what the chief economist of the National Association of Home Builders appeared to be getting at during a panel discussion Friday evening on Fox Business Network.
"Basically, buyers are being misled by these scare tactics of big drops in individual (markets)," argued the NAHB's David Crowe in a "housing summit" led by anchor Gerri Willis.
Instead, buyers should be focused on the market in their town or neighborhood, he said.
Maybe, given the latest grim tidings on the nation's battered housing market.
The Fiserv Case-Shiller Indexes are now projecting another 3.6 percent drop in home prices across the country through next June.
And the Bay State is not likely to escape the undertow, with various submarkets expected to see declines of anywhere from 2.8 to 4.5 percent, according to the Wisconsin-based housing market tracker.
He certainly stirred the pot. Commenting on my post yesterday on how the Boston area remains one of the most expensive in the country to buy in, VincenteP argued a family needs to make $250,000 to buy a house and live a typical middle class lifestyle here.
In Boston a family needs to make $250K just to have a "middle class" experience that $70K would buy in most other parts of the country. Oh the culture, right. Except that companies have started to realize this as well and have moved their jobs elsewhere. No jobs, housing prices will come down.
Not surprisingly, that $250,000 number got some people pretty worked up.
Anybody who can't make $250K/yr work in Boston is either spoiled, financially clueless, or has an inveterate gambling/drug habit.
While I think $250,000 is too high, it gets to a key point. It takes more to live a middle class life - complete with a single-family home large enough for a kid or two - than in most other parts of the country. And to do so, you need to earn considerably more than you would than, say, in North Dakota or Upstate New York.
Only New York and California's top three metro markets are more expensive to buy a house in, Zillow finds in its latest quarterly report.
Of the nation's 25 top metro markets, the Boston area comes in at No. 5, with a median home value of $319,000.
While San Francisco remains king, at $467,400, we are not that far behind New York ($348,000), San Diego ($344,000), and Los Angeles ($387,000).
And we are still near the top despite a nearly 20 percent decline across the Boston area in median prices since the market peaked here in 2005.FULL ENTRY
Home buying has gotten pretty complicated.
There is an ever growing list of things to consider, well beyond the old standard of school system, neighborhood and - hopefully, but no guarantee these days - potential resale value.
Buyers are supposed to endlessly obsess about the energy footprint of a house and how much damage their commute will do to the global climate.
But there are even more basic issues to consider, especially in an age where weather patterns are becoming more unpredictable and storms more intense.
This past week of mass power outages across Greater Boston, triggered by a freak October snow storm, is a good reminder of how vulnerable we all are when it comes to nature's wrath.
Here's my quick list potential weather/nature related hazards to mull when house hunting. OK, if you think I am being paranoid, feel free to tell me so, because I am to some extent - and I always enjoy a good argument. But here goes.
The latest homes sales numbers are out and they look tough.
Pending home sales - contracts signed but not closed yet - fell 2 percent in October over September across the state, the Massachusetts Association of Realtors reports.
Instead of hitting open houses and putting houses under agreement as the fall market kicked in, home buyers instead appear to be taking a step back.
Nationally, pending sales fell 4.6 percent in September from August, the National Association of Realtors reports.
I’m dreaming of a white Halloween. Well, it is a nightmare for those who took the brunt of the early snowfall in the northeast.
Trick-or-treating was cancelled in Lexington this year because of the snowstorm. I first heard of this on Sunday afternoon when a FaceBook friend mentioned it. Schools were closed for Monday, so Halloween was cancelled, too.
Is this good public safety? Does trick-or-treating create more cars on the roads? Should families without power be exempt from candy-giving?
My first impression was that cancelling trick-or-treating was overkill, but then I drove around Lexington. I was working in Lexington on Monday and was detoured off a main road (Pleasant Street) because trees or tree-removal equipment was still blocking the road. I passed several clusters of tree-removal trucks. There were branches all along the roadways on many streets.
OK, no one is going to hunt for a house on the basis of whether the area is prone to power outages.
Still, as we endure the second week-long power outage in three months, it might be an issue at least considering.
And, oddly enough, if you are so inclined, there is a way to figure this out.
As you look at a community's schools and other services, also check out whether the town runs its own electric utility or relies on one of the big power companies, NStar and National Grid.
If it does, there's a good bet that your lights will be coming on much faster than those of your friends in the town next door serviced by one the big utilities.
It's Monday! Happy Halloween. Today, Sam Schneiderman, Broker-owner of Greater Boston Home Team
discusses how different agents view inspection reports.
During the course of a recent transaction in which I represented the buyer, the listing agent called me to tell me that she did not want me to send a copy of the inspection report to her the next time that I represented a buyer that was buying one of her listings. She went on to explain what I already knew; if she received a copy of the inspection, she was obligated to disclose that information to other potential buyers if she had to put the property back on the market. The problem, she explained, is that two different inspectors might come up with two different sets of findings on the same property. I presumed that to mean that it was possible that a second inspector might not find some of the problems that the first one found or that it is possible that the first inspector might have found “defects” that are not really defects at all, so why open up a can of worms by disclosing the results of the first inspection?
During the same week, I received an offer on one of my listings from an agent in one of the big franchise offices. That offer included the franchise’s inspection contingency clause, which stated that if the buyer terminated the agreement based on an adverse inspection, that the buyer should send only the relevant portions of the inspection report only if requested by the seller.FULL ENTRY
Here's a scary number. As many as 42 percent of homeowners across the country think prices typically rise about 7 percent a year, according to a new survey by Zillow.
Of course, the real number is much lower, on average 2-5 percent a year. And of course, that's an historic average with the ups and downs of the market smoothed out.
The last time I checked - just this morning actually - we are still locked in a historic downturn that has seen home values fall as much as 30 percent or more in some markets.
She's been at it for ten months now, but Dionysia can't find a buyer for her renovated Victorian.
In fact, she's hasn't even gotten an offer on her house, located in the downtown of a "small MetroWest city," with just a modest pickup in traffic through the house this fall after a completely dead summer.
Dionysia wonders where she has gone wrong.
After all, she's priced her house at just $6,000 above what she paid for it eight years ago. And that's despite having pumped more than $100,000 into everything from a new roof.
Here's what she had to say in a comment on my recent blog on sellers who get insulted by low-ball bidders.
The Bay State may still be perceived as a liberal stronghold, but the president does not appear to be getting a lot of love from local real estate agents.
A startling 78 percent of Massachusetts real estate agents polled by HomeGain "strongly disapprove" of the Obama's performance.
The survey, taken in the third quarter amid a pileup of bad housing market news and the fallout from a tough spring market, is a big jump from the roughly 50 percent who gave the president failing grades at the start of the year.
It is further reflection of the deep quagmire the housing market has bogged down in. And while it would be unfair to blame the president for creating the housing mess we are in, he has arguably taken a bad situation and made it worse.
I'll lift here from my weekly Banker & Tradesman column, which came out today, which delves into the HomeGain poll numbers.FULL ENTRY
Sorry, but if you get offended because a buyer tries to strike a hard bargain, please don't come crying to me.
You may not like the offer, but to take it as a personal affront?
We are living in 2011, not 1811.
Frankly, here's where I think some sellers desperately need a reality check.
Everyone haggles over everything these days. But some sellers apparently still get miffed over what they perceive as low ball offers.
That's what our friend "Frank," who surfaces from time to time to share his experiences, is finding out as he continues to look for a deal in suburban Boston.
Spying a promising $470,000 colonial north of Boston, Frank offered $425,000.
While that might sound low, it is roughly 10 percent below the asking price and above the assessed value, Frank notes.
Besides, the owners had already cut the price twice before.
But instead of countering, the owners are apparently opting to cut the price again, to $465,000.
Today, I celebrate the home purchase of L and J. This purchase is cause for celebration. Sometimes, the transfer of a house from one person to another is just a business deal. Sometimes, it becomes a joyful transfer of the best parts of a life from one family to another.
The house in question was in the same family for 66 years. The family that was selling had owned it since the (now deceased) father was a teenager. He later bought it from his parents and raised his family in it. His adult daughter was selling it. The house had 66 year’s worth of stuff in it. Making it even harder was that the (now deceased) mother was a hoarder.
One of the hardest seller situations is when someone is selling their parent’s house. Handling a parent’s things and making decisions about throwing things away, selling things, and keeping things, is very difficult. For agents, it requires tact. Working in a compassionate way goes a long way to making things work out for everyone involved.
The sellers were under the gun to get the house cleared out for sale. It was a Sisyphean task. They couldn’t market the house, generally, until it was cleared out. My clients saw the house while it was still cluttered, but could see through the clutter and knew the house would work for them. They were able to see beyond the clutter and had faith in the seller’s ability to get the house cleared out for closing. A deal was struck.
Buyers should be cashing in right now, scooping up homes at bargain prices, but they aren't.
Instead, many sellers are refusing play, either pulling their homes off the market or opting not to sell in the first place.
A growing problem locally - I recently blogged about it here - the decline in decent inventory is also starting to become a major issue in other metro markets across the country.
The number of homes on the market has dropped by 20 percent across the country through the end of September, according to a new report by Realtor.com.
Sam Schneiderman, Broker-owner of Greater Boston Home Team discusses the biggest challenge that he feels condo buyers and owners face.
The lure of carefree condo living is enticing: buy a condo and someone else will take care of the maintenance, freeing condo owners to attend to their other priorities.
The reality of condo living is that someone else has to make sure that the property is cared for and the bills are being paid. The “someone” is the group of owners that run the condo association.
Those who buy units in professionally managed buildings (usually buildings with over four to six units) typically, but not always, have the advantage of buying into better run buildings than the smaller self-managed associations.
Even the best manager has to follow guidelines set by the condo association’s board and live within the budget that the board approves. In tough economic times, some professional managers are finding it challenging to get the funds needed to perform all required maintenance and keep a healthy reserve account.FULL ENTRY
For-sale signs are a little harder to spot this fall.
The number of homes for sale is dropping, both across the country and here in Massachusetts.
And while the drop in "inventory," as it's called in the business, might be good news in a grossly overbuilt market like Las Vegas, it is definitely bad news here, especially in still pricey Greater Boston.
Here are two numbers to munch on from a piece in this week's Banker & Tradesman.
The number of homes on the market was down 5.3 percent in August compared to a year earlier. July saw a 1.7 percent year-over-year drop in inventory.
Meanwhile, sales activity, while still anemic, has begun to pick up after hitting rock bottom last summer with the expiration of the home buyer tax credit, may it rest in peace. Sales rose 15.8 percent in August compared to August 2010, the paper reports, citing figures from real estate data firm, The Warren Group, its parent company.
Roughly 87 percent of agents of real estate agents surveyed by the company cited the poor economy as delaying plans by Baby Boomers to sell their homes.
That includes a fair number of older Boomers (56-64) nearing retirement, sitting on suburban homes they had planned to sell, but now presumably waiting until the real estate market and economy settle out.
Many of these older Boomers, in turn, would like to downsize to a condo or townhome, according to roughly half the agents surveyed.
It's a significant finding for Greater Boston, which suffers from a chronic lack of decent inventory.
Boston Mayor Thomas M. Menino has been an unflagging cheerleader for urban life, overseeing an explosion in new condo development downtown.
But his decision to effectively bar Walmart from setting foot in Boston - and in particular Roxbury - raises one of the major drawbacks of urban living.
Yes, if you trade in your suburban home for a condo or house in Boston, you might just be able to ditch your car as well.
And for someone who hates cars as much as I do, that's an attraction.
But carless or not, you are then stuck with a limited array of shopping options, of which the lack of a Walmart is just the tip of the iceberg. Major grocery stores are hard to find, and, with a captive audience, the prices are invariably higher at the few that have managed to squeeze their way into the city.
A client of mine asked:
During our condo meeting, there was talk about changing our HOA bylaws regarding pets and smoking. There wasn't a clear consensus on what we should do. As it stands now, we have no limits on smoking and a limit of 2 pets that weigh less than 75 lbs. One of my main concerns was how a non-smoking or an even more-limited pet policy could hurt or help our property value (one tenant wants to ban all pets and at a minimum ban dogs.) I've done some searching on the web, but I'm not narrowing in on an answer…
Pet and smoking bans are both an ongoing condo association dilemmas. My sense is that enforcement is where the problem comes in. You either need to enforce the no pet policy or the pet behavior policy. It creates a cop-neighbor tension between the pet owning condo owner and the non pet owning condo owner. Same goes for smoking bans. Either can harm condo owner’s relationships.
In my practice, there are condo buyers who will refuse to buy in a pet-free building because they have pets or plan on having pets. I have not run into a single buyer who would refuse to live somewhere because pets were allowed. I did a quick search of condos in Somerville, Cambridge and Brookline. At this moment 474 are for sale, only 18 have a no pet policy posted on the MLS.
I couldn’t find any good statistics on the economic impact of a no-pet policy. Anecdotally, I have noticed some drag on resale when a building has a no-pet policy. It is more about it taking longer to sell, not a noticeable drop in price. I haven’t seen a similar drag on resale based on buyers rejecting properties that allow pets.FULL ENTRY
Allison Oropallo may be poised to make a big splash this Sunday during the season finale of HGTV’s “All American Handyman.”
An Arlington middle school teacher, she is the only woman in the show’s seven year run to make it to the last stage of a grueling, months-long competition that involves, among other things, building an Adirondack Chair in 90 minutes.
And if she can smoke the show's other three male finalists in the last big challenge - building a shed, followed by redoing a kitchen in five hours - then HGTV should rename the show, which does seem a bit dated.
“It’s absolutely insane,” Allison says of the challenges she faces on the show.
But in real life, she faces an equally daunting task ahead as she contemplates someday buying a home in still ultra pricey Greater Boston on a teacher’s salary.
I got a phone call from a client of mine. He wanted to know what to do about his garage, which was destroyed by a tree on the day Irene blew through. Is it better to replace it with a garage or, instead, put up a shed for the bicycles and enjoy more yard space? Does removing the garage put a ding on the property value for potential resale?
Here is the information he told me:
The property had a metal pre-fab garage that was rusty and in poor condition since before they bought it, nearly ten years ago.
They have a three-car wide driveway in front of it.
The house is a two-family building located in Somerville, north of Porter Square. Their lot is about 6000 square feet. The back yard is tiny. The house is long and thin and sits to one side of the lot, making most of the potential yard on the side of the house where the garage is.
Here is what I answered:
You called about the question of what is the best economic decision to make about the garage. I have to give you a non-answer answer, unfortunately. There is not clear economic advantage either way. Here’s why:
An appraiser may calculate the value of the house based on the garage being there or not, but the buying public is likely to see the garage as equal value to the bigger yard. In my experience with buyers in towns near Boston, I frequently hear buyers wish the garage was not there, since it ruins the yard space. Some people do want garages, but just as many want a good yard.FULL ENTRY
I wouldn't bet the house on it.
Yes, there certainly seem to be many more cash buyers out there than before. The Globe and WBUR both recently did pieces on this - more than a third of all home and condo sales across the state so far this year have been cash deals.
Yet with home sales across the state having fallen to anemic levels and banks skittish, it may also be the case that cash buyers are among the last guys standing here. (Thanks to Markus for this common sense observation.)
Yes, the cash buyer may be king now, but the realm is shrinking fast.
Here's a revealing stat. In 2004, as the housing bubble was reaching its peak, there were 50,561 homes sold across Massachusetts. But by 2010, that number had plunged by more than 25 percent, to 37,326, according to the Massachusetts Association of Realtors.
My hunch is that more than just our incredibly shrinking real estate market is at work here - there is also a surge in speculative buying of the kind that always takes place in the wake of a market crash, whether on Wall Street or Main Street.
The apartment market has long been a haven for skittish buyers in Greater Boston.
But soaring rents may be poised to shift that calculus, making renting as costly as buying in some cases.
The median rent for a two bedroom in Boston and its suburbs is nearing the $2,000 mark, according to a new survey by Champagne, Illinois-based rental market data cruncher Cazoodle.
That's a 13.3 percent jump this year through September compared to the same period last year.
It's also far above a handful of other cities that Cazoodle ran stats on, with Washington metro, at $1,875, the closest, and Chicago, the Twin Cities and Baltimore well behind these market leaders, so to speak.
So what does this do to the rent-versus-buy calculus?
Generally, about ten percent of real estate transactions are paid with cash. This year, the average in Massachusetts for the first three quarters is forty percent. It is this change that piqued the interest of both the Boston Globe and WBUR.
Jenifer McKim at the Boston Globe mentions some overlapping categories of cash buyers:
Very rich cash buyers purchasing deeply discounted high end condos.
Speculators buying distressed properties at deep discounts to flip or rent.
Investors buying rental property near colleges.
Over at WBUR, Curt Nickisch was working on a similar story this week. He also added this statistic to the mix:
In some Massachusetts communities, more than half of home sales this year are have been paid with cold hard cash. Those communities include Provincetown, New Bedford and Cambridge.
I am not sure how to categorize these cash buyers. Some are downsizers buying retirement properties, some are investors, and some are purchasing “kiddie condos.” (Parents buying condos for their student-children. This is a hybrid between investing and buying a second family home.)
Are you laying you cash down for real estate this year?FULL ENTRY
That's what the nation's bankers are predicting in a survey just released by FICO.
Nearly half - or 49 percent - of risk management officers surveyed at banks across the country don't see home prices climbing back to 2007 levels for nearly another decade.
By comparison, just 21 percent thought prices would rebound before the decade ends.
An even larger number - 73 percent - are banking on foreclosures being a major problem for at least another five years. About half, 46 percent expect mortgage delinquencies, the first step towards an eventual foreclosure, to rise over the next six months.
OK, I haven't exactly been breathlessly following FICO's surveys, so I guess I missed this, but the bankers are apparently feeling markedly sour as of late after a burst of relative optimism early this year.
So what does this mean for Massachusetts, and in particular, for the Greater Boston market?
After reading another lame ranking of the "best places to live" that mixed in some randomly chosen Greater Boston towns, I was fairly disgusted.
So I threw the question out - as to the best places to live locally - to the readers of this blog.
Here's a list, based on your nominations:
For their quaint, picture perfect, walkable downtowns: Concord, Newburyport and Winchester.
OK, here's your chance to weigh in and share what you know. Fire away. I will feature the most scintillating entries in a post next week.
Now here are my questions for you.
For buyers looking at homes or condos, here in Greater Boston, or elsewhere, for that matter, what is your impression of prices and selection? Are there attractive options in your price range? Are sellers still holding out - or ready to cut a deal?
What towns and neighborhoods have the best bargains right now? Conversely, what zip codes are overpriced, in your estimation?
For sellers, what kind of demand are you seeing? Are you getting traffic at open houses? Have you had to cut your asking price? And if so, by how much? Also, are you using a real estate agent, or are you going it alone?
Half decent homes at more reasonable prices - that sums up we need more of here in Greater Boston.
We can poke fun all day at Miami and Las Vegas and other grossly overbuilt markets, but at least there is no lack of new homes to pick from.
But instead of new homes or at least older ones in good repair, we are getting more getting more foreclosures, according to a report out this morning by The Warren Group, publisher of Banker & Tradesman.
Foreclosures took a nose dive last fall, both in the Bay State and across the country, after the robo-signing scandal blew and revealed that major lenders were running shoddy, assembly-line style foreclosure mills.
Now foreclosure deeds - the last step in the process - are on the rise again across the state. And with the steady proliferation of distressed properties into the suburbs - I have one right around the corner from me here in Natick - the increase could cast a much wider pall than in years past.
I'm still waiting, but so far the double dip has failed to bring about the deep home price reductions here in Greater Boston that some frustrated buyers are longing for.
The latest Case-Shiller numbers show a 1.9 percent decline in Boston area home prices this July from July 2010.
Frankly, it's modest decline. And it's far from the wrenching realignment that seemed in order after the expiration of the home buyer tax credit last year sent sales plunging off a cliff.
The most common reason that sellers are underwater now is not because of their initial mortgage. It is because they kept borrowing against the bubble-level equity of their house. Some did it to improve the house with a new kitchen, put on an addition, upgrade some of the systems, or just for good-quality maintenance. Others floated their vacations, cars or paid college bills. Some hedged their periods of unemployment or underemployment with their home equity loans.
When the bubble began to deflate, they found themselves stuck in their homes and in their mortgages. If they are lucky, they still have the income to pay the mortgage and keep the house. What they don’t have is the cash to leave the house.
Here’s a rough case in point to show how owners can be underwater without being slammed by large-scale depreciation. I chose a middle-class example, because the example of people who bought with no money down at tippy-top peak is just too obvious. Those buyers had not equity to begin with.
Instead, I also used a town where the deflation has been relatively small, compared to most of Massachusetts and tiny compared to the rest of the country. I used a steady 5 percent loan rate, even though these owners would have started higher and refinanced down through the time period I am describing:
J and J bought a smallish house is Lexington in 1996 for $250,000. They added an addition in 2000 for $100,000. Today, they are still sitting pretty. They can still sell that house for $600,000 or more and walk away with a profit.
Here's how the the water rose:FULL ENTRY
As I sip my morning coffee, I am looking over a list of the nation's top 20 metro markets sent over by Trulia.
It was set up to mirror the cities in the much watched Case-Shiller index, the latest installment of which is due out later this morning.
And the Boston area leaps out for having the smallest average price cut on a list of markets that stretches from San Diego to Dallas to New York.
When Miami area homeowners decide to lower their asking price, they knock it down by a meaty 11 percent.
In Atlanta and Tampa, it is 9 percent, and in 11 other markets the average cut weighs in at a still substantial 7 to 8 percent.
But in Greater Boston? Our home sellers can muster up only a relatively measly 5 percent discount.FULL ENTRY
Pamlow thinks we spend too much time on this blog debating the dollars and cents side of home buying/selling/ownership. We are missing the bigger picture, she contends.
And frankly, I think she's right.
To boil it down to its core, buying and owning a home is part of the recipe generations of Americans have been following in their efforts to build a "nice life" for themselves, as pamlow notes.
Renting is fine, but it's still not comparable, especially for young families, when it comes to the much wider array of home sizes, styles and locations that are available on the for-sale market.
And guess what, the fast and furious romance with apartment living is already entering its final 15 minutes as landlords big and small scramble to jack up rents.
So how far have prices fallen in the Boston area since the peak of the bubble in 2005?
Well, about a whopping 3 percent, according to quarterly numbers put out by the Massachusetts Association of Realtors.
We do a lot of jabbering on this blog about the big decline in home prices.
And yes, statewide, we have been hit pretty hard - nationally even worse.
But when it comes to Boston and the cities and towns that make up its western and southern suburbs, it's a much different picture.
So says Trulia in its latest American Dream survey.
More than 65 percent of Millennials consider home ownership as part of their "personal American dream," according to a recent Harris Interactive poll commissioned by the real estate website. R
It's an age group - 18 to 34 - where renting has supposedly become the new ideal amid the never ending downturn in home sales and prices.
In fact, the Millennials are almost as bullish as the somewhat older Gen Xers, 66 percent of whom are still sold on the idea of homeownership.
Yet it's the Baby Boomers who are the most bullish of all. Of those in their pre-retirement years, 74 percent are still high on homeownership, with the number rising to 76 percent for those 55 and older.
A home inspector of my acquaintance wrote to ask me this:
It recently struck me that most of my clients are part of a couple. Two people buying a home. That makes sense. It pretty much takes two incomes to support one for most folks.
But when I have a single client who is buying a home, it is almost always a single woman. I work with very few single men.
SO I have two questions:
1) Does that mirror your experience?
2) If so, why do you think that is?
I took a quick look at my client list over the past three years and replied:
Yes, single women outstrip single men for buying solo by 3:1 or so, depending on the year. Couples outstrip singles by 3:1 or 4:1.
Looking beyond my little office, the National statistics look like this for 2010:
First time house buyers: 48 percent married, 12 percent unmarried couples, 23 percent single women, 15 percent single men.
Recent buyers (not first timers): 68 percent married, 4 percent unmarried couples, 17 percent single women, 9 percent single men.
I am not going to venture a guess as to why single women buy independently more than men do. In my experience, the pattern holds for always-single and newly single. Here are some broad generalizations:FULL ENTRY
Today, Sam Schneiderman, Broker-owner of Greater Boston Home Team discusses the types of sewerage systems that buyers might find, depending on where they are looking to buy.
Most City Slickers rarely think about the sewerage system in their home or condo. Their waste water just goes down the drain and disappears into the city/town sewer system unless the toilet or pipes get clogged or break. Homeowners pay the city/town sewer bill and enjoy almost no sewerage system maintenance hassles.
On a rare occasion, I run into a private sewerage system in a city. (I’ve seen them in some parts of Newton and the Boston neighborhoods of Hyde Park and Roslindale.)
Those that are moving to less densely populated communities may find that homes in some of those communities or neighborhoods are not connected to city sewers. Instead, they may find private sewerage systems on the property like septic systems or older cesspools. (There are also some newer innovative and alternative technologies, but I have yet to see them installed.) When working properly, private systems don’t usually require much maintenance and there is no sewer bill to pay.
As technology has advanced, municipalities have adopted strict rules for the installation of private sewer systems, particularly when they were in close proximity to drinking water wells or other water (ponds, lakes, underground streams, etc.) In Massachusetts, private sewerage systems are now subject to specific regulations
and must pass a Title 5 test before any property can be sold.
OK, you can pick Bermuda if you want, but I am thinking much more locally, such as Greater Boston.
My inspiration on this chilly but bright Monday morning comes from CNN Money's list of the top 100 places to live.
There are five Boston area towns on the list - thanks to Banker & Tradesman for pointing this out. Milton is No. 2 on the CNN Money list, followed by, in no particular order, Sharon, Acton, Chelmsford and Easton.
All fine towns, but reading the descriptions, it's hard not to have the sneaking suspicion that these communities were simply drawn out of a hat.
I wear a bunch of hats and I don’t have a place to hang them all. Like most people, there is at least one room in the house that gets out of control. For me, it is my home office.
My home office that wears too many hats, too. My home office is the writing center for this blog, my company blog, and my book. My home office is also where I do some of my work as a buyer’s agent and as the owner of my real estate company. My home office is also where I find myself when I am planning things with friends and family, since I schedule out of my computer calendar. My home office is where the TV lives, so it is where movies are watched, yoga and fitness DVD are followed, and -- as of this week -- where football games are watched. My home office stores my books and my office supplies.
My professional office does not have this identity crisis: it is just a professional office.
The reason that I bring this up is because it is an issue for house buyers. It is a hard question for most:
Do you have too much stuff or do you have too little space?
Today, I want to outline some of the most common things that my buyers mention about their lifestyle and the house choices they make to accommodate their clutter weak-spots. Many focus on these things:FULL ENTRY
Despite the windows being covered with dark plastic, neighbors of the $520,000 Cleveland Street duplex, some of whom have lived on the street for decades, never noticed anything amiss.
Still, the college student has good taste in real estate. After all, you could do worse that Arlington - you could easily shell out $550,000 to $600,000 to buy a home in the area.
There were a couple stories after that about even more flagrant neighbor antics - this Roxbury house was being used as a brothel.
When you are looking at buying a house or condo, you inevitably end up gambling when it comes to your new neighbors.
How I love seeing homes after a huge rain.
There is a lot to be learned about a house if you see it just after bad weather has rolled through. Here are some things that I look for. What would you add to the list? Some of these may turn out to be easily fixed. However, you would not get the same warning if you saw the same house during a dry spell.
If you see a wet vac (shop vac) plugged in and looking recently used it could be a bad sign. Did the owners need to vacuum up water during or after the storm? This is a red flag that needs to be investigated.
Damp marks on the exterior walls or floor show that water was able to get in during the extraordinary conditions.
A damp smell or seeing damp wood still in basement is a bad sign. Owners need to be careful to dry out any wood that got wet to avoid mold. Anything that is porous that got wet should have been thrown out by now.
Buckling vinyl or wood parquet floor tiles can happen over a long period of time or can happen suddenly from standing water. Either way, dampness is getting in.FULL ENTRY
Short sales are slowly on the rise, now accounting for 12 percent of all home sales, USA Today reports.
That said, real estate agents selling homes across the state report that the short sale process is still anything but short.
In a recent survey by the Massachusetts Association of Realtors, just over half - 54 percent - reported they had handled at least one short sale over the past year.
Here's a breakdown of how long it took:
- 22 percent reported it took an average of 1-3 months to close on the home
- 46 percent reported it took 4-6 months to close
- 25 percent reported 6-12 months to close
- 7 percent reported it took over 12 months on average to close a short sale
The short answer is everywhere else but here.
A survey just out by HomeGain suggests a big shift in attitudes toward the real estate market.
Half of all homeowners across the country now believe prices are headed down over the next six months.
That's a marked increase from the second quarter, when just 30 percent of homeowners were bracing for more price declines.
Despite now years of falling sales and prices, the ever optimistic American homeowner has been confidently predicting a real estate market turnaround is just around the corner. Until now that is.
Yet as usual, homeowners here in the Bay State, are once again defying common sense as they buck this trend towards greater realism.
I went to some open houses last Sunday with people who are not buying a house this year. What was I doing there? The goal was to see houses that will be comparable properties for their proposed house hunt next year. They currently own a starter house and intend to trade up before September 2012.
This is what happened:
House Number One was solidly in their preferred price range. Not a stretch. It was in a neighborhood they are very fond of.
He said: “If this was on the market next spring, I’d want to make an offer!”
She said: “This is close, but it isn’t my ‘forever house.’”
They both agreed the yard was too small. She would solve it with landscaping; he would solve it by using the local park.
Location: A, Size: B+, Condition: A. Price: Acceptable.
House Number Two was over their price range.
It was in a different location, where there was a lot more space between the houses. The yard was big and flat, but abutted non-residential property. The house, itself, was much too big for them.
If you have money to burn and want your children to go to school in Dover - where the median sale price tops $1 million - well then go for it.
I'd still take a bookworm in a middling school system any day - I think chasing academic brands is foolish.
But that's just me. I must fess up here - I hated (K-12) school and spent as much of my time buried in a book - often at home - as possible.
Still, even here in pricey Greater Boston, most of us can't buy our way into the elite towns - and maybe wouldn't if we could.
Boston magazine's ranking of the area's schools has some big flaws, but at least it provides a rough sketch of what's out there. (The Dover-Sherborn district is No. 1 on the magazine's list.)
In my post yesterday about town/school shopping, I thought woodenhippo offered up a good, no nonsense analysis of how to squeeze some value out of the rankings.
Today, Sam Schneiderman, broker owner of Greater Boston Home Team continues the discussion about living area that he started on August 8th. That discussion was about single family living area calculations. Today, Sam discusses condominium living areas.
Condominium and single family living areas are calculated differently.
While single family living area is calculated from exterior dimensions of a home’s living area, a condominium’s living area is calculated from interior dimensions. (The outside perimeter walls of a condominium unit are usually part of the condominium association’s common area.)
Unfortunately, all kinds of “extras” are often added into the living area of condominiums to inflate their size and value. This starts when a developer insists on including the square footage of garages, decks or porches in “living areas” stated in condominium documents. That living area is typically used to market the condos and the town assessor usually uses the inflated living area to assess the value of the condominiums for taxation.
The living area for a condominium unit is supposed to include all heated finished spaces, including below grade (basement) spaces that are legal living areas. (If not part of the original condo construction, added living areas should be heated, have proper ceiling height, windows, entrance and egress, and town building inspectors should have signed off on the permits for its construction.)FULL ENTRY
For upscale buyers with school age children, the answer is pretty simple: A whole lot.
Despite the downturn, the bidding wars to get into towns with the best school systems - as measured by test scores, teacher-student ratio, and other metrics - are raging unabated.
That's my quick take on Boston magazine's annual ranking of the area's top school systems.
A quick look at the top 15 reveals communities that also boast some of the highest home prices in the state, if not the country. And some have seen just nominal declines and even gains over the past few years, when the real estate market in general has gone haywire.
So says Clear Capital in its latest survey of real estate values across the country.
Plummeting consumer confidence and stubbornly high unemployment could make for a tough fall and an even gloomier winter, the housing market tracker predicts.
Don't worry. I am sure everyone is feeling a lot better now after Obama's big jobs speech last night!
Still, Greater Boston heads into the fall in a better position than many other markets.
I guess that's for you to decide. One thing is for sure, though, the prices at the DNA Lofts have certainly come down.
The Davis Cos., a veteran local developer, recently acquired the downtown-style condo project on Dot Ave after the builder lost it to foreclosure.
The new owners are now putting up 25 of the remaining DNA Loft units up for sale at an auction on Oct. 6. The condo project is located at 944 Dorchester Ave., where Dorchester meets South Boston.
Minimum bids range from $115,000 for a 665 square foot studio, to $275,000 for a roughly 1,600 square foot penthouse. The penthouse had previously been on the market for just under $500,000.
When the house next door gets foreclosed on, it can be an absolute nightmare for the neighbors.
Just ask "Carol." She lives in a neighborhood here in Greater Boston, a short walk from the ocean in a location that would not seem like a hot spot for distressed properties.
Yet Carol's life has been turned upside down since the bank seized the house next door.
For starters, Carol and her husband, having bought their house seven years ago, would like to move on to bigger and better things.
Yet the problem property next door - not to mention a tough market - have helped drag down the value of their home by a hefty $100,000. Among other things, the house next door is in need of repairs, while the yard outside is trashed.
So much for that idea.
But if Carol can't move, staying put is becoming increasingly uncomfortable.
There's a now a steady stream of occasionally rude bargain hunters gawking at the foreclosure special next door, including one couple who swung by at 10:30 p.m. one night for a quick peak.
Worse, despite exchanging words with Carol's irate husband, the couple was back the next day with their real estate agent.
If there is any etiquette related to how and when a house is shown, Carol would sure like to hear about it.
It may seem like I'm missing in action, but I'm not. My post went up this morning, but for some reason it got stuck farther down.
Hope everyone had a great Labor Day weekend. Time to get geared up for more real estate fun this fall.
All for now,
Here's my long-term real estate strategy, and it's pretty simple - buy and hold. My wife Karen and I spent roughly $200,000 renovating and putting a modest addition onto our Natick fixer-upper.
We have young children just starting school, we like our town, and we have no plans to move until retirement, or, more likely, we get too old to work anymore.
Is my house underwater? Who knows, but frankly, I don't really care much either. A lot can happen in thirty years and it seems unlikely that Greater Boston is going to morph into Detroit.
If anything, maybe the bubble and now the crash will bring back the old buy and hold mentality that our grandparents had.
To me, that wouldn't be such a bad thing.
If so, well then join the club.
An often overlooked problem in our now completely dysfunctional housing market is the bruised and battered seller.
Yes, buyers are increasingly hard to find as the bad economic times roll on and home prices fall again.
But sellers who have a half decent home to unload - at a reasonable price - are the other endangered species out there in the real estate jungle.
And it is an especially chronic problem here in the Greater Boston housing market, which is overloaded with overpriced, aging homes in need of work.
Fred Breimyer, regional economist for the FDIC in Boston, offered up a telling stat when I caught up with him the other day.
What you see online is often not anywhere near what you are going to get.
In fact, I have the perfect example of this right in my Natick neighborhood.
The light blue home around the corner from me at 17 Marion St., a ramshackle 1930s home of no particular style, was foreclosed on a couple years ago.
In fact, it enjoyed a pretty nice run during the bubble years, fetching $249,000 in 2002 and then getting flipped a couple years later for more than $284,000.
Then the economy came crashing down, with the home taken back by the bank for $175,000 in 2009.
After sitting empty but inconspicuous for a couple years, 17 Marion has morphed into the classic foreclosure special, with the recent addition of plywood over all the windows in advance of Irene the icing on the cake.
Now it's being marketed, intermittently, for the unbelievably low price of $205,000. (Yes, I am being sarcastic here.)
That's the reality - but you wouldn't have a clue just looking at the online listing for the home.
Boston is one of the cities that led a modest June rebound in prices, according to the latest Standard & Poor's/Case Shiller report.
The Hub was behind only to Chicago and Minneapolis, with a 2.4 percent gain in home prices in June. Chicago led the 20 cities covered by the Case-Shiller index with a 3.4 percent gain.
Monthly numbers, especially when you are dealing with the spring market, the traditional sales season, can be tricky if not downright misleading. A lot of this is just probably hype based on season changes.
In fact, on a year-over-year basis, home prices are actually down in the Boston metro market by 2.1 percent.
But there's the catch as well - the market began falling again a year ago and all we have to show for it is a lousy 2.1 percent drop in home prices? Hardly red meat for potential buyers.
The double dip in prices, at least when it comes to the core of the Boston market, so far is shaping up to be fairly wimpy. Sure, sales are down and have yet to recover, but prices remain extremely sticky.
Anyone banking on the Boston area finally become a buyers' market may have a very long wait ahead of them.
I am not a typical real estate agent. The thing that sets me apart more than anything else is that I do not subscribe to the tactic of selling homes. I work with people who buy houses. There is a lot to this distinction.
People who own (or rent) houses (or apartments) make them into homes. People sell the homes they have made out of condos and houses. Buyers walk into someone else’s home and want to buy it. On closing day, that home has reverted to its natural state; it is a house or condo. Then, the new owner has the job of making it a home, or not. I have seen million-dollar houses that are not homes and small apartments that are homes.
The bottom line is that a house is a box where you keep your stuff and live your life. There are many houses that will work for a buyer. There is no perfect house or dream house. Even if you have a romantic notion about a particular house, you could find the same utility elsewhere. If you are inclined to make a home, you can make it in any private dwelling. Being in love with a house is a choice.
A home is a place integrated into your life. The physical house becomes the backdrop for your sense of self and memories. I frequently hear buyers say that their current apartment will always be “the place where my daughter was a baby,” or “the first place we lived together.” Sellers are often even more attached to their house than a renter to their apartment, since owners tend to live in the house longer and made more physical changes to it.
Mother Nature has been busy reminding us that a house is a box where you keep your stuff and live your life. A house is vulnerable. If the house gets destroyed, you can lose your home.
Desperate times, desperate measures. Proposal to guarantee rock bottom mortgage rates for all takes flight
Life, liberty, and a guaranteed, rock bottom mortgage rate?
A proposal for a great, big national mortgage refi party may turn out to be more than talk radio/blog fodder after all.
The Obama Administration is studying plans that would guarantee a 4 percent interest rate for tens of millions of homeowners with federally backed mortgages, The New York Times reports.
There are appealing aspects to the plan - bondholders, not taxpayers, would take the hit. Better yet, it would act as a giant stimulus plan for the economy, freeing up as much as $85 billion in potential consumer spending that is now being sucked into mortgage payments.
Moreover, it may not need Congressional approval, the Times notes. That would let the Obama folks sidestep all the Tea Party rock heads.
It may be a buyers' market in the rest of the country, but not so here in the Boston area.
Despite weakening prices, landing a half decent home at a price that won't break the bank is still challenging. And the closer you get to Boston, the harder it gets.
Just take Adam Waitkunas, who runs his own high-tech public affairs firm, and his girlfriend and now fiance, Kelly Mitchell.
They finally landed a Cape in Carlisle - but not after nearly a year of hunting that took them through as many as many as 30 homes. And not after having to drop hopes of landing in Lincoln or Weston.
After you close, your closing “goes to record.” This is the process of getting your mortgage, deed, and other paperwork into the system. Someone paid by the closing attorney will go to the registry to get the paperwork filed into a registry of deeds database. (It can be done by a non-lawyer. There are errand services to do this for attorney’s offices.) Within a couple of hours of most closings, a new owner can see his/her deed on line at the local registry. The original paper deed will show up, by mail, months later. You can file it, but you don’t need to take extra-good care of it. To sell, you do not need an original deed; it is not like the title you have for your car. The important thing is that your deed is recorded at your local registry of deeds.
A registry is an old-fashioned system. The filing is done by Book and Page. This corresponds to big books with big pages. On-line searching can be done by document (Book and Page number or type of document), name (of buyer or seller) or address.
My buyers check to see that their purchase has gone to record. The ones that haven’t been patrolling the databases for months find this really neat. They also realize anyone can see it. They wonder about their privacy. What is not on record is your interest rate, what you paid along the way, or your social security number.
Getting the purchase to record is the easy part, and it goes well almost all the time. The problems develop later. Buyers rarely check later to see that the discharges (which take a while to process through the lenders) get to record.FULL ENTRY
It's been a tough year for home sales in Massachusetts, which are down more than 16 percent so far compared to the same period in 2010.
But in a break from this downward spiral, Bay State homes sales actually jumped 7 percent in July, reports The Warren Group, publisher of Banker & Tradesman.
It was the first increase since January.
So are we finally seeing the start of the long-awaited rebound in the real estate market?
Today, Sam Schneiderman, broker owner of Greater Boston Home Team writes about lease to own arrangements. It's a way for tenants to become owners and a way for accidental landlords to sell.
What is leasing to own?
Under a lease to own agreement, a potential buyer leases a property from the owner using an agreement that allows the buyer/tenant to purchase the property at the end of the lease period, typically at a pre-determined price.
Usually a portion of the rent goes toward the down payment. If the buyer/tenant does not buy at the end of the lease period, the amount set aside for the deposit is often forfeited. (Note that lenders want to see proof of a separate account for the tenant's portion of the rent being used toward the down payment.)
This arrangement can benefit sellers who are having trouble selling their property and do not want to leave it vacant.
Buyer's who have had "credit events" or other issues that prevent them from qualifying for a mortgage for a pre-determined amount of time are ideal candidates for a lease to own arrangement. (Prospective buyer/tenants are likely to have experienced recent divorces, death of a spouse, extended unemployment prior to current employment, job transfers, etc. Many have good income and credit but need more time to qualify for a mortgage based on their new circumstances or they need to accumulate a larger down-payment.)
This stat in a Globe story yesterday on poverty in Western Massachusetts jumped off the page at me.
The study paints a stark picture of two commonwealths, in which the gap between rich and poor, east and west is growing. For example, the inflation-adjusted median income of affluent families in Greater Boston has grown 54 percent since 1979, to $230,000 from $150,000 a year, largely due to high-paying technology jobs.
This paragraph goes a long way to explain a phenomenon that often stumps both newcomers to the Boston area's high-priced housing market and veterans as well. Given declining population, an epic real estate downturn and national economic troubles, how did housing prices get so high here and why have they been so stubborn coming down?
It's the classic fantasy, returning to the neighborhood you grew up in to buy back your childhood home.
Back in the "olden days," as my five-year-old daughter calls them - though of course to her that's anything that happened before she was born, but no matter - it was more common for two or three generations of a family to live under the same roof.
But with the birth of the self sufficient, nuclear family after World War II, those days are long gone. The house and town we grow up in often has no bearing on where we eventually land. By the time we are out of college, mom and dad have already downsized to a condo or moved to a warmer climate.
That certainly was my experience. I grew up in a nice, 1970s subdivision in Norfolk, a commuter town with lots of woods and farms about 30 miles south of Boston. By a fluke, really, my sister Sandra still lives in town, so occasionally I drive by four bedroom colonial I grew up in at 8 Noon Hill Ave.
It always looks smaller than it did when I was living there - the current owners, I'm told, have taken out all that dark, 1970s wood paneling and have painted the walls. Probably stripped out the powder blue and rose red carpet as well.
A pair of Columbia Business School profs have come up with a rather unique way to fix the nation's woes - they want to throw a great, big mortgage refi party for homeowners across the country.
R. Glenn Hubbard, dean of the Columbia Business School, and Chris Mayer, a professor of finance and economics and the school's senior vice dean, would like to refinance 30 million mortgages across the country down to a once unimaginable 4 percent.
The duo contend this would both stabilize the reeling housing market while providing a $60 billion a year boost to an increasingly troubled economy as well. The average homeowner would wind up with hundreds of additional dollars to spend - money that is now being sucked into mortgage payments.
Mayer appeared on Tom Ashbrook's On Point radio program yesterday morning to tout the proposal.
Not exactly a pair of Ivory Tower lefties, Hubbard chaired the Council of Economic Advisors under President George W. Bush.
There's both much to be said for this idea - and some reasons to be concerned as well.
If so, you are not alone.
Just over half of all agents surveyed by the Massachusetts Association of Realtors said sales in their offices have taken a hit as a result of appraisals that came in under listing prices.
A significant number of those who answered yes had seen as many as three to four sales hit by low appraisals, which, if they don't kill a sale, can lead to some frantic last minute restructuring.
In fact, the Bay State numbers are significantly worse than the national numbers, which have been rising as well. The National Association of Realtors reported that 16 percent of all sales fell through in June, up from 9 percent in June of 2010. Low-ball appraisals were the main culprit, the trade group contends.
For a growing number of would-be home sellers and buyers, the numbers appraisers are throwing out are increasingly disconnected with reality.
It is now cheaper to buy a house than rent an apartment in 74 percent of the nation's largest metro markets, Trulia's latest Rent vs. Buy Index finds.
That is just about everywhere else except for Greater Boston, which is one of the few holdouts in this trend towards dramatically cheaper homes.
OK, it's hardly a surprise that Las Vegas, the original foreclosure basket case, tops the list of markets where it's far cheaper to buy than rent.
The same goes for Detroit, where you could probably pick up a home for practically nothing if you are willing to take your chances on the sputtering Motor City.
But there are also a lot of fairly attractive metro markets where buying a home now makes more sense than renting.
It's a group that includes Baltimore and Charlotte, Atlanta and Minneapolis, Chicago and Sacramento.
Yet while home prices have plunged around the country, the decline in the Boston area has been far more tentative.
Today, Sam Schneiderman, broker owner of Greater Boston Home Team addresses a reader's questions about building permits in his weekly Monday blog post.
Last Monday, we discussed Living Area calculations for single family properties. I focused on how appraisers calculate single-family lower level finished space for mortgage purposes. (Condo and multifamily calculations often vary from the way that single-family living area is calculated.)
Readers asked lots of good questions about how living area would be calculated in different situations. For those interested in learning more about how various areas of single family homes are calculated, I suggest an excellent article written by my client and friend, Maria Lando, a/k/a “The Math Mom”.
Now, on to the business at hand:
Last week, Lisa53 wrote:
“We hired a licensed contractor, electrician and HVAC person but did not go the permit route because we plan on staying a while (esp in this market) and weren't looking to increase our property taxes. Our contractor gave us the choice. Everything is code and we even ripped down a bunch of the work done by the previous homeowners, who did it themselves, and badly. I was a little hesitant about skipping the permits, but time will tell.”FULL ENTRY
That's the Obama Administration's latest brainstorm on how to fix our ever more messed up housing market.
The Home Affordable Modification Program - now that's a mouthful - is seeking proposals from investors on what to do with hundreds of thousands of foreclosed homes sitting empty and helping drag the housing market down.
And the feds appear to be reaching out to hedge funds and other deep-pocketed investors who can scoop up large tracts of homes and convert them into rentals, The Wall Street Journal reports.
Anything is probably better than Washington's current policy of muddling/sleep walking through one of the worst housing downturns in modern history - the Journal lauds the Obama folks for looking at a private market solution.
But if the game plan is to turn all these foreclosure specials over to the big boys and girls, what happens to the small investors out there looking for a shot at fixing up a few homes and renting them out?
The last thing that a buyer does before closing is take a walk through the house or condo. Usually, the buyer and buyer’s agent are there. Sometimes the seller or seller’s agent is there, too. The purpose is to check that property has been prepared for closing. Things to check are whether the heat and hot water are working, and that the property is vacant and clean. Everything should be working that was working at inspection. Nothing should be damaged by the sellers or their movers on the way out. Things that should be gone are gone; things that should stay are there and work.
That seems simple enough. But it isn’t always.
Sam wrote about mishaps in the garden found on walk-through. He mentioned that the Purchase and Sales Agreement needs to be specific about real estate (realty) and chattel (personalty) so that what should stay will stay and what should go will go. I create a list of grey-area items that are staying and going. I give it to the seller’s side after home inspection. This gets the discussion done and also creates a neat list for the attorneys to incorporate into the Purchase and Sales Agreement.
Real estate is the land, what grows out of it, and everything built on it. The house or garage and anything affixed to the house or garage is real estate. All the appliances that are hard-wired in are real estate (light fixtures, built-in dishwashers, in-the-wall air conditioners.) The stove stays, too. Built-in bookshelves are real estate. Furniture built for a specific space is also real estate.
Chattel is anything that can be unplugged and moved, or is not attached to the house. This includes refrigerators, washers, and dryers. Even though gas dryers are connected via the gas line, they are typically considered chattel.
Grey-area items should be listed and discussed. Buyer and seller should agree about what is staying and what is going.
My rental focus this week turns to larger condo associations. Landlords who rent their condos in larger condo associations are often plagued by special assessments (additional fees for maintenance and repair.) These costs get added to rental fees as time goes on. It is in the interests of would-be tenants to pay attention to whether the building is being taken care of before big-ticket repairs are needed. It is also in the interest of non-occupant owners to encourage their management to be pro-active about building exterior issues.
Mediate Management published a blog titled The 3 Biggest Deferred Maintenance Mistakes That Condominiums Make
Here is my take on their list:
I have written about deferred maintenance. It costs more, a lot more, in the long run. Mediate gets specific:
You need a maintenance plan that the association must stay devoted to…here are the 3 biggest maintenance mistakes you should try to avoid:
1) Neglecting your roof until it leaks or endlessly patching to avoid a replacement
2) Neglecting your masonry and not making regular annual inspections
3) Neglecting paint and exterior wood repairs
Exterior leaks cause more damage than most people realize. A little drip can be the source of wood rot, termite or carpenter ant infestation, plaster damage and mold. Because water works its way down through whoever’s unit is below it, a condo association can waste a lot of time and money chasing down leaks, patching them, repairing the interiors, and doing it all again when the next little leak begins to show itself.
Mediate management recommends
... A proactive tip is to schedule annual inspections by your roofing vendor. They will survey the structure, clean out gutters, clear drains, and patch or repair vulnerable areas. They will also inspect and repair copper downspouts and detailing, roof flashing, and other metal finishes that may deteriorate or leak over time. Regular visits from the same vendor will become an excellent resource for planning out the expected life span of your roofing materials.FULL ENTRY
OK, here's my take: Sell your house first, move to a rental, and then focus on buying.
Why put yourself through the stress of trying to buy a new home while you sell your old one?
A high-wire act even during the best of times, selling while buying has become even more difficult as the pool of credit worthy buyers willing to take on a chance on falling market dwindles.
Instead, by selling first, you have the flexibility of a first time buyer coupled - hopefully - with a little cash in your pocket.
That's my take, though I suspect I am in the minority here. What's yours?
Mike wrote to me with a question that is on the mind of anyone who owns a condo in a building where there is a short sale or foreclosure.
To give you some history, back in 2006 during the boom I was thinking of jumping into the real estate market out of fear of being out priced. I settled upon a condo in the newly built ….[condo complex in a north shore town]. I made an offer on hand’s down the nicest 1 bedroom in the building… The original owner bought it preconstruction and got every conceivable perk added. Huge granite island, granite in the bathroom, California closets. The unit was phenomenal…My offer at the time was $340,000, which got accepted, but I got cold feet and backed out of the deal. I still follow the buildings sales out of curiosity and I recently saw this same unit go on the market in a short sale for $240,000 and was eventually sold for $220, 000. Before this even the worst 1 bedrooms in the building were selling for $300,000+. It seems to me that this sale will be used as a starting point for all future sales in the building, immediately putting every other one bedroom owner at least 100k under water.
Did the bank just literally cripple this building and its tenants?
In general, a single distressed sale in a condo complex is not going to drag down the value of every unit like it in that building. It takes three to tango, for appraisers. Appraisers are aware that a comparable property is distressed, and takes that into consideration. Unless there is an epidemic of distressed sales in a building, a new, low price-point has not just been established by this one, low sale.
Looking a little deeper, Mike really dodged the bullet by having cold feet. There are two sales in that building in the past year and a half that indicate declining prices that could put other owners underwater. Only one of these was lender-involved; the other owner did not owe much on his unit.
Really, this is a foolish game, trying to predict what quarter home prices will start to turn around.
Yet every housing tracker out there does it, dutifully rolling out their latest home price predictions every quarter or so, trying to pinpoint at what time in the future prices will being their long-awaited turnaround.
The latest entry in the predictions game is Fiserv, which has pushed back by another three months the date at which it believes the market will shift into recovery mode.
Why are agents reluctant to talk about crime, safety, and schools? That’s easy. Safety and good schools are hard to measure objectively. They are matters of personal choice. One person’s “safe enough” is somebody else’s idea of scary. Weston public schools are considered the best on many lists, but many parents in Weston send their children to private school.
What is an agent’s job in regard to subjective information? Many agents provide objective information about schools and crime. Some provide contacts to former clients who can speak about their experiences in a neighborhood or at a school. But the decision to buy depends on the comfort level of the buyer. Unfortunately, comfort levels can run along race and ethnic lines.
Agents are legally required not to steer their clients. Steering is the practice of coaxing consumers into segregated neighborhoods by choosing to talk up an area to one type of person and insult it to another. The practice was commonplace until fair housing rules came into place and enough agents behaved for fear of being caught...OK, that was blunt. Not all agents behave because they think they will be caught. In fact, if I ran the world, enforcement would be better than it is; most agents don’t much fear being caught because there’s not much testing. But even the most liberal, non-racist agent has had it drummed in that subjective opinion is risky. My insurance company sent me this example of someone in trouble last year.FULL ENTRY
Bynxers thinks he's found a solution to Greater Boston's home price conundrum. He's even dubbed it the "Third Way."
I'll give him A for creativity, but I think it boils down to another variation on a now well worn path - moving to a cheaper home well beyond the 495 ring and settling for an epic commute.
Here's how Bynxers, who has managed to wrangle three days of telecommuting a week from his boss, pitched his idea in a recent comment.
Sam Schneiderman, broker owner of Greater Boston Home Team has a few things to say about how living area is calculated and advertised.
The secondary mortgage market has clear guidelines about how appraisers are required to calculate and report the "gross living area" of single families. The rules are clear; any finished areas that are "below grade" are not supposed to be included in the gross living area of the house. That means that if the floor of a finished basement or lower level is not level with or above the land outside of it, its "living area" should not be included with the rest of the home's above grade living area.
Below grade living area is still considered when appraising single families, however, it is included and valued as a separate category of living space in the appraisal report. Presumably, that is because below grade living area is valued differently than above grade living area.FULL ENTRY
Like a lot of people, I thought once a debt default had been averted, things would go back to normal.
Normal as in sluggish economy and messed up housing market - all familiar terrain right now.
I even suggested in my post last Monday that avoiding a debt default had averted Armageddon in the housing market.
Now it looks like I wrote too soon.
OK, so Congress, despite the block headed posturing of the last few weeks, wasn't so completely senseless as to force the United States to default on its debts, effectively pushing the economy off the cliff. But it came pretty darn close - earning an unprecedented 82 percent disapproval rating.
In fact, the long and debilitating debt default debate, coupled with Standard & Poor's decision to jump on the bandwagon and downgrade the federal government's long-held AAA debt rating, has taken its toll.
And anyone who suggests all this won't have a profound impact on the housing market is beyond clueless.
Surprise, surprise! The MBTA extension of the Green line in Somerville and Medford has been delayed, again. This time, they are projecting 2018 as a finish date, with the Medford stop possibly being delayed until 2020.
I am on record here at BREN for being skeptical about the on-time arrival of the Green Line. I wrote about it in 2007, and 2008 that I do not think that buying in anticipation of the Green Line is a good idea.
In 2009, I drew on lessons learned during the Red Line extension in the 1980s for an understanding of just how long it takes to see profit from that kind of community change. Here’s what I said then. I still stand by it, except now I am pushing my projections back four years.
C., a client of mine, asked me this question:
… I was also wondering if you had any opinions on the proposed Green Line extension. Personally I think I'll be dead by the time it's done, but was wondering if you'd heard anything to the contrary. I do know about that lawsuit that said it was supposed to be completed by the end of 2014. But I'm not holding my breath.FULL ENTRY
Home prices bounced back somewhat during the spring selling season.
But it wasn't enough to reverse the double dip, with prices still down nationally nearly 8 percent for the year, Clear Capital finds in a newly released report.
The Northeast, and in particular the Greater Boston market, fared considerably better than the rest of the country. The Northeast saw prices rise 5.2 percent this spring over the abysmal winter months. That said, home prices are still down nearly 3 percent from July 2010.
Greater Boston, which the survey defines as a broad stretch encompassing the pricey western suburbs, posted a 7.6 percent gain in home prices, spring over winter. Prices, however, are still down 1.4 percent from July 2010.
The New York metro area fared even better. Home prices rose 6.7 percent in the spring, for a net gain, year over year, of 1.5 percent.
Still, as far as home prices go, this may be as good as it gets this year. We are now in the doldrums of the summer market, and if you couldn't find a buyer this spring, you are either looking at price reduction or pulling your home off the market.
Today, I am writing about unsafe conditions I have seen in attics (and basements.) Paying attention to this counts as both a rental issue and a buying issue.If you have any additional questions this rental season, write me.
I am not so naïve as to think that all workers do house renovations to code. Many renovations are done by homeowners or their paid help that are way-way-way out of code. The attic is a place where I’ve seen some whoppers.
Absolutely the worst:
Early in my career, I saw this: The seller had put paneling (the 70s kind) along the walls and the sloping roof line all the way to the peak. What was he thinking? Well, he was thinking he wanted more ceiling height and the wood going across the attic at about 5 feet up was in the way. He (or she, but this was probably a he) didn’t do any checking to find out why the roof framing was built that way to begin with. He removed the wood that was in his way.
When I showed this house, the ceiling paneling was bowing in. When we went outside, the exterior walls were bowing out. What was going on? The owner had removed the collar ties that support the roof. Years later, that roof was collapsing.
More common mistakes:
In our old housing stock there are lots and lots of “finished” attics that have bedrooms in them. Even if they have been bedrooms since the 20s, it doesn’t make them safe bedrooms. I frequently see personal belongings that show that people have been living in these rooms for many years. They were lucky that no one was hurt in the time they used those rooms. Neither owners nor renters should have been sleeping there.
The more things change, the more they stay the same in our perpetually inflated Greater Boston housing market.
Prices may be coming down again, but it has been a long, slow and grudging decline here in the Boston area. And if you look at towns within the 128 belt, well it's hard to see all that much of a drop in prices from the peak years of 2004/2005.
Frankly, if you have a half decent house and don't have to sell, why would you right now?
That brings me to jhwilly's lament yesterday in the comments section on my post about the endangered species of the housing market, the move-up buyer.
“The REALTORS® are coming! The REALTORS® are coming!” Well, actually, the REALTORS® are going. They are going to some bigger commercial property because they have outgrown the Waltham location. Where they will land is still undisclosed.
Massachusetts Association of REALTORS® President Laurie Cadigan, broker-owner of Barrett & Company in Concord, took the opportunity to say, “Effectively, we are taking our own advice: Now is a great time to sell and buy.” Time will tell whether the commercial trade-up was a good idea.
I always liked the MAR (Massachusetts Association of REALTORS®) office. Over the years, I have been there for classes. The meeting room was useful. There was plenty of parking. The downside was that there was not enough room, so I can see why they would want to trade up.
The office backs up on a visible part of I-95/ Route 128. There are trees there, so inside it wasn’t all that noisy. The MAR sign was quite visible to southbound traffic. We’ll see what the new owners do with that opportunity.FULL ENTRY
Here's an interesting take from Calculated Risk on the endangered species of the housing market - the move-up buyer.
First time buyers have increasingly become the sole source of demand in the sputtering housing market. After all, all they have to do is give notice to their landlord.
By contrast, homeowners looking to trade up can't move up until they can find a buyer for their home.
And, of course, the family selling the home you want to buy may be faced with the same dilemma, and so on.
It's a chain of transactions that during good times we all take for granted, but during bad times, can become highly problematic.
Sam Schneiderman, broker owner of Greater Boston Home Team discusses the pricing strategy known as “testing the market.”
Assuming that a property is properly marketed, when it first comes on the market all agents and buyers have their eyes on that property. Today, that means that the brain that is processing the information on the screen quickly decides whether or not the property is of interest and worthwhile to look at, based on the property’s features and price.
Since the average attention span in the Internet age seems to be the length of time that an image is displayed on a screen, an overpriced property is likely to fade from memory as quickly as the next home appears on the screen.
Sellers that try to “test the water” with a high price often find that they need to adjust their asking price later in order to attract interest in their property or sell within their desired time frame.
Maybe, if Congress can get its act together and pass a compromise bill today to keep Uncle Sam from becoming the biggest deadbeat in history.
If the federal government were to start default on its debts, it could have catastrophic consequences for the economy and, by extension, the housing market.
A still stubbornly high unemployment remains one of the biggest obstacles to a housing recovery, argues Greg McBride, senior financial analyst at Bankrate.com.
A prolonged debt default could very well trigger another severe downturn, throwing another 2 million people out of work while sending interest rates soaring.
That's obviously just what the housing market needs right now as it flounders amid another round of falling prices and sales.
"The downside of a default is massive," McBride said. "It is the reason we teach our kids to look both ways before they cross the street."
The doomsday-like debt default countdown looms over the housing market like the sword of Damocles.
After all, along with an economy that seems perilously close to shifting into reverse, the debt debate fiasco down in Washington is not exactly a confidence builder for potential home buyers.
But has it begun to truly hit home with individual buyers, prompting them to put decisions on hold or even bail after putting homes under agreement?
The Case-Shiller housing indices are the gold standard of the real estate industry, tracking resales of existing homes across the country.
But my head is aching after reading the press release on the numbers by the S&P Indices, which puts out the crucial market gauge devised by Karl Case, professor emeritus at Wellesley College, and Yale University economist Robert Shiller.
The numbers clearly show continued year-over-year declines in housing prices - Greater Boston prices were down 3.2 percent in May.
Yet the press release starts off touting seasonal increases seen in several cities in May over this April, the heart of the spring sales season.
Home sales plunged more than 23 percent in June, the fifth straight month of double-digit declines, reports The Warren Group, publisher of Banker & Tradesman.
In fact, the 4,313 homes sold last month marked the worst June since 1991, when there were 4,243 sales.
Of course, that low point was set during another brutal recession that hit Greater Boston and New England particularly hard compared to the rest of the country.
The early 1990s were a tough time for the Massachusetts economy and real estate market here in particular. The 1990s may have ended amid the happier times of the tech boom, but the decade started with an epic bust that featured a collapse in home sales and prices after a big run up during the Reagan years.
Sounds familiar, but with national bankruptcy looming, it's not clear whether we get the happy ending this time around.
Sam Schneiderman, broker owner of Greater Boston Home Team brings you a must-read for anyone planning to buy and renovate.
It's not uncommon to buy a home and do some renovations before moving in. Many buyers do cosmetic updating like paint and/or floor sanding, but when improvements are more extensive and delay occupying the house, buyers need to make sure that the house is properly insured and that their loan allows them to delay occupancy.
Recently, I helped buyer-clients purchase a home that they intended to renovate extensively before moving in. Planning and renovating would take between two and four months before they could occupy.
They purchased with a typical mortgage for owner-occupants. Knowing that the home was going to be unoccupied for a few months, their insurance agent obtained a construction policy to cover the vacant renovation period.
Unfortunately, there are problems with that strategy.FULL ENTRY
Now how's that for a double whammy?
Despite the housing downturn, the Boston area still has some of the highest home prices in the country.
Now, with the exodus of homeowners into the rental market, we have some of highest apartment rents as well.
Greater Boston is No. 5 in the country, behind only New York and its suburbs and San Francisco, the Globe reports, citing a new survey by Somerville-based RentalBeast.com.
Maybe, suggests a new report by Radar Logic, which argues the weak spring market may be a precursor to even deeper price declines this fall.
Home prices nationally fell nearly 6 percent in May - the most rapid decline since September, 2009. Overall, year-over year price declines have been accelerating since June 2010 in the wake of the expiration of the home buyer tax credit, according to Radar Logic.
Come fall, prices will hit a new "post-bust lows," Radar Logic predicts
On that cheery note, have a great weekend.
Ah, all those poor buyers who bought during the bubble years. It's hard to find a more maligned group out there. Basically, if you paid some sky-high price for your home back in 2004 or 2005, everyone assumes you are a fool who jumped on the bubble band wagon.
But it turns out that maybe those bubble years' buyers aren't so foolish after all, at least when it comes to figuring out what their homes are worth now. In fact, they may have a better grasp of current market reality than those who bought later during the bust, or for that matter homeowners like me who bought just before the big run up in prices began, according to a new report by Zillow.com.
Today, our Monday guy Sam Schneiderman, broker owner of Greater Boston Home Team discusses what every borrower should know about how lenders verify income these days
Not long ago, a signed copy of a borrower’s tax return, copies of W-2 forms, 1099 forms and maybe a letter from the borrower’s CPA would have been sufficient to prove income for most loans.
In today’s lending environment, lenders are more prudent. They are required by Fannie Mae to verify that the information on the tax returns submitted to the lender matches the information on file with the IRS. The lender does that by submitting form 4506t to the IRS to obtain a transcript of the tax returns on file with the IRS. That transcript is not a copy of the tax return; it consists of a line by line printout of the income and deductions from the tax returns filed with the IRS for the particular years in question.
For those who are current with their tax returns, that should not pose a problem.FULL ENTRY
Just back from two weeks of vacation with my wife and three little ones down in the D.C. area.
Karen strung together a pair of house exchanges in Virginia that put us close enough to Washington to make some day trips into the city.
And it also gave me a chance to see what life is like in a gated community.
Frankly, it's a concept I have never been too wild on, but after a late night scare that drove home the vulnerability of rural living, I am rethinking my reservations.
We spent the first week at a development called Lake Holiday in the verdant Shenandoah Valley.
The reality of what it means to live in a gated community was driven home at the start of our vacation when we drove up to the guard shack at the entrance to the development.
Check out this Forbes piece. It breaks down the various real estate indexes - Case-Shiller, Clear Capital - and looks at how they stack up with each other.
Given the profusion of real estate numbers and websites and firms tracking them, it's a helpful peek inside the sausage factory.
Still, I take issue with the main theme - the fluctuations of Case-Shiller or whatever your index of choice is don't really have much meaning for the average homeowner.
It's a safe, conventional argument, but it no longer holds the water it once did.
There's no point scrimping and saving to buy a house only to get sunk after you move in and the roof starts leaking.
In fact, the biggest challenge of homeownership may come after you sign your life away on the mortgage - it's the job of keeping your house in livable shape without getting into a financial jam.
It's a theme that should resonate here in Greater Boston, where first-time home buyers too often stretch to get buy some older, overpriced home in need of work. Little do they know what they are getting into.
I recently took a look at this for Bankrate - here are some tips I came across.
Today, our Monday guy Sam Schneiderman, broker owner of Greater Boston Home Team, writes about problems that could have been avoided by paying attention to the Purchase and Sales agreement, or by keeping your hands off the peonies.
Something that is not a big deal to a seller can be a very big deal to a buyer or vice-versa. That is why good Purchase and Sale (P+S) agreements spell out the details of the agreement in minute detail.
But who reads them, aside from the attorneys?
Many agents and brokers don’t get involved in P+S details because they may have been told that once they do, they expose themselves to extra liability. I think that while an agent or broker is not an attorney, one needs to realize that a buyer or seller doesn’t usually know what to look for in a P+S or what areas cause the most common problems if they are not scrutinized before signing the P+S. Those areas should be understood by all of the parties involved in the transaction before signing the P+S. I prefer a conference call with the attorney and client to review the P+S prior to sending it to the other side.
In my experience, the area that causes the most trouble is the paragraph that spells out exactly what is being left with the property (i.e. which appliances, air conditioners, light fixtures, etc.). If it is not scrutinized by both the buyer and seller, it’s likely that someone may be surprised later.
Anything attached to a building is referred to as a fixture and is supposed to remain with the property unless specifically excluded from the sale.
Exclusions should be in offers and later carried forward to a P+S.
Here are a couple of issues that I have seen:FULL ENTRY
No, and for a very simple reason: The Boston area has a lot of things, but starter homes are not one of them.
We simply don't have the vast subdivisions of new homes, ready and waiting for first-time buyers that you can find in many Sunbelt cities.
That's not to say builders aren't putting up any new homes in Greater Boston - even in the worst of times, such as right now, a builder or two can be found adding a home or two to a subdivision somewhere out in Acton or Southborough.
But here's the rub: If that new home is built within the 128 belt, given that prices still remain near their bubble years' peak in upscale suburbs like Wellesley or Newton, you are likely looking at an overpriced McMansion.
So who's to blame for the housing mess?
Now, to be fair, I want to give boomers a chance to defend their generation's honor - and better yet, blame all those irksome Gen Xers and Gen Yers for all our current housing market woes.
To get things rolling, I will start off with a comment by ISchmidlapp. He contends the younger couples in his town have been the ones leveraging to buy the McMansions, all under the guise of doing right by their children. By contrast, the boomers in his neighborhood were all happy to buy and fix up 1950s capes and ranches.FULL ENTRY
Well that's what economist Gary Shilling is predicting.
A true doom and gloomer, he's also forecasting a return to recession in 2012.
That said, Shilling's bearish pronouncements have been right at key moments, including 2008.
No says a provocative new study out of George Washington University.
The Federal Housing Administration was formed to help first-time and low-to-moderate income buyers get mortgages.
But it now finds itself backing mortgages up to nearly $730,000 in some of the nation's costliest housing markets, the report notes.
It is a change that came about in the wake of the 2008 financial crisis - as recently as 2006 the FHA wouldn't back any mortgages above $362,790, the GWU study finds.
But with housing prices having been in free fall for the past few years, those higher limits now appear to be helping the comfortably well off move into their dream homes, or at least one could argue that after looking at the study.
Goodbye July 4th and hello dog days of the real estate market.
If you haven’t sold your house by now, it’s time to either take a meat cleaver to the price or pull it off the market.
Look for lots of price reductions in the weeks ahead.
It's an odd looking house hard by the railroad tracks on Marion Street in Natick. Built in 1930 with no particular style in mind, it sits precariously perched on the downside of a steep hill, with no front yard and a parking-space/driveway the only buffer between the house and a busy cut-through road.
But it's a sad commentary on the Greater Boston real estate market that this clearly dysfunctional house, crammed onto a tiny lot by some Depression-era builder, looked slightly tempting to my wife Karen and me when we were house hunting back in 2002.
How things have changed. Today I thank my lucky stars I never bought it, the plywood over the front window at 17 Marion St. the telltale sign the never-ending foreclosure epidemic has claimed another home.
Just call it the dead cat bounce.
That about sums up yesterday's report by the Massachusetts Association of Realtors that prices rose by half a percent, even as sales plunged 20 percent.
Thanks to beermeister, who called the dead cat bounce first.
And even that may be a statistical aberration - the latest report by the Case-Shiller index, the gold standard of home price tracking, has Boston area prices falling .2 percent.
The Case-Shiller index was up overall by .7 percent in April over May, but, significantly, Boston was one of seven cities that saw prices fall.
And even that overall, national bump, as modest as it is, appears questionable. The increase reported by Case-Shiller was the not-seasonally adjusted number. Seasonally adjusted, prices actually fell .1 percent.
Arlington, Franklin, and to some extent Needham are all classic examples of blue collar towns that have gone uptown.
And let's not forget urban neighborhoods like Davis Square, the South End and now Jamaica Plain as well.
Time to get out our crystal balls and peer into the future here. If you are buyer looking to get in early on a town on the rise here in Greater Boston, where should you be house hunting right now?
Should you be hitting open houses in Watertown, which is basking in the heat of the Cambridge market, or Medford, which someday might get a green line stop or two?
My brother Ben and I grew up in the suburbs here in the 1970s, long before Greater Boston became an international magnet for the upwardly mobile.
While I returned to the area after graduate school to work in newspapers, Ben left for college and never looked back, pursuing a medical career that took him to Nashville, Baltimore and Chicago.
So when we all gathered at my house in Natick earlier this week for a rare family get-together, I was particularly intrigued at Ben's shock at some of the dramatic changes he noticed in towns he last knew as a teenager.
Ben barely recognized Franklin, which, back in the 1970s was as blue collar a town as they come, with a respectable but hardly hip downtown.
That's all changed, of course. Real estate values have soared over the past few decades in Franklin as the homes have gotten bigger and its once dull downtown has filled up with restaurants and other amenities.
And Franklin is hardly alone, with a number of other towns within the 495 and 128 beltways having undergone equally dramatic demographic changes.
The spring market was nothing short of a debacle for sellers.
As always, it began with some economists and housing market watchers holding out hope we might see glimmers of a rebound on the horizon.
And it is ending with those hopes thoroughly upended as the double dip in home prices unfolds.
That's not to say there continue to be some hot pockets here and there where home prices remain buoyant - we happen to have more than our share of those here in Greater Boston.
But the mood of the market clearly is heading down as prices continue to fall, the latest HomeGain survey finds, with a disappointing spring having led to a big increase in pessimism.
It's a favorite game of economists and housing market watchers. When your prediction of a housing rebound falls flat, just push off that rosy estimate until the next year.
Just take a look at Fannie Mae's revised forecast for home sales across the country.
Faced with a sluggish economy and a housing market headed south, Fannie Mae has revised downward its prediction of a 6 percent jump in overall home sales this year.
It's now down to 4.3 percent, with Fannie also predicting a decline this year in new home construction, compared to an increase it had been predicting.
But don't worry, just wait until next year, Fannie Mae's economists tell us.
Sam Schneiderman, broker owner of Greater Boston Home Team is our Monday guy. Today he discusses online the accuracy of online reviews.
If you read this blog, chances are that you also use online reviews to help you decide what products to buy and who to do business with. I do, but since I started receiving emails like the one below every 3-4 weeks, I approach those reviews a bit more skeptically.
Below is an actual email (complete with missing words and misspellings) that I have received at least 3 times over the past few weeks. I have taken out the link to the company to comply with editorial guidelines:
“Google is now using business reviews to determine business ranking. People are trashing companies with reviews, Complaint sites and Blogs. We can help you defend your company by posting positive Reviews, Blogs and creating Websites to take over Search Results and control what people see about your company. How does posting positive reviews help in your businesses Google ranking? 1. Positive reviews increase your business rank by linking important and relevant websites to your website. 2. A constant stream of positive reviews improves your online reputation. 3. Positive reviews drive traffic to your business. 4. Positive reviews restore a tarnished reputation by pushing down negative reviews and links. 5. Helps protect against competitors or anyone else from attempting to run your ranking.” Tired of review sites? Hire us to knock them off the front page of Google under your search term. Our company has been in the business of taking over the first page of google for our clients for 8 years and knocking off complaint sites. We can do the same for your company and review sites. We will create special websites and blogs and link them to the 15 thousand websites we already have. These websites will knock the review sites away and replace them with content you control.”FULL ENTRY
Is Cambridge truly immune?
After all, as the rest of the real estate market heads south, things don't appear to have changed all that much in Cambridge since the days of the housing bubble.
It is enough to make Cambridge an object of envy nationally - The Wall Street Journal cites the country's academic capital as one of a handful of markets that are still near their bubble year peaks.
Cambridge prices are about what they were in 2004, hardly a down year, and 8.6 percent off their peak, the Journal notes. The median single family sale price in Cambridge was up to $730,000 year-to-date through April, compared to $600,000 during the same period last year, according to The Warren Group.
Zillow's home index, which includes assessed values of properties not on the market, pegs the average home value in Cambridge at $423,900, down .6 percent year-over-year.
The piece cites the obvious - Cambridge is home to MIT and Harvard and a relatively thriving jobs market. Yet the impact of Cambridge's booming economy on home values can't be overstated, with the city benefiting from breakneck growth in a trio of key sectors - life sciences, technology and higher education.FULL ENTRY
I take questions. Email to Rona Fischman. But sometimes a slightly off-topic comment repeats a question I’ve seen before.
Rona -- are there laws in MA about what agents *can't* tell their clients? When we bought I first house in the Midwest, back when information was nowhere near as readily available online as it is today, one of the things that I really liked about our agent was that she was a very straight shooter. When my husband and I inquired about looking at houses in a certain section of town she nipped that in the bud and told us we wouldn't want to be over there (and she was right). However, when we bought our house in CT our agent seemed to be very "by the book" and I vaguely recalled her saying something to the effect of not being "allowed" to share her opinions about certain schools, etc. Since we were moving across the country and didn't know much about the area, and she lived here her whole life and was an expert on the area, it actually would have been helpful to have some advice and not simply a reiteration of the facts (i.e. "the school is having a lot of budget problems and has been in the news, let me pull some articles for you" as opposed to "yes, there is a school there." )
In general, the reason agents don’t talk about schools or safety is because their managers or brokers tell them they are not allowed to. No law, just policy. What are they afraid of? First, being accused of steering. Second, being held to a subjective opinion on something.
In quality offices, there is information about schools and crime. That information is factual, not subjective. In some offices, like mine, we provide factual data links and also rely on parents in the districts and owners in neighborhoods who can speak to their experiences.
Today, is an encore of a previous entry.
Q: Why would agents not tell you about the great schools?
Answer number one: Unless the agent says the same thing to every customer or client, that agent may be seen as practicing “steering.” Steering violates fair housing laws. It is the attempt to encourage people to buy in areas with people “just like” the buyer. In the past, this practice maintained segregated communities.
Where have all the housing bulls gone?
Fresh off the business pages at the Boston Herald, I jumped headfirst into full-time freelancing and writing for this blog in the fall of 2008.
Back then, even as the world appeared headed into another Great Depression, there was still a housing bull or two around to bait all the bears on this blog.
But one by one, Sunshine & Lollipops and the rest of the housing bulls have fallen off the comment boards, digging in for what looks like will be a very, very long wait for the second coming of the Great Housing Bubble.
Even economists, who just can't seem to resist the temptation to predict housing prices will fall now but will then rise at some other point that is always just around the corner, appear to be wising up as well.FULL ENTRY
I was asked by a friend of mine whether I would take a listing on a house with a level-three sex offender* next door. Since I don’t take listings, I got to dodge the question. Since then, I’ve been asking listing agents. Some say that the person next door has done nothing wrong. That owner should be allowed to hire help to sell his or her house. Some say, they couldn’t sell a house with an offender next door.
When a level-three sex offender is released from prison, neighbors in the immediate area are informed. However, there is no requirement for the police to inform people who subsequently move into the area.
What brought my friend to call me and ask such a question? There is a sex offender living around the corner from this friend. The house next to the offender is under agreement to a family with little girls. My friend was driving past when she saw the new buyers were at the house with their buyer’s agent, and the listing agent. The little girls were dancing around (apparently invited) on the lawn of the level-three sex offender.FULL ENTRY
Anybody who has ever gaped at the astronomical price tag for some modest starter home in an upscale Boston suburb has surely had this thought at some point.
The schools in Sudbury, Winchester or Weston, or you fill in the town, are surely great, but if I took the same cramped Cape and moved it 20 miles west, I'd shave off half the price or more.
A case in point is Coldwell Banker's survey of the most and least affordable towns in the Bay State, as measured by average selling price.
Steve, our brave seller from Lowell who shared his frustrations with the current market, must be having some second thoughts right now.
Apparently he made the fatal mistake of having bought his now eight-year-old colonial in Lowell during the home price bubble. And, according to some folks who comment on this blog, that was an unforgivable error in judgment.
I'll leave names - or to be more accurate pseudonyms - out of this.
Still, it's worth taking a look at this barb thrown out by one of the regulars on the comment boards of this blog.
Steve bought a new home in Lowell back during the bubble years and has spent the last eight years spiffing it up.
He and his wife decided to buy the newly-built colonial after losing bidding wars for homes across the Merrimack Valley and Southern New Hampshire. At $309,900, it seemed a lot more reasonable than the other homes he had bid on, which were closer to $400,000.
Times change and Steve and his wife, who now have two young children, would like to take advantage of falling home prices to move up to a bigger house.
Under no illusions about the state of the market, Steve is ready to sell low in order to buy low.
With new hardwood floors, a professional paint job and some nice landscaping and a fence, his 1,700-square-foot colonial sparkles. And, at $289,000, it is priced right for Lowell's Belvidere neighborhood, while offering a nearly $20,000 discount from what Steve originally bought it for.
There's only one small problem - Steve can't find a buyer. In fact, he's having a hard time getting anybody to come and check it out.
So when he read my post suggesting that buyers face a dearth of decent homes at reasonable prices to choose from, Steve fired off this email to me.
Our Monday guy Sam Schneiderman, broker owner of Greater Boston Home Team answers some common questions about offers.
What are the rules about making offers in Massachusetts?
- There are no official “rules”, although a final deal should contain certain elements that were discussed in my blog post (“What Every Good Offer Needs”) on March 21.
Is there a standard offer form?
- The “standard form” can vary from area to area and from agency to agency. The most common forms used in Greater Boston are from the Greater Boston Real Estate Board or Massachusetts Association of Realtors, however, there are various contingency addenda that are added to basic offers. Those may be on their forms or an agency’s own forms. The degree to which the forms protect buyers or sellers may vary depending on the type of agency that the agent filling out the form works for and/or the agent’s relationship with the buyer (i.e. seller agency, single party agency, exclusive buyer agency, facilitators, dual or designated agent).
How much of a deposit should be included with the offer?
- The offer deposit is typically a formality. It can be as low as $500 or as high as the buyer or buyer’s agent thinks that it should be to get the seller’s attention. The most common amount is $1,000. I have advised buyer-clients to go as high as $10,000 on high end property, custom construction and/or in multiple offer situations. Larger deposits get the seller’s attention and convey that buyers are more serious than smaller deposits might.
There's a cruel twist to how the real estate downturn is playing out here in Greater Boston.
While home prices are on the retreat again, it may be actually becoming harder to find a decent home.
Rona, in this insightful post, argues the quality of homes on the market has dropped markedly over the past year or two. She's seeing too many homes in need of work or near major highways.
In fact, I'd argue that what we are seeing is a long-term problem that is actually growing more acute.FULL ENTRY
Buyers negotiate against a seller. But the seller is not the enemy. Other buyers -- real and imagined by the seller – is who will drive the price up. In some markets around Boston, there is strong demand; in others, there is not. Know where you are shopping. If there is lowered demand, there is more room for negotiation, since real competition is less likely, so phantoms are hard to conjure.
A house is a house and it costs what someone will pay for it. Whether the seller owes 120 percent of its current value or 10 percent of its current value, the price is more or less the same. Buyers are not helping themselves by counting the seller’s profit. I frequently see buyers who have the seller’s purchase price in hand before seeing the house. I hear things like, “he’s paid only $175,000 for it, so he’ll be free to go down.” Most of the time, the buyers are looking at the sale price and not the debt level (which could be much higher.) Also, the buyers are not subtracting for improvements. It is wishful thinking that a seller will take less profit, because he has equity. Even if he financially can take less, why would he share potential profit with you if there’s another buyer who will pay more?
Knowing the point where a seller will take a loss is helpful to negotiation. If the seller is close to the bone, know where the break-even point is. Break even is a powerful anchor for sellers in this marketplace. The problem here is that break-even is an emotionally-driven number that is not always logical.
One seller will be content only if he/she can close with the initial down payment intact. Another will rationalize that they are even if they close with their initial down payment intact, minus rental cost for the period that they owned the house. Some will see break even as leaving the closing table at zero or with a tiny payout.
When negotiating against a seller, you should get an estimate of the seller’s position. Much of the debt information is available in public records. Between MLS and public records for permits, there is pretty good information about improvements. Frequently, the listing agent can get accurate information about what work the seller did, whether the seller did his/her own work or hired out, and whether there are permits.
If you can find out the seller’s motivation for the sale, this can also inform how hard you can push. A seller who is buying something else, has bought something else, or is relocating will be more amenable than a seller who could move this year or next year or sometime thereafter. Listing agents are often a font of this kind of information.
These are the most general things I can think of – that are not about the buyer’s motivations -- that help buyer’s position themselves for negotiation. Is there anything else that I missed?
Have you been frustrated by attempts to negotiate that would have been helped by this advice? What happened?
Home prices continue to fall across the country, but the pace of decline is starting to slow, ClearCapital reports.
But apparently it is a different story here in Greater Boston.
Nationally, prices fell 2.3 percent, on a quarterly basis, in May, less than half of April's 4.9 percent drop.
By contrast, the Boston area home prices fell 4.1 percent in May, landing it on a list of laggards topped by the likes of Detroit, Hartford and Cleveland.
Now that's quite a turnaround.
The latest pending sales report is out, and the Massachusetts Association of Realtors is touting the "first year-over-year increase since December, 2010."
That's technically true, but it hardly tells us what's really going on with home sales, which have been lost in the shadow of ongoing drama over the double dip in prices.
A close look at the numbers hardly points to a revival, but rather how brittle the real estate market still is across the Bay State.
Given the tumult in the real estate market, it's an option that looks increasingly attractive.
The phenomenon of buyers sitting on the sidelines, waiting for the right time to jump into the market, is hardly new, though the numbers have grown as the housing downturn drags on.
But we are now also seeing sellers cash out and and renting, instead of buying again, until the market straightens itself out.
I know at least one real estate agent in the western suburbs who attributes at least some of the drop in sales this spring to sellers opting to rent instead of buying again.
Just take jj24, a potential buyer getting ready to move from Connecticut to the Boston area with her young family. Despite a juicy corporate relocation package with all sort of perks based on buying a home, the rental market looks safer to her.
Home prices have never been so affordable, beating even the 1990s on that score.
So don't get paralyzed by the short-term fluctuations of the economy - think long-term and go out and buy that house you have been pining for.
So goes this provocative piece in this weekend's Wall Street Journal. Given the play it is getting on various brokerage websites, it is fast becoming a rallying cry for Realtors across the country.
Sale prices or assessed values, which are more accurate? Today, I indulge
Lance, who asked:
On your list… I see your point about how sale prices do not line up with assessments. Nobody ever said they would. If you’re feeling charitable, I would be curious to see the same list run against initial (not latest) asking prices for those same properties…. Please post a comparison, along with the average margin of error for both groups (assessors vs. UHS). I assume the margin of error will occur in both directions (not just on the high side) for the UHS’s listing prices given all those bidding wars happening this spring.
(Data on the next page)
Owners want their assessments low, so their taxes are not inflated. Therefore assessments need to be pegged to the low-priced end of the selling season. So it didn’t surprise me that winter sales were in line with assessed values, and spring sales were off. It also didn’t surprise me that agents do better with sticking to their original asking prices in the spring, than they do in the winter. As a buyer’s agent, I prefer winter shopping, when the asking prices are more negotiable and prices, in general, are lower.
I think you will find the asking prices cooked up by the all-knowing UHS listing agents are even more out of line with reality than the assessments.
Actually, they are about the same amount off, depending on the season. However, at their worst, both the assessor’s offices and the agents are the same as Zillow, or better.
Home prices across the state and country are on the second leg of an epic slide down.
But in Greater Boston, home prices remain stubbornly high in many towns.
In fact, a number of suburbs have seen median home prices rise - not fall - this spring.
Our local housing market has the same problem it has always had: Too few well maintained, desirable homes at reasonable prices.
So when a home in a good location, good town and in good condition comes on the market at a reasonable price, it gets snapped up.
Here are towns where prices are rising, according to records section of Banker & Tradesman, published by The Warren Group. All numbers are median home sale prices, year to date, through April, compared to the first four months of 2010.
I've broken the list into two parts - relative surprises and the usual suspects.
When I wrote about overpricing, I made these general statements, based on what I am seeing around Boston:
…demand has not dried up and the shadow supply has not swamped the inventory, leading to rapid price drops. So there is a market full of buyers who are spending what the market is still bearing, in order to get a house that suits them.
If demand has not dried up why are sales down?
Sales are down because inventory is down. Anecdotally, I would say that demand is as high this year as last, but good inventory is low in my area right around Boston. If you want a house with a view of I-95, there are some nice houses to be had, at a relatively low price. But, if you want a house to stay in long enough to make it worth your effort, the pickings are slim. The inventory is clogged with houses that are either overpriced, in need of huge upgrades, tiny, or poorly located. The ones that are well priced and worthy of living in are being sold quickly. Kihon1 bears witness to this:
I've been looking for a house for the past five months… I've seen gems of houses going for very little money, but in bad locations. I've seen other, similar houses, with water, mold, vermin, and HOLES in the walls, going for 100K over the nicer house…FULL ENTRY
… I also understand that if I buy a house that I settled for, I won't be happy in it. This is a big investment to be unhappy with in the long run. So I'll keep looking for the right house at the right price in the right area. And sellers should understand, there's plenty of potential buyers out there who are just like me.
The housing market woes just keep on coming.
Jumbo loan ceilings, which the federal government raised during the recession in hopes of boosting the ailing housing sector, are set to come tumbling down again Oct. 1.
That could have big implications for a high-cost housing market like Greater Boston, which has benefited over the past few years from the decision to boost the starting point for more expensive jumbo loans to $523,750.
That's hardly luxury real estate territory - in many upscale suburbs that would barely get you in the door.
But starting in October, we will be looking at a new, and significantly lower limit of $465,750, warns Greg McBride, a senior financial analyst at Bankrate.com.
"It doesn't help, that's for sure," McBride said of the impact on the housing market. "There are likely to be fewer qualified borrowers once those (lower) limits kick in."
Skeptical yet about all the media hype on how apartment living is the wave of the future?
If you're not, then you should be. This is a classic case of a short-term shift being trumpeted as a long-term cultural trend.
There's no debate the number of renters across the country has risen sharply at a time when foreclosures and falling home prices has tarnished the idea of homeownership.
In fact, the number of renters has grown by 692,000 each year since 2006, when home prices started falling, USA Today reports.
Yet there are some big problems with the now fashionable notion that renting is destined to become the new owning.
Reasons to be wary of the Renter Nation hype include:
One more time! The only way to know what something is worth is to use accurate recent sale data accurately. You need a Comparative Market Analysis. Anything else is folly.
Many buyers lack the skills and experience needed to meaningfully evaluate comps. But anybody with a web browser (or iPhone app) can look up a home's value on Zillow or check the assessed value online. These are the anchors that most buyers care about, far more important than asking price. So when a buyer asks why the asking price is 20 percent above both Zillow and the tax assessor, there better be a very good answer. "The tax assessor is wrong" simply doesn't cut it anymore.
The tax assessor is wrong. OK, it doesn’t cut it. It just happens to be true. I don’t have a bone to pick with tax assessors. They have a huge job to do and, at least, they set foot in houses unlike Zillow. Lance is entirely wrong that buyers care about assessed values or Zillow values. They may say they do, in surveys, but they don’t out on the streets.
Just for fun, I matched assessed values with sale price on properties that closed May 25 and May 26:
Assessed/Sale/Town corrected 3:30 5/31
Do you see a pattern to rely on here? I sure don’t.
The downturn in home prices has now blown past the previous lows set during the Great Recession, according to the latest Case-Shiller numbers.
Home prices in 18 of the nation's top 20 metro markets, including Boston, saw prices fall again in March. It marks the eighth straight month of declining home prices since the end of the home buyer tax credit pushed the residential market off the cliff.
March saw a 3.6 percent, year-over-year drop in home prices, following on the heels of a 3.3 percent drop in February.
Nationally, home prices have now slipped below April 2009 levels, the last low point of the current, and now years-long, housing downturn, according to Case-Shiller.
There are many here that will argue that all houses are overpriced. Economically speaking -- when you look at greater Boston -- they are right. The bubble has not finished deflating here. However, demand has not dried up and the shadow supply has not swamped the inventory, leading to rapid price drops. So there is a market full of buyers who are spending what the market is still bearing, in order to get a house that suits them.
Buyers, realize that lots of sellers think his/her home is worth more than it is worth. I have seen this over and over and wrote about it before.There is wishful thinking. “My house is the nicest one on the block.” “I’m in the very best neighborhood.” “Garages aren’t worth that much, so my house is worth as much as that one (with the two-car garage.)” It is part of the reason that open houses draw nosey neighbors. The neighbors can then play the wishful thinking game of “That house sold for $400,000; mine is worth $30,000 more.”
Add to that what I mentioned yesterday:
This has been a miserable spring for sellers.
Not only are sales down, but prices are down as well.
Sipping my morning coffee, I came across these numbers in the records section of Banker & Tradesman, which is published by The Warren Group, the Boston-based real estate publisher and data firm.
Market psychology is a funny thing. Just recall the foolhardy stampede last spring by buyers scrambling to close on homes in time to collect the $8,000 federal home buyer tax credit. A year later, you can get reap multiples of that as sellers slash prices, but buyers are waiting on the sidelines again. Go figure.
Here are some year-to-date numbers, which match up median prices for the first four months of 2011 with spring 2010. I note sales where the declines are significant.
Towns where sellers are feeling the most pain include:
The most successful sellers price their house near market value and draw buyers who know the market and are ready to buy. Sellers who overprice see their property stuck on the market longer and frequently sell for less than they may have.
Here’s what happens:
Suppose there are five Cape Cod houses for sale in roughly the same size, location, and condition. They are priced $349,000, $354,000, $359,000, $369,000 and $385,000. The market value of these hypothetical houses are all close to $350,000-$355,000.
People who are shopping in the $300,000-$350,000 range will see two or three of them.
Shoppers in the $350,000-$400,000 range may see most of them. Those buyers will think they are overpriced or just hate them because they aren’t as nice as properties that are really worth $360-400,000. The most likely thing these buyers will remember is why the Cape wasn’t as nice as the other houses they saw that day. Many will rule the Cape out, even though it is a nice house in the $350,000-$355,000 range.FULL ENTRY
If you really want to check out the neighbors before you buy, well Trulia is betting it has the search tool for you.
Trulia next Thursday will roll out CrimeMaps, which it bills as a service that will enable "people to view, explore and compare crime in neighborhoods across the U.S."
The initial stats will not include Boston, but data on the Hub will be coming soon, I am told.
Trulia contends its new mapping technology will let you determine which neighborhoods have the least and most crime reports, when crime tends to happen, and even the most dangerous intersections.
Of course, whether this proves to be useful or just a silly gimmick will boil down to not only what kind of information is available but how it is displayed.
I've had buyer-clients who considered houses that abut wetlands. For one of them, their closing almost got held up while the seller moved a shed (with no foundation) two feet forward to satisfy the local conservation office. If you are considering buying in a town with wetland, pay attention to what Attorney Richard D. Vetstein offers us today.
Massachusetts has one of the most restrictive wetlands and environmental codes in the U.S. Simply put you cannot do anything – not clear, cut, fill, dump (not even leaves, grass clippings or dirt), alter, grade, landscape or build upon — any wetland resource areas without a permit from your local town Cons