The Boston Real Estate Blog

Recently I attended a panel discussion put together by WBZ News Radio titled œThe Rebounding Real Estate Market. The panel featured, among others, Barry Bluestone, the Dean of the School of Public Policy and Urban Management at Northeastern University and Kevin Sears, the President of the Massachusetts Association of Realtors. The following are some of the more important points from my notes:

Question: Is the Massachusetts real estate market on the rebound?

• Although nationally the economy, especially the jobs market, is still in tough shape, here in Massachusetts we have added 30,000 jobs so far this year.
• According to the Warren Group and the Case-Shiller Index prices in Massachusetts, both for condominiums and single family homes, stabilized at the end of last summer.
• Foreclosures are slowing and we appear to be at the beginning, state-wide, of a rebound.

Question: What does the aging population of Massachusetts really mean?

• Between now and 2018 Massachusetts will add 244,000 additional residents over the age of 55.
• Recent trends in housing indicate they will sell off their large suburban homes and opt for planned communities outside of Boston and for condominiums in downtown Boston.

Question: Was the recent real estate buyer™s tax credit effective?

• In Massachusetts we have now seen 10 straight months of increases in the number of sales.
• Likewise, we have witnessed 6 consecutive months of price increases. April ™10 over April ™09 saw a 7% increase to $295,000 in the median statewide sale price. For the city of Boston for the same time period that number rose to $440,000.
• This spring market we have witnessed a 46% increase in the number of sales over last spring.
• In a word, YES, the credits were effective!

Question: What effect is a rebound in the real estate market having on the economy?

• Currently there are 30,000 homes for sale in Massachusetts
• For each sale economists estimate that $57,000 are added into the economy by way of realtor fees, furniture sales, renovations, etc.
• The effect of these sales will thus be very positive news for the economy.

Question: Are mortgage rates going to rise soon?

• Rates should remain at or new historic lows for most of this year.
• Current instability in the European economy is keeping rates down.
• But this will not last forever and we can expect interest rates to rise in the coming year.

Question: Is this a good time to be buying and selling in Massachusetts?

• Prices in Massachusetts are stable to rising depending on what local market you are in.
• Rates are at or near historic lows.
• There is available inventory.
• The general economy and the real estate market are on the rebound.

Conclusion: Waiting to get into the market would be a mistake!

The next time you know someone thinking of buying or selling in the greater Boston market call or email me. I promise I will take excellent care of them!

Boston Real Estate “ 2010 Q1 ReviewPositive news continues suggest that we are indeed through the worst of the Great Recession which began in December of 2007. It is hard to believe that it’s been so long! On Friday the government reported that the economy grew for the third straight quarter in a row. Gross domestic product (GDP) grew 3.2% in Q1 2010. If we look back one year to Q1 2009 GDP had fallen a staggering 6.4%. What a difference a year makes!

Nationally home prices have started to inch up along with the economy. In February of this year, for the first time since December 2006,the S&P/Case-Shiller 20-city index posted a year-over-year gain. Compared to February of 2009 same home sale prices rose 1.6%. 9 of the 20 homes in the index showed gains, with Boston (defined as the Greater Boston Metropolitan Area from the New Hampshire border to Braintree) posting a gain of 1.8%.

So how have we fared in the city of Boston itself? Considering that we are comparing the current Q1 2010 to the worst quarter of the recession a year ago, quite well indeed. Boston™s housing market often leads the nation in both downturn and recovery.  We were one of the first to peak in 2005 and now appear to be leading the way on the road to recovery in 2010. Although unemployment and foreclosure rates remain stubbornly high, we are making progress on the road to recovery.

Let™s take a look at the data. We start foremost with sales activity comparing Q1 of 2009 to that of 2010.  Sales volume in most of Boston™s neighborhoods are up dramatically. Citywide, there were more than 41% more sales!

While frustrating for buyers, low inventory levels continue to support a balance between supply and demand.  Although the economy is recovering, given the uncertainty in the jobs market, many people have postponed trading up. As a result, inventory levels continue to decline. Citywide, available inventory is down about 10%.

Many of Boston™s neighborhoods realized modest price appreciation in Q1 2010.  While South Boston saw a decrease caused by foreclosures and short sales, and the Waterfront suffered in the comparison this quarter because there were not the same level of sales of new luxury product this past quarter compared to a year ago, Citywide the average sale price increased more than 19%.

Looking at the median, rather than the average price reveals that prices have held up rather well. Median price is the mathematical point where ½ of the sales data falls above and ½ of the data falls below. Again, note the exception of the Waterfront for the reason stated above. Citywide the median price rose over 13%.

The average price paid per square foot rose across the board. Citywide the average price paid per square foot rose 10%.

Average days on market increased by roughly 8% Citywide. Some neighborhoods, especially the Waterfront, saw dramatic increases in the time it takes to sell a property.

Summing it all up it is safe to say that the downturn that started in the middle of 2005 has turned around. Anecdotally Q2 2010 seems even busier and more robust Q1 2010. It remains to be seen what effect the expiration of the tax incentives will have on the numbers for the balance of the year. Interest rates are likely to remain low as demand for US Treasuries continues to increase given the recent difficulties in Greece, Spain and Portugal.

The next time you know someone thinking of buying or selling in the Boston area call or email me. It will be my pleasure to help them. Here™s to a great year in 2010!

Cheers.

Last week I had the opportunity to attend a lecture given by Lawrence Yun, the chief economist for the National Association of Realtors (NAR). The tone and substance of the lecture, and the question and answer session that followed, were actually quite upbeat. While some may be skeptical of his optimistic outlook given that he works for NAR, Yun had credible stats and data to back up his assertions. What follows is a redaction from my notes.

Nationally the housing market has been in a recession for the past 4 years. In the latter half of 2009 the first time buyer $8,000 tax credit provided a boost. This uptick in the market stalled, however, in December because the credit was set to expire. Now that Congress has extended and expanded the credit Yun predicts another rise in the number of transactions. As it currently stands a buyer has until the end of April to sign a purchase agreement and until the end of June to close the deal. If the buyer is a first time buyer the credit is $8,000. If the buyer is a trade-up/down buyer and owned for 5 years the credit is $6,500. (Consult your accountant for details and restrictions.)

Yun estimates that 2 million people used the credit in 2009. In 2010 Yun predicts that an additional 2.4 million people will use it. Yun further predicts that year over year 2010 will see a 15% rise in the number of transactions with a 3% to 5% rise in price. Yun believes that prices over corrected on the way down and that there is value to be had. So  even once the stimulus expires, with prices stable to rising, the fence sitters will make their move given that rates are going to have to rise.

What happened in 2008 was, according to Yun, equivalent to the 100 year flood. The melt down was caused by a combination of lax regulation, interest rates that were held low for too long, Wall Street which was overly aggressive in selling the collateralized mortgage products and fraudulent lending practices.

Most of the recovery has been in the lower and entry market segment. While the Fed has been buying conforming mortgages, thus keeping rates low, there is no secondary market for jumbo loans. Thus banks require a 20% to 30% down payment and higher rates since they have to keep the loans on their books. Yun predicts that as the balance sheets of the banks continue to improve, they will slowly make more Jumbo loans on more favorable terms.

In the white hot market prior to the bust national inventory levels were at 3 months. At the worst point during the correction the inventory rose to almost 12 months! Now it is 6 months, which according to Yun is a œnormal market.

Comparing the number of existing homes sold in 2009 we are at the same number as we were in the year 2,000. The main difference is that the population has increased by 30 million! Yun posits that there is a lot of pent up demand. All the people who have moved back with their parents, or gotten housemates, roommates etc., are bursting at the seams. Furthermore, Yun indicates that in the year 2000 there were only 11 million renters who qualified to purchase a median priced home. In 2009 there were 16 million. As the economy recovers, these renters should enter the market.

As for distressed sales in 2009 there were 3 Million. In 2010 there will be another 3 million. Yun predicts that as the renters and fence sitters come out this year they will eat up this inventory of distressed properties, thus keeping the market in balance.

Finally, a few predictions Yun made were:

1.                                                   As the fed eases up on its purchase of mortgages rates will rise to 6% by then of 2010.

2.                                                   GDP will be up 2.8% for the year 2010.

3.                                                   Unemployment will slowly come down over the course of the year. And

4.                                                   55% of all housing purchases will be first time buyers in 2010.

So, the next time you know someone thinking of buying or selling in the Boston area give me a call. I promise to take excellent care of them!

Now that the holidays are behind us it's a good time to take a look back at 2009 and then focus our attention on the opportunities 2010 will afford us.

There's no doubt that 2009 was a difficult year for many. And it's nice to see it finally in the rear view mirror! While the start of 2009 was nothing if not hideous by whatever standard you measure it, there was clear evidence of an economic turn around in the second half.

Here are a just a few items of positive news which indicate it's now a good time to be in the real estate market, whether you are thinking of buying or selling:

• The Consumer Confidence Index, which had increased in November, rose again in December.  The index now stands at 52.9 up from 50.6 in November.

• GDP is expected to grow 3.0% in Q1 2010.  As a point of reference, GDP fell by 6.4% in Q1 2009.

• In November 2009, pending home sales rose nationally for the 9th consecutive month.

• For November 2009 the Massachusetts Association of Realtors reported that single-family home sales were up a record 63.1% compared to November 2008.  Condominium sales also hit record levels going up 76.2 percent compared to the prior year.

• The number of single family homes put under agreement in Massachusetts in November 2009 was up 15% compared to the same time last year.

• The inventory of single-family homes in Massachusetts as of November 30th, 2009 decreased by 15.0% compared to November 2008, which translates into only 6.5 months of inventory.  This is down from 12.2 months of inventory last year, and 7.1 months in October.

• The federal government extended the Home Buyer Tax Credit to grant up to a $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

• 30 year fixed mortgage rates averaged 5.14% nationwide as of December 31st, 2009.

• Amended underwriting guidelines for FHA loans now offer buyers the opportunity to purchase with as little as a 3.5% down payment.

I see opportunity and possibility here. Are you ready to move on with your plans? Do you know someone who should consider buying or selling? Give me a call!

I hope you find this information helpful and intriguing. I'm always available to discuss how I might be of help to you and your friends.

After much anticipation the Federal Housing Administration (FHA) has, effective December 7, 2009 made adjustments to its underwriting guidelines. The new rules will expand the number of properties eligible for FHA loans.

The great advantage to FHA loans has been that for qualified applicants and properties the minimum down payment has been 3.5% as opposed to 10% or 20% for conventional non-FHA loans. The tricky part has been that many properties, under the old guidelines, simply did not meet the criteria. That had been especially true in the historic neighborhoods of Boston where many condominiums are in associations that only have 2 or 3 units.

Here are some of the more important changes:

• Under the old guidelines the association had to have 4 or more units. Now an association with 2 or 3 units qualifies.
• Under the old guidelines the required owner occupancy in the association was 51%. Now it is 50%.
• Under the old guidelines the maximum amount of commercial space was 20%. It has now been increased to 25%.
• Whereas new projects were ineligible under the old guidelines, now FHA, with extensive documentation up front, will give loans on new construction projects.

The House Financial Services Committee is, however, considering a couple of adjustments that would make it more difficult to obtain a FHA loan. There are some who feel it is too easy for buyers to qualify for the FHA loans and feel that the applicants should have more œskin in the game. One proposal is to increase the minimum credit score from the current 620 to 640. The other proposal is to raise the down payment from the current 3.5% to 5%. These proposals have not been enacted. So stay tuned!

With the new guidelines in effect, many more properties in the South End, Beacon Hill, Back Bay, South Boston and Dorchester are now eligible for FHA loans. Given that mortgage rates are hovering at all-time lows of about 5%, that the first time buyer tax credit has been extended, and further that Congress has expanded the credit to include trade-up buyers we should have a busy market this winter/spring. And today the IRS issued a guideline that under some circumstances if a parent is co-signing on the loan for a child the child can get the full $8,000 tax credit, although the parent would not be entitled to claim one. Good news indeed!

Who is the next person you know thinking of buying or selling in the Greater Boston area? Give me a call or email me and I will be sure to take excellent care of them.

According to the National Association of Realtors existing home sales surged in October to the highest level in more than 2-1/2 years. NAR reported today that existing home sales rose 10.1% last month to a seasonally adjusted annual rate of 6.1 million units

Sales activity of existing homes, by far the largest segment of the market, is the highest since February 2007, when the annual rate was 6.55 million.

Most economists attribute the gain to an influx of buyers seeking to capitalize on an $8,000 tax credit that the Obama administration made available for qualified first-time home buyers. The credit, originally scheduled to expire at the end of November, has recently been extended to April 30 and expanded to include more home buyers.

Most who follow the market closely feel that we are likely to see a decrease in the volumes of sales of existing homes until Spring at which time the numbers should climb back up.

In another good sign for the market the available supply of inventory has dropped to 7 months. The caveat here is that more foreclosed homes will come on the market, tending to push up the available supply.

Remember all markets, like politics, are local. Whenever you know of someone looking to buy or sell in the greater Boston area be sure to email or call me. I promise to take excellent care of them!

The U.S. Congress has approved a Bill that extends and expands the first-time home buyer tax credit which was set to expire at the end of November. The bill extends the first-time home buyer credit to contracts signed by April 30th and closings completed by June 30th. Furthermore, income limits are expanded to cover more affluent buyers; couples earning up to $225,000 and individuals earning up to $125,000 annually now qualify.

The Bill also creates a new trade-up tax credit of $6,500 for buyers who have owned their current home for at least five years. The credit is applicable to homes worth up to $800,000. The same income caps for the first-time buyer credit apply to the trade up credit ($225,000 for couple and $125,000 for individuals).

President Obama is expected to sign the Bill as early as tomorrow. According to the National Association of Realtors about 1.4 million first-time homebuyers qualified for the credit through August. According to NAR about 350,000 of them would not have purchased their homes without the credit.  The extension and expansion should make for a more robust Fall and Spring market. With mortgage rates at historic lows there is opportunity out there!

Who is the next person you know looking to buy or sell real estate in the Greater Boston area? Call me, I promise I™ll take great care of them!

Sometimes I come across fun little factoids about our local real estate market here in Boston. Today I discovered that the Greater Boston area is the fourth-safest place among the largest 40 cities in the U.S., according to a ranking by Forbes.

The rankings take into account each city™s 2008 levels of violent crime, workplace fatalities rates, traffic death rates and natural disaster risk. So despite the bad rap we Bostonians get for being aggressive (crazy) drivers, we can™t be all that bad!

The Boston-Cambridge-Quincy statistical area ranked 10th in violent crime and fifth in workplace fatality rates. Greater Boston had the best ranking when it comes to traffic-related fatalities and ranked 28th in natural disaster risk.

With 4.5 million residents, the area was the largest metro included in Forbes’ top five safest cities. So, whenever you know of someone thinking of buying or selling in the Greater Boston area you have two things to tell them. First, according to Forbes, Boston is a safe city. Second, you know a great real estate broker and his name is John O™Connor.

Sales of existing homes in September posted the largest monthly increase in 26 years as buyers scrambled to cash in on the first-time home buyer tax credit. Sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million last month according to the National Association of Realtors.

Nationwide sales are up almost 24 percent from their bottom in January, 2009. Prices, however, continued to be dragged down by foreclosures and short sales. The median price last month was $174,900, down almost 9 percent from $191,200 a year earlier.

But looking back at the last 4 months we can see an upward trend. According to the Case-Shiller Home Price Index of 20 cities, home prices rose for the fourth month in a row during August and suffered a smaller-than-expected annual drop. Prices in the index rose a non-seasonally adjusted 1.2% in August.

In a further sign of a stabilizing market, the inventory of unsold homes on the market fell about 7 percent to 3.63 million – less than an eight-month supply at the current sales pace.

Nationally, prices could fall further because rising unemployment leads to more foreclosures. The jobless rate, currently at 9.8 percent is expected to rise as high as 10.5 percent next year, causing more people to fall behind on their mortgages.

Here in Boston we seem to be doing better, quite a bit better, than the national average. In Massachusetts the unemployment rate is 9.3%, half a point lower than the national average. Next year the Massachusetts economy is expected to grow by 2%, faster than the national prediction. And while Massachusetts lost 4% of its jobs, the nation lost 5% of its jobs.

Although the performance of the Massachusetts economy may not seem all that much better than the national economy, there are some key differences which indicate Massachusetts will pull out of the recession sooner, and in a more meaningful way than the rest of the nation. Our mix of industries (technology, health care, biomedical and financial services) is expected to lead the recovery (as opposed to automobile, heavy manufacturing, and construction which will lag). In fact already this year Massachusetts companies are reporting strong increases in sales.

With respect to the housing market the story is rather similar. City-wide the median sale price comparing, Q3 2009 to Q3 2008, is only down 5.43%. But in some neighborhoods the median sale price for the same period is actually up. In the South End, for example, median sale price posted a 3.55% gain.

So far so good. It looks like we have seen the worst of it here in the greater Boston area. There is light at the end of the tunnel. It will be most interesting to see how we fare in Q4 since it was in Q4 2008 that we saw the start of the 6 month precipitous decline that began with the collapse of Lehman Brothers. Stay tuned!

And in the meantime please do not hesitate to call or email me whenever I can help you, a client or a friend with a real estate need in the greater Boston area. I promise to take excellent care of them.

Those who follow my blog know that I generally post on the conditions of the real estate market here in Boston. I often analyze national trends in the economy that have bearing on the real estate market. I hope you all find the information useful.

When I’m not blogging what I do is help my clients buy and sell real estate. So . . . here are two great new homes in Boston that I am marketing. Click on the link for a virtual tour and all the relevant information.

50 Berkeley Street, No. 5 for $419,000   http://www.visualtour.com/applets/flashviewer2/viewer.asp?t=2022365&sk=36

20 Concord Square, No 3 for $219,000   http://www.visualtour.com/applets/flashviewer2/viewer.asp?t=2022340&sk=36

Let me know your feed back. I look forward to hearing from you!