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Boston Prices Soar

Interesting fact from Trulia that Scott reported on Boston.com

Boston proces soar while the suburbs lag.

Posted by Scott Van Voorhis, Boston.com

Home and condo prices in Greater Boston’s suburbs rose a solid 6.1 percent over the first five months of 2013 compared to the same period in 2012, real estate portal Trulia reports.

But Boston home and condo prices blew that number away, rising 10.1 percent during the same period.

While price increases in the cities are outpacing the suburbs around the country, Boston is in a league of its own, right along with New York, where prices are also on a tear.

“The difference makes it among the biggest gaps in the country,” Jed Kolko, Trulia’s chief economist, commented in an email.

Yet despite or maybe because of the rising city prices, the suburbs are seeing markedly faster population growth.

While urban areas saw their overall population rise by .36 percent, the suburbs grew much faster, by .56 percent, Trulia reports.

Leading the upward charge in prices are “high-rise neighborhoods,” as well as ethnically diverse neighborhood and zip codes with a significant percentage of same sex couples.

Needless to say, such diversity is for the most part the monopoly of urban areas right now – a pattern particularly evident in Greater Boston. Our suburbs, for the most part, are the opposite of diverse.

Neighborhoods where no particular ethnic or racial group makes up the majority saw prices rise 14.3 percent. And in neighborhoods where same-sex couples account for more than 1 percent, prices rose a staggering 16.5 percent.

It does make you wonder whether the cities and suburbs are getting ready to change places now, with rising urban prices pushing anyone who can’t afford elevated prices and rents into the suburbs.

 

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Boston Condo Prices At Record High

 

Jenifer’s article today in the Globe…WOW!

Luxury units help push Boston condo prices to record

Low inventory likely to remain a factor

By Jenifer B. McKim

|  GLOBE STAFF  JULY 23, 2013

Condominium prices in Boston’s downtown market jumped to a record high in the second quarter of the year, driven by strong demand, tight inventories, and a taste for luxury, according to data to be released Tuesday.

The median price for a condo in Boston’s central neighborhoods increased to $537,950 in the three-month period that ended in June, a 5.3 percent increase from same period a year ago, according to LINK, a Boston company that tracks condo sales in a 12-neighborhood area, including the Back Bay and Beacon Hill.

That beat the previous record of $537,000 during the first quarter of 2013, according to LINK, which has been tracking local condo data since 1993.

Strong sales of luxury condos, which include services like a valet and concierge, helped push the citywide median value — the midway point between the lowest and highest sale prices — to the record. The median price of a luxury condo jumped to $1.4 million from $1.24 million in the second quarter of 2012, a more than 13 percent increase.

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Sales of luxury condos increased by 2.4 percent between April and June, according to LINK.

“We are zooming right ahead,’’ said John Ranco, a senior sales associate with Hammond Residential Real Estate LLC in the South End. Ranco said buyers “are out there in force. It is just the matter of finding the right property.”

That hasn’t been easy for many house hunters. As in the broader Massachusetts real estate market, listings have shrunk as more buyers come into the market, according to LINK, which tracks condos in the Back Bay, Beacon Hill, Charlestown, the Fenway, the Leather District, Midtown, the North End, the Seaport, South Boston, the South End, the Waterfront, and the West End.

Inventory for condos in these neighborhoods dropped in June to 328 units from 531 a year ago, a 38.2 percent drop.

The shortage of properties on the market contributed to the slight decline in overall condo sales, which fell 1.2 percent from the second quarter of 2012, according to LINK.

Kevin Ahearn, president of the Boston-based residential brokerage firm, Otis & Ahearn Inc., said he expects tight inventory will keep pushing prices in the city’s downtown market for years. There are very few new listings, he said.

“We are seeing the front end of a very big move up in pricing,” he said.

Home values throughout the Boston area are on the rise. Median sales prices for condos in Greater Boston — considered roughly the region within the Interstate 495 loop — rose to a record $422,000 in June, a 5.5 percent increase from the $400,000 value during the same month last year, according to the Greater Boston Association of Realtors, which released data Monday.

Single-family homes also rose to a record $541,500 in June, a 7.8 percent increase from the same time last year, the association said.

Within the city of Boston, areas like South Boston and Charlestown — neighborhoods with relatively lower costs — have experienced some of the biggest jumps in condo values over the last several months as buyers are unable to find or afford properties in other downtown neighborhoods, said Debra Blair, president of LINK.

“It will be another three to five years before we have inventory,’’ she said. “That will keep pressure on prices going up.”

Jenifer B. McKim can be reached at [email protected]. Follow her on Twitter@jbmckim.

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Inventory Shortage Eases

Good national perspective on inventory levels from Teke at realtor.com.

Inventory shortages ease

Realtor.com data shows 4.3 percent growth in listings from May to June
Teke Wiggin

Teke Wiggin Staff Writer

Inventory shortages that constrained home sales this spring are beginning to ease, with the number of homes listed for sale trending upwards in June, according to realtor.com data, The Wall Street Journal reports.

The total number of listings rose by 4.3 percent from May to June, to 1.9 million homes. While that’s down by 7.3 percent from the same time a year ago, inventory was off 18.6 percent year over year in February, the newspaper said.

Real estate industry observers have speculated that home price gains might spur more homeowners to put their properties up for sale — and for builders to break ground on more new homes.

With the latest CoreLogic Home Price index showing a 12.2 percent year-over-year gain in home prices in May, the recent uptick in listings — though bolstered by a normal seasonal increase — suggests that these market reactions may be starting to play out.

“No one wants to sell at the bottom, but prices have now been rising for more than a year and by more than 30 percent in some markets — triggering some homeowners to lock in those gains, including those who have been underwater,” said Jed Kolko, chief economist at listing portal Trulia.

But while home value appreciation may be coaxing some to sell, National Association of Realtors Chief Economist Lawrence Yun said in a statement last month that growth in home supply will primarily depend on an increase in construction.

“The housing numbers are overwhelmingly positive,” Yun said about May home sales, which NAR said hit their highest level since November 2009. “However, the number of available homes is unlikely to grow, despite a nice gain in May, unless new home construction ramps up quickly by an additional 50 percent. The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth.”

A recovery in construction activity is already beginning to take hold, Kolko noted.

“Even though inventory peaks in the summer and drops off later in the year, buyers should have more to choose from next spring and summer than they had this year,” he said.

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Goode and Farmer Report – Boston July 2013

 Condos are selling 46% faster than last year and there are 38% less available for sale.

Jon photo 2There are two big numbers that stand out when looking at Boston condo sales through the 2nd quarter. In all Boston neighborhoods combined, days on market have decreased an average 46% in 2013. The number of available condos for sale has decreased 38% to 693 properties for sale from 1,123 at this time last year…and these figures are down from very low 2012 numbers! Condos are selling 46% faster than last year and there are 38% less available for sale.  How’s that for a volatile dynamic.

 

All Boston neighborhoods combined saw a 9% increase in the average sales price of condos to $605K from $553K last year. The total number of condos sold was flat at 2,007 units vs. 2,034 units. This real estate market remains relatively healthy but the continuing decrease in inventory levels is beginning to affect the number of sales.

The Back Bay, saw a 13% increase in average sales price to $1.309M but a 19% decrease in sales from 248 in 2012 to 202 this year. The inventory of available condos for sale dropped 36% to 101 units.

The South End saw a 15% increase in the average sales price to $791K from $691K in 2012, but a 4% decrease in the number of sales to 268.  Inventory of condos for sale decreased a whopping 47% to 57 from 107 last year. This will continue to be a factor in market performance going forward.

South Boston saw the largest decrease in inventory in downtown Boston. Available condos for sale dropped 53% to 46 from 98 available for sale last year. The average sales price of a condo increased by 10% to $452K from $410K last year. The number of sales dropped 1% to 245 vs 249.

Inventory remains the problem, but this market is so resilient and so desirable that declining inventory levels are just now beginning to impact sales. We will keep an eye on the very important fall market to see where this trend takes us.

 

Boston Q2 2013

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Goode and Farmer Report – Provincetown, Truro, Wellfleet July 2013

Provincetown year-to-date sales moderated somewhat from a robust 2012 first half as a shortage of properties for sale and a harsh winter kept buyers on the sidelines. Recently the market ticked up markedly as the weather improved.

Condominium sales slowed by 27% from 69 units last year to 50 this year, although a sluggish 16 sales in 1Q more than doubled in 2Q to 34. The average sales price of condos sold stayed relatively flat at $390K – a 2% decrease from $400K last year. Days on market for condominiums sold decreased by 8%; further illustrating the lack of inventory.

Single-family properties performed well with a 24% increase in the average sale price from $731K in 2012 to $905K year-to-date. The median sales price increased 28% to $867K from last years $675K – 22 have sold so far this year against 27 last year. Total sales volume was up 1% to $19.7M.

The average days on market has decreased in both categories driven by less inventory available for sale and relatively strong demand. For condos, it decreased 8% from 214 to 197 and for single-family properties, DOM decreased 22% from 253 to 197. Properties are selling faster as there are fewer on the market and demand remains very high.

Speaking of inventory, currently there are 110 condos on the market with an average listing price of $470K and an average price per square foot (ppsf) of $557. There are 54 single-family properties on the market with an average listing price of $1.411M and an average ppsf of $558.

The market has heated up in the past several weeks with several properties going under contract. The most interesting development is that two, $2M+ houses on Telegraph Hill went under contract in the past few weeks. The number of properties going U/A has increased noticeably. It has turned into summer overnight and the fourth of July has come and gone. The season is in full swing!

Ptown 2Q 2013

 

 

 

 

 

 

 

 

 

 

Other towns on the Outer Cape have experienced a similar dynamic. The number of single-family home sales in Truro was down 13% to 26 units from 30 in 2012. The average sales price was down 18% to $607K from $737K last year.

The Truro market consists mostly of single-family homes. There are currently 72 single-family properties available to chose from.

In Wellfleet, the single-family market performed better than last year with a 4% increase in the average sales prices to $556K from last year’s $533K. The number of sales was the same as in 2012 at 32 properties sold. The current 93 single-family homes available for sale offer many choices for buyers.

Truro 2Q 2013

 

 

 

 

 

 

 

 

 

 

 

There is generally positive news on the outer Cape in both single-family homes and condominiums. A strong second-home market on the Cape is an indication of an improving economy and of improving consumer confidence. These buyer and seller attitudes and still relatively low interest rates are signaling a very strong second half for outer Cape real estate.

Please call or stop in if you are considering selling or if you are just curious as to what your home is worth. If you are considering buying a home, remember that our business philosophy is that the best-informed buyers are the happiest and it is what we do best.

 

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Rising Mortgage Rates And The Housing Recovery

 My favorite Mike Simonsen of Altos Research on rising mortgage rates. 

How Much Risk are Rising Mortgage Rates to the Housing Recovery

A recovery created purely by government largess is no recovery at all.

That’s the strongest argument that our universally hot housing market is ephemeral. It’s true that the hot housing market is due in large part to federal government policy aimed at stimulating and rewarding housing demand. It’s generally a far better deal to own than to rent and the US Government likes it that way.

No place is policy more obvious than in the mortgage markets. By buying mortgages by the truckload since late 2008, the Fed has suppressed rates to ridiculously low levels. I’ve said this before, 3.4% guaranteed for 30 years? I wouldn’t give myself that loan. But this trend can’t last forever, and over the last few weeks, mortgage rates are on the rise. What happens next?

Mortgage Rates as of 2013
Average interest rate on 30-year fixed mortgage, primary residence, across 20 major US metros. Source: Altos Research

Surely this is bad news, right?

Despite recent moves, mortgages are still insanely cheap. See the above chart for the Altos Research mortgage rate monitor.

Slight moves in rates impact the re-finance application rate instantly. Refinancers are hyper-sensitive to rate moves.

For real estate purchases, consider this analysis by Dan Green at The Mortgage Reports. Rising rates cuts into purchasing power. We’ve had a 25 basis point move in rates in May. It’s a sharp move.  For some people, that will mean a 4% lower priced home. A full 100 basis point increase in rates translates into 10.75% less purchasing power.

This is all bad, right? For home prices in 2013, I’m going to argue “No.” Last week, while refinance applications fell by 12%, new purchase applications actually rose3%. The low-but-rising mortgage rate scenario results in a rush to get in while the getting is good. All of the bullish factors in today’s roaring housing market are still in full effect, so demand is strong.

Mortgage purchasing power
Home price affordability falls as mortgage rates climb. Source: The Mortgage Reports

Rising Rates to Accelerate the Housing Price Surge in 2013

A surprisingly large proportion of buyers in this housing market are all-cash buyers. They’re in the market because homes are cheap, relative to the alternative, prices and rents are rising. Real estate is an attractive place to put your cash this year. This demand cohort is unaffected by rate moves.

Low-but-rising rates actually stimulates demand for people who had not yet seriously committed to buying a home. Because we’re in a supply-constrained market, this extra demand goes right to the prices of the homes available for sale.

To track this scenario, we’ll watch supply and demand levels after June 30.  That’s the day that inventory typically peaks across the country and, for the second half of the year, the inventory is absorbed with fewer and fewer new homes listed for sale, until January 15 of the following year when everything resets.

If rates climb sharply through the end of the year, then continued price recovery in 2014 will be at risk. As of 2013, consider this yet another stimulus spike. We’ll see those leading indicators emerge in 3Q and 4Q of 2013. Altos clients see this data in real-time. Casual readers will have to wait until I get around to writing a blog post.

 

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2 Telegraph Hill Homes Under Contract.

Two beautiful houses atop  Telegraph  Hill have gone under contract in the last few weeks. Both have asking prices over $2M.  In the last 2 years only 5 properties have sold in Provincetown with prices over $2M. Four were on the water on Commercial Street and the other was on Telegraph Hill

9 Telegraph Hill which we have been marketing with an asking price of $2.295M is under contract. This is one of the most perfectly sited homes on the hill, hardly visible from the street and with expansive water views from most rooms. The house has 3 bedrooms and 3.5 baths, an incredibly large open living area with a giant fieldstone fireplace and a deck running the full length of the back of the house. The rear of the house is all glass and deck.

 

9 Telegraph living telescope  9 Telegraph Hill. List price $2.295M Pending.  9 Telegraph master bedroom 1

 

8 Telegraph Hill sits atop the Hill at its eastern tip with arguably the best views on the hill.  This is a 3 bedroom, 4 bath home of 3,510 square feet that has a listing price of $3.195M.  This property went under contract a few weeks ago and is being marketed by our good friends at Atlantic Bay Sothebys.

 

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Pretty heady stuff for the Provincetown market to have two similar and $2M+ properties sell in the same few weeks. And while these two properties are not representative of the entire market they do represent renewed interest and activity in this segment of the market.

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No Housing Bubble….Good Graphic

New….from the KCM Crew.

Housing Bubble? We Don’t Think So 

by THE KCM CREW on JUNE 28, 2013 ·

 

Bubble

 

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Are We Creating The Next Bubble In Massachusetts?

Interesting Globe article confronting the lack of housing starts statewide.

By Jay Fitzgerald

GLOBE CORRESPONDENT

It’s a scenario that would be familiar to anyone who lived through the Massachusetts Miracle of the late 1980s and the bull housing market of the last decade, go-go years of soaring home prices and tight supplies that ultimately ended badly. And if policy makers, economists, and industry officials are accurate in their predictions, history is set to repeat itself.

“We’re just going down the same old road we went [down] before,” said Brad Campbell, executive director of the Homebuilders and Remodelers Association of Massachusetts.

The housing market in Massachusetts appears trapped in a boom-bust cycle that only seems likely to accelerate. While any number of variables — interest rates, job growth, consumer confidence — influence home sales and prices, the fundamental problem for the local housing market has remained unchanged for decades: The state doesn’t build enough housing to keep up with increasing population and households.

And Massachusetts fell further behind in housing production in recent years. Even at the peak of the last boom, housing production remained well below the levels of decades ago. In 2005, about 24,500 building permits were issued for both single-family and multifamily housing units in Massachusetts, compared with more than 30,000 in 1980, according to the Commerce Department.

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By 2009, the depths of the last recession, building permits had fallen to fewer than 8,000, and in 2012, three years after the recession, building permits issued for housing units were still less than half the number of 2005. Meanwhile, the state’s population grew by more than 400,000, according to the census.

“There’s simply no question that we’re not building enough housing units to meet demand,” said Barry Bluestone, an economist and director of the Dukakis Center for Urban and Regional Policy at Northeastern University.

The expected consequences can be lifted right out of the most basic Economics 101 textbook: Supply shortages lead to rising prices.

Deborah Heffernan, co-owner of Avenue 3 Real Estate in Cambridge, recently listed a four-bedroom, single-family home in Arlington. It was under contract within six days, after 25 groups of people toured the house and three bidders drove the price to $75,000 above the asking price of about $1 million.

Another bidding war between two potential buyers pushed the price of a three-bedroom Arlington condo $22,000 above the asking price of $439,000, said Heffernan, adding that she has heard of other real estate agents fielding 10 to 15 offers for some homes.

“It’s just crazy,” she said. “You have more people vying for fewer properties today, and it’s just adding to the price pressure.”

In April, the number of single-family homes on the market in Massachusetts was down more than 30 percent from the same month last year, the 29th month in a row in which inventories were below their prior-year levels, according to the Massachusetts Association of Realtors.

Median prices for single-family homes, while still below their prerecession levels, are rising quickly. In May, the median price for a single-family home in Massachusetts jumped by 12 percent, to $324,000, compared with the same month a year ago, according to data from the Warren Group, a Boston firm that tracks real estate. That was the fourth consecutive month of year-over-year double digit increases, the fifth in the past six months, according to the Warren Group.

Rising prices, of course, are good for homeowners and the broader economy, creating wealth that supports consumer spending and a range of economic activities. But if prices rise too fast, it can create the psychology that leads to a bubble, pushing more buyers into the market and driving many to spend and borrow too much with the idea that prices will only go higher.

Eventually, as recent history shows, they don’t go higher, and the bubble bursts.

Some economists attribute recent price spikes to temporary conditions, a combination of pent-up demand from buyers who stayed on the sidelines during the recession and a reluctance by potential sellers to put homes on the market until prices return to prerecession levels.

As the market gets back to normal, inventories will rise and price increases will moderate.

But this short-term adjustment by the market won’t address the long-term issues, other analysts said.

A recent study by Bluestone and his Northeastern colleagues shows that Greater Boston alone — or Essex, Middlesex, Norfolk, Plymouth, and Suffolk counties — needed, at minimum, to add 12,000 new housing units per year from 2010 to 2020 just to meet very modest population and economic growth — a quota the region has yet to meet.

The number climbs to as high as 19,000 units per year if the region experiences stronger growth, Bluestone said.

In particular, the state needs more multifamily housing — apartment and condo buildings — to meet the demands of younger workers and aging baby boomers who increasingly prefer to live in smaller units in urban areas, Bluestone said. There’s been an increase in multifamily housing construction in the past few years, particularly in the city of Boston, but much more still needs to be done, said Bluestone.

The Northeastern study is one of the reasons why Governor Deval Patrick last fall called for a goal of 10,000 new multifamily housing units per year through the end of the decade.

Economists and policy makers aren’t just concerned that short supplies could inflate another price bubble. They also worry that they could undermine the state economy by making Massachusetts too expensive to attract and keep talented workers, particularly young workers who can live and work in other parts of the country where prices are lower and earnings go farther.

“We’ve had a chronic problem for years of high rents and high home prices, much higher than the rest of the country,” said Greg Bialecki, Patrick’s secretary of housing and economic development. “And that’s clearly pushed young people and young couples out of state.”

But such plans are all but certain to run into the same challenges that have constrained housing development for decades: a limited amount of developable land and strict zoning rules and building-lot requirements in many towns and cities in the area.

Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, bristles at the suggestion that local building rules are the primary cause of a housing shortage that makes the state a less attractive place to live and work.

“Current zoning laws are what brought people to these towns in the first place,” said Beckwith, adding that many towns can’t afford the extra schools and services associated with new housing.

But Clark Ziegler, executive director of the Massachusetts Housing Partnership, a quasi-state agency that promotes affordable housing, said something needs to change at both the local and state levels in order to avoid a repeat of the boom-bust cycle.

“The underlying problem is that nothing has changed over the years,” said Ziegler. “This is not a pattern that can and will sustain a modern economy. We need to make changes.”

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WOW! Herring Cove Bath House and Farland’s Food Too!

 

Top Photo
Work crews finish up the final touches at the new Herring Cove bath house, slated to open soon in Provincetown.Cape Cod Times/Steve Heaslip
June 26, 2013

PROVINCETOWN — The new bathhouse at Herring Cove Beach will open Saturday as summer crowds really start to arrive at the Cape Cod National Seashore’s most popular swimming beach.

The $5 million facility is a marked departure from the beige and dank 1950s-era bathhouse demolished last fall. In its place are four shingled cottages, about 400 to 600 square feet each, sitting on pilings and connected with wide decks. Each building takes care of the small things to make for a good time at the beach: changing into swimsuits, taking a quick bathroom break and downing cold drinks and food. The outdoor areas seem open and inviting enough, with broad views of the sea, that they might be a place people could gather in the evening.

“We talked about it being a destination,” Seashore Deputy Superintendent Kathy Tevyaw said as she stood Tuesday with her back to the sea, facing the new buildings, in near 80-degree heat. Workers were scrambling to complete a cedar-framed trellis that will provide shade on the decks. Benches still needed to be installed and signs hung. Shingles on two buildings are arranged to resemble a whale and a sea turtle to reflect the animal life nearby.

The upgrades are both fun and serious, according to National Park Service project manager and architect Amy Sebring.

The bathhouse — like plans for the beach’s northern parking — has been designed to withstand the effects of climate change, such as rising seas and fierce winter winds, and to allow dunes to migrate naturally. The buildings and decks have been pulled back at least 100 feet from the edge of the coast and raised about 4 feet. The modular design could make it possible to move the buildings even farther back. The posts for the trellis can withstand 150 mph winds, Sebring said.

“This will still be standing,” Sebring said with her hand on a post, somewhat jokingly, when other structures in town have been flattened.

“Structural integrity is a big agenda for the National Park Service as a whole,” she said.

The beach had 876,000 visitors in 2012, according to the National Park Service.

The Seashore received money to rebuild the bathhouse two years earlier than expected, in part because of the previous building’s poor condition, its vulnerability to heavy surf and erosion, and the need to use money that was at risk of not being available later, Sebring and Tevyaw said last fall. A plan to move the 208-spot northern parking lot back about 125 fee back and 15 feet higher will, according to Seashore officials, help protect it from storm erosion and maintain a favorite drive-up spot for the beach.

Even the food served at the new bathhouse’s snack bar has a forward-thinking vibe, with the recent launch within the National Park Service of a move toward more healthful and sustainable food. A Provincetown business, Far Land Provisions, has won a three-year contract to run the snack bar, Seashore Superintendent George Price announced Thursday in a written release. Far Land Provisions is a food store, deli, bakery and catering company on Bradford Street. The snack bar will open next week, with hours probably from just before lunch to sunset, co-owner Tom Boland said Tuesday.

“We’re very excited,” Boland said. “It’s a beautiful facility. They have done such an amazing job.” Rest assured, Boland said, the snack bar will definitely be serving hot dogs.