I will be posting regular market reports for Provincetown and Boston on my blog. Here is the first Goode and Farmer Report for year end 2011 with an update for March 2012.
Michael Ferzoco is the principle of Eleven interiors, the Interior design firm he founded in 2005. Michael’s post below starts a work in progress in the North End. Enjoy. Michael @ElevenInteriors.com.
We recently began working with a client in Boston’s North End neighborhood. Over the past 18 months he’s had a number of issues with water leaks and this past summer he began noticing mold on the walls and baseboards. Our client realized that he needed to bite the bullet and completely renovate the space to guarantee that it was sealed from the elements. The space is quasi-free standing in that it only shares a fire wall with a mirror image space. These two units each have their own private entrance from the street. They are part of a condo association that includes a multi-unit building with 8 condos. It is the mirror image of my client’s space. The unobstructed views of Boston Harbor from my client’s home are magical. The space has the potential to be a sweet, little oasis in one of the most ethnically European neighborhoods in the city.
The space feels small at 750 square feet because it’s a duplex. Yes, that’s right, just about 350 square feet of livable space on each floor in order to accommodate the stair case and entry area. The space is also awkwardly shaped with two fairly long exterior walls that actually follow the curve of the sidewalk/street. The client has lived in the space for more than 10 years without making any changes. It was originally developed in the late 1990’s. The space is so poorly laid out that whoever did it originally should have their license revoked. WOW! Talk about bad flow, bad energy, a poor use of limited space and mediocre, at best, materials. This place had everything wrong with it. See for yourself…
The big question is, how do you take a space like this and create something that’s actually wonderful to live in? Check back here from time to time to follow the transformation.
The first full week of March. Continued low inventory and strong demand has created a dynamic where inventory is selling very quickly, many with multiple offers. Pending home sales increased last month by 44% from last February as per the Massachusetts Association of Realtors. We usually start seeing an increase of market activity in early March culminating in May but this early activity is similar to what we see in a very busy mid spring market. Crazy for the first week in March.
Open houses on the last two Sundays were literally mobbed with 25 – 40 visitors at every open house. Very rarely have we seen 20 parties waiting to get into an open house on Sunday yet this scene was repeated in almost every neighborhood this past weekend.
While new proprieties are coming on the market they are selling just as quickly . The South End has 21% less condominiums available for sale than at the same time last year. Back Bay has 12% less. Beacon Hill has 41% less. South Boston has 31% less condos for sale then at this time last year.
Our office put 11 properties under agreement in the last 10 days with a volume of $11M, and listed just 10. This is happening all over the city and does not allow for any appreciable and normal build up of inventory heading into the key spring Market. Those properties that went under agreement this weekend were 524 Massachusetts Ave #3, 94 Waltham St # 6 and 343 Commonwealth Ave.
There will be several new properties listed this week that were mentioned “around the table” in my sales meeting yesterday. This activity looks promising and hopefully will begin to build some listing momentum. All are very attractive, well priced properties with prices from $499K and up. Will they stick around long? I will let you know next week.
An article by Roben Farzad in this weeks Bloomberg Businessweek illustrates a very different Miami and general South Florida real estate market than what we are used to reading about. We hear the good news of decreasing inventory as investors buy up swaths of distressed real estate to turn into rentals, but not a healthy building boom, with full occupancy predicted in a years time.
Roben writes that at least two dozen condo projects have been announced in the past 10 months. The 27-floor Bellini on Williams Island is taking orders for its 70 condos, each with elevators that open directly into the unit. The 65-floor, 1,000-unit Resorts World Miami, featuring a lagoon, casino, shopping mall, and six towers, is expected to be ready for occupancy in 2014. The Mansions at Acqualina, by local developer Jules Trump, will have 79 villas with ocean views and a 16,000-square-foot, $50 million Palazzo di Oro penthouse. Trump says the project registered $200 million in sales in its first month.
Latin Americans, Europeans, and Asians, are said to represent as much as 80 percent of new buyers in the area. At Trump Hollywood, another superluxury complex (by the Donald, and the Related Group), buyers are South Americans, Canadians, and Russians. Apogee Beach, a new Related Group condo 20 miles north of the city, presold 87 percent of its units to Argentines, Venezuelans, and Mexicans—and only 5 percent to Americans, the developer says. “When we saw that foreigners were again buying condos here, we rapidly adapted,” says Jorge Pérez, Related’s chief executive officer.
Developers predict that Miami’s downtown condo market will reach full occupancy early next year, compared with 8 percent vacancy now—even as 4,500 new condos become available across South Florida. Peter Zalewski, a principal at Condo Vultures, says, “The speculator seeking riches has always been the common thread in South Florida’s boom-bust cycles,” “The only change today is the extent of foreign investors with strong currencies flooding in.”
It certainly seems like the downtown Miami and South Beach are hot again as international buyers rush to acquire pied-a-terres in what has long been considered the gateway to Latin America. Home sales jumped 46% last year, the Miami Association of Realtors reports. Median monthly rents are up 30%from 2009, according to Condo Vultures, a Miami real state consulting firm.
The Standard & Poor’s Case-Shiller Index released this week shows that Boston real estate prices are up 1.4% from our low in September 2005. Most parts of the country seemed to bottom out in the summer of 2009 and from there began a slow recovery. Many markets have now fallen below that 2009 “bottom” too, but not Boston. The Case Shiller composite of cities index shows prices decreasing 1.8% since that composite “bottom” in 2009. Hmm…so that really wasn’t the bottom in many markets.
As we fortunate folks in Boston know, we fared much better than most. Atlanta has declined another 17.2% from its low in July 2007. Las Vegas has declined another 19.3% from its ow in August 2006. On the other end of the spectrum San Francisco has increased 8.7% since its low in in May 2006.
Here is some interesting context as we try to make sense of all this analysis and what it means to us in our specific neighborhoods. At 2005 year end, which was near Boston’s historic low, the average sales price for a condo in the South End was $527K. At year end 2011 the average sales price of a condo was $656K, an increase of 14.6%. At 2005 year end the average price of a Back Bay condo was $1,038K. At year end in 2011 it was $1,045K, a .07% increase.
As you can imagine the 1.4% increase in prices from the low in Boston in 2005 represents an average of all neighborhoods. This composite average price increase is a result of the incredible variety of prices, inventory type, location, condition, and of course supply dynamics in Boston, and drives home the huge variety of buying and selling opportunities that exists today.
Michael Ferzoco is the principle of Eleven Interiors, the interior design firm he founded in 2005. Michael is a regular contributor to my blog adding a fabulous design component to the conversation. You can reach Michael at [email protected].
Given the “new economy” in recent years, most prospective clients considering a design project have had to tighten their belts. I’ve had my share of clients approach me with financial trepidation about starting a new project. They may have the finances, but they may want to implement the project in phases. And many, I have found, are also a bit leery of beginning a project without some kind of certainty that they’re budget will be honored. As professionals we owe it to our savvy clientele to “put it on the table”… to let them know exactly where they are financially at all times during the life of their project.
Budgets are a tricky conversation to have with a client. They often feel like they’re taking a leap of faith by telling a designer that they have a given dollar amount to put toward their project. I always insist on defining the budget. There can be that cat and mouse game where the prospective client explains what they want to do and then asks “how much do you think that will cost?” Well, it could cost a little or a lot, depending on how much they have available to spend! Yes, a kitchen can be renovated with Ikea cabinetry and basic granite countertops or it can be done in custom cabinetry with all the bells and whistles and Caesarstone countertops, or perhaps it’ll fall somewhere in between.
Every client’s project is important regardless of the budget. There are $20k clients and there are $500k clients….but to each of those respective clients, that’s a lot of green.
In an effort to “keep it all on the table”, I’ve always prepared a detailed budget and presented it to my clients at the beginning of a project. Inevitably, over time, that budget will change (the built-ins cost X instead of Y because they decided on a more, or less expensive, wood or finish; or they absolutely had to have those vintage chairs), but the client receives an update every week with the respective line item highlighted for their review and approval. That way, both of us can be assured that there won’t be any financial surprises at the end of the project. Good faith, all around. They share information with me and I share it with them. It makes the entire process so pleasant.
A client’s budget is the most important piece of information they can share with me. Of course, chances are highly likely that I’m going to spend it because that’s what they told me they had available to spend! But more than that, knowing the budget allows me to present clients with product that will work within that budget.
I have posted at length about the lack of good inventory in all downtown neighborhoods but specifically in the South End, of the frequencey of multiple offers, and the general need for inventory to keep the positive market momentum going.
This newly marketed property offered for sale at $1,250K by listing agent Jamie Curtis went under agreement from the open house on Sunday. It is a beautifully designed parlor and street level duplex on Shawmut Avenue with great outdoor space. There were 30+ folks at the open house. Yes, it was a gorgeous weekend, which helped with the open house attendance…again no snow and bright sunshine, but the quality, condition and location of this property drove this sale.
So far this selling season, as well priced inventory comes on the market it sells immediately, so inventory doesn’t have a chance to build up. There are still only 99 condos for sale in the South End, an 18% decrease from last year at this time. 38 condos went under agreement in the past month in the South End with an average list price of $721K.
Everyone assumes that there will be a slow build up of inventory as we move into March. It always happens. We shall see..and I will keep you posted.
The first full week of February. Still no snow! Still no inventory.
Once again the story around the table at our business meeting was the 92 condos on the market in the South End. A 22% decrease from last year at the same time. As I have said before, historically inventory is usually at its lowest level in mid winter, but this is a new low. In the $400K price range in the South End there are 15 properties for sale, only 1.75 months supply!
Many of our under agreements were products of multiple offers. Properties that are priced well are selling quickly. Properties that have been on the market for a while are getting a second looks and selling. This is the view from the street.
The real estate outlook is running parallel to the bigger economic picture. There is some momentum to the market, but it needs inventory to fuel a strong spring selling season. The general economic picture is looking a bit more positive too. A few more months of decent employment numbers and we just might be on a roll.
So far this week (it is Thursday) 6 under agreements have come in. Three in the South End, one in South Boston, one in Concord and one in the Leather District, with list prices from $459K to $1,285K. Agents are busy with buyers and sellers, and with temps in the high 40’s and low 50’s this weekend, we should see some great activity. I will give you an update next week.
Briggs Johnson is one of my agent contributors to the blog. He specializes in rentals and sales in the downtown neighborhoods. He knows the rental market exceptionally well and gives the best advice and service. He is also a very smart and engaged sales agent and one of the most affable guys around. He will occasionally bestow his wise words upon us in my blog. The post below is a great primer on the rental market and a must read. Briggs can be reached at buyrentsellboston.com or at 617-997-2720
Last Week, I got an email from a mutual friend who was trying to help his brother find a rental in the Back Bay, Beacon Hill or the South End. He was looking at rentals up to 2k and although I focus on the higher end rental market, I told him I’d send him everything up to $2100 on MLS. There were a handful of listings (10) and I got a follow up message asking me to send listings under $1600. I did a seperate search of 1000-1600 and guess how many rentals came up in those neighborhoods……ONE!! As of Feb 4th, 2012, there is only 1 rental available to the real estate agents via MLS. Now, don’t get me wrong, this does not mean that there are no rentals out there in this range, but it is a big indicator that if you are looking to live downtown under $2000 this winter, you are going to have a very tough time. Here are some key points to consider if you are in the rental hunt right about now or over the next few months.
1. Season. Winter, in general, can be Slim Pickins! Most rentals do not come on until the Spring and Summer months and the reality is that most landlords do not want to have a vacant apartment during the middle of the winter. Generally speaking, rents tend not to get top dollar in the winter and they have the potential to stay on the market vacant, (but with inventory so low right now, prices can still be on the high side). Most rentals that tend to come on the market in the Winter are “lease breaks”, the occasional “tenant at will” and condo’s that decide to turn into rentals. One thing that is important (for any season), is that most apartments become vacant when the tenant gives their proper notice. In Boston, the majority of leasses are 60 days notice and sometimes 90 days. If you are looking in February, then you should start in December. Yes, things do come up last minute, so its good to be aware, but know when its best to start your search.
2.Pets. If you have a pet, it is going to be that much more difficult. I don’t have any statistics that confirm this, but i’d say about 75% of all Boston rentals are not pet friendly. No inventory, plus pets, means even more difficulty finding a place (or a decent place). You may have to pay more than you thought, or take something a little less nice, just to find a place that will accept your pooch. If you have multiple pooches and a cat, your percentages have now been reduced even further. I remember getting a call from a desperate agent looking to help his client find a $1700 apartment for him and his 4 chihuahas. Really? I’d rather hunt for unicorns in the Blue Hills than take on that challenge. My tip for that type of renter is…well…buy a condo (if you can).
3. Open up your neighborhood search. If you won’t budge on quality and can’t find anything, open up your neighborhoods. If you start just looking at South End, Beacon Hill and Back Bay and see nothing….open it up to South Boston, Charlestown, Cambridge, Brookline etc….
4. Wait (if you can). If you have to move ASAP, then, you have to take something and bite the bullet. If you hate what is out there, I suggest only signing a lease till August 31st and start your search over again in the summer. There are few landlords that will be against this because it gets them “back on the cycle.” If you are currently in a place that has a flexible move out date than you have a better chance of finding something that better suits your taste. Things come up all the time, but really at random, so if you keep focused on whats out there you should have some luck.
5. Negotiation. If you are looking at a lease break, you usually won’t be able to negotiate on the price. You typically have to pay at least what the current tenant is paying because the owner has the current tenant in a contract and does not need to rent for less while he is currently in a contract for. If you are looking at a vacant apartment and can occupy the place almost immediately, then you have the best chance to negotiate. If you are looking 2 months in advance, then you have less chance to get something for a lesser price because the landlord will most likely try to wait out for their asking price because time is on their side, not yours.
6. Paying a Fee. If you are a renter and are working with an agent, expect to pay a fee. I love getting calls from people and say they only want to see no fee rentals. If you want no fee rentals then I suggest looking on craigslist or going straight to the management company. Most agencies will charge a fee, but i suggest at least trying to negotiate. Winter tends to be a little slow and its worth asking to see if the owner would at least split the fee. I reccommend all renters I work with, to at least try. It’s rare for owners in downtown Boston to pay the fee, but, slower months happen much more than summer months. Expect to pay a full fee in the summer months, because if you don’t, there is someone right behind you who will.
7. Doorman you ask? If you want a building with a doorman you should probably expect to increase your pricepoint. If you want a one bed in an elevator building with a gym, common roofdeck and a doorman, expect to pay at least $2300. anything under $2000 was about 2 years ago. You might be able to find something for less outside downtown Boston, but you’ll have to read about that on someone elses blog. If you are looking ar a 2 bedroom in these buildings then you are looking at the $3500+ price range. If you are looking at even more luxurious building like One Back Bay, the Ritz, 45 province, the Mandarin etc. your pricepoint has increased to a whole new level.
8. Be Flexible to view properties. I love getting the client who can only see places after 8:00PM because they work late and are 1 hour outside the city. It’s almost impossible to set up showings that late for a few reasons. 1, the other agent can’t do that late, 2, I can’t do that late ,3, the current tenant or owner won’t allow the place to be shown that late and 4, if its a leasing office, they usually close around 6pm. If that is all you can do, then know you will be even more limited and it will be frustrating for both your agent and for you. Also, if you can only see places on the weekends, that is where you will have the most competition and potentially miss out on the good ones. I notice that the people who are the most flexible, have the best results. If you can sneak out during lunchtime for the brand new listing that looks awesome, do it!!
Hope these hints help “manage your expectations” in regards to your rental hunt this winter. It’s tough, its competitive, and it’s not going to be easy. Good Luck!!
Cell 617 997 2720
The South End office had 7 under agreements this week. Our under agreements ranged from a property listed at $277K to one listed at $1,599K. Two under agreements over a million, 3 between $500K and $1M, and 2 under $500K. This excites me more than anything. There is activity in all price ranges, and from what I hear around the office there are very serious buyers out there in all these price ranges just waiting for some good inventory.
The talk remains about the lack of inventory in all downtown neighborhoods. Available inventory is at an all time low of 2.23 months in the South End, and in certain price bands there is even less. The lack of inventory and strong buyer activity is creating many multiple offer situations. This is not mentioned to gin up excitement by any means but in order to maintain this early and healthy level of activity we do need additional inventory.
Some agents are even wondering if that winter vacation is such a good idea, as there is so much going on! I say go! Engage your coverage options and take a break as this early activity is boding well for a decent and busy Spring.
We had a great “robust” office meeting talking about the need to focus on a business plan and the need to utilize all the resources available in order to execute the plan, and of course the lack of snow and inventory. We had a fun agent and friends networking night out at Game On in the Fenway on Groundhog Day. I saw a post on fb this morning saying that Puxatony Phil is not a meteorologist and what the hell does he know anyway? 6 more weeks of winter? Hope not!
That’s it from here.