Tag: Boston luxury real estate

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Boston Condo Record

WOW!

Boston Condo Goes for Record

Posted by Scott Van Voorhis

Four Seasons, luxuryboston.jpg

 

A condo sold at the Four Seasons came close to hitting the $3,000 a square foot mark.

That’s the word from Kevin Ahearn, chief executive of one of downtown Boston’s leading luxury marketing and condo sales firm.

Unit 1201 at the Four Seasons, fetched $10.5 million back in May in a quiet deal involving only a few brokers.

The final sale price weighed in at $2,908 square feet for the four-bedroom, three-and-a-half bath penthouse.

That’s the highest amount paid to date, on a per-square-foot basis, for a Boston condo, Ahearn believes.

“Big jumps in pricing are occurring,” Ahearn said. “We don’t see any slowdown, in fact we see an acceleration.”

At 3,525 square feet, the Four Seasons condo is the size of a large suburban home, but with with upper floor views of the Back Bay and Public Garden.

Given just a few months ago all the hype in the market was about a few units that managed to break the $2,000-a-square-foot mark, Boston condo prices are clearly on a tear.

The Four Season penthouse was last sold in back in the summer of 2000 for $6.3 million – some pretty decent price appreciation there.

“It is indicative of very significant upward pressure on prices,” Ahearn said.

Well you can say that again.

 

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5 Things To Know About Housing In 2014

A long but very interesting post from Housing Wire – from a national perspective – and while many of the fundamental issues do not directly reflect our local market performance…it is important to know as we  navigate our own real estate markets.

 

5 things to know about housing for the rest of 2014

See what housing insiders are saying

The future of housing for 2014 looks a lot different  than it did at the start of the year.

Either fundamentals have changed, or the evidence is getting so overwhelming that neither the most hopeful naiveté or calculating spin can cover it.

That’s not to say there aren’t bright spots, but marking the danger spots on the map is a lot more important than marking X on the buried treasure.

So here are five things to know about housing and where it’s going for the rest of 2014.

1) Luxury Sales Fly as Home Sales for the Rest Crash and Burn

Home sales among the 1%  look like they will beat last year’s numbers, and that’s about the only real bright spot in housing on the horizon, and the only thing looking positive for the rest of 2014.

Sales of the priciest 1% of homes are up 21.1% so far this year, according to Redfin. This follows a gain of 35.7% in 2013. Meanwhile, on the other side of the bridge, home sales in the remaining 99% of the market have fallen 7.6% in 2014.

It’s not that interest rates are usurious by any stretch. This is despite mortgage rates having dropped to their lowest level in more than six months. The 30-year, fixed-rate mortgage averaged 4.14% for the week ended May 22.

BlackRock CEO Laurence Fink said Tuesday that the housing market is “structurally more unsound ” than prior to the financial crisis due to its reliance on the government-sponsored enterprises of Fannie Mae and Freddie Mac.

“There are haves and have-nots, and the haves are the ones out buying,” Redfin CEO Glenn Kelman said.

2) Real Estate Investment Highly Uncertain

Concerns still linger over the state of residential investment, which contracted in both the fourth quarter of 2013 and the first quarter of 2014, as well as prices being driven up by investors rather than homeowners, and the growing affordability gap for buyers. The weak labor market means that the recovery is tenuous. Weak job growth and wage stagnation remain challenges for both housing and for the economy in general.

Federal Reserve Bank of Cleveland researchers Edward Knotek II and Saeed Zaman say there are three primary factors behind the recent slowdown in residential investment: the increase in mortgage rates since early 2013; the unusually cold winter; and a modest tightening of lending standards in the residential mortgage market.

The weather reason doesn’t really fly. As CoreLogic’s (CLGX) reported, past severe winters that have affected housing starts negatively were followed by a rebound after temperatures began to rise again. This analysis indicates there should be a rebound again this spring, but it will not be sufficient to counteract the current weakness in the market, which can’t be blamed on the weather.

Knotek and Zaman say the resumption of more normal weather and ongoing improvements in labor markets and the broader economy should allow for a rebound in residential investment. However, the researchers also note that the experiences of the past year highlight the strong interest rate sensitivity of the housing sector.

3) Investor Price Increases Push Housing Out of Reach

Home prices in the United States are just 12.8% off the 2006 peak, according to the comprehensive March home price index report from Black Knight Financial Services.

April home price data from S&P/Case-Shiller released on Tuesday, found slight increases for the month. The 10-city and 20-city composites recorded miniscule rises for March 2014, increasing .8% and .9% month-over-month.

Separately, the Federal Housing Finance Agency House Price Index found that prices continued to trend higher in the first quarter, and increased for the eleventh consecutive quarter, rising 1.3% in the first three months of 2014.

Housing affordability is being skewed by cash investors (increasingly) and institutional buyers (less so than last year) which are still accounting for almost half of all home sales. Until there is affordability, there cannot be a rise in first-time buyer participation. Which brings us to the next point.

4) Millennials Want to Buy but Can’t

DoubleLine Capital founder Jeffrey Gundlach said he is concerned that would-be young buyers are shunning mortgages even though all the evidence shows they want to buy rather than rent. So far, returning homebuyers havedominated the scene in 2014 because too many first-timers are dealing with mounting debt.

“The deferral of marriage has such a staggering impact on real estate and I just don’t think people focus on it,” said real estate investor Sam Zell, 72, whose Chicago-based Equity Residential is the largest U.S. apartment landlord. “I don’t think the multifamily market has ever had a better set of future demographics.”

Zell said he expects the Homeownership rate to drop as low as 55% from the current 35-year low, as more people delay marriage.

So what’s the good news? Now might be a good time to invest in apartments.

5) Mortgage Originations Fizzle

Mortgage originations are at their lowest level in 14 years and everyone is expecting that will only get worse as mortgage rates creep up.

Chris Flanagan, MBS/ABS strategist for BofA Merrill Lynch, said mortgage activity is going to underperform in 2014.

“We were expecting $1 trillion in gross issuance for the year (at the start of 2014.) We’re at about $200 billion now,” Flanagan said. “So we’re on track for $750 billion for the year, which is less than expected.”

He said credit remains a headwind for buyers.

“We came into this year knowing credit would be tight,” Flanagan said. “We hear anecdotal evidence that credit is loosening, but (when you consider mitigating factors to the anecdotal evidence) the end result is credit is still very, very tight.”

Flanagan said that while the FHA has lowered its threshold for FICO scores by 15 points, it hasn’t translated into increased mortgage originations.

It’s happening across the board. Bank of America (BAC) reported that its first-quarter mortgage originations fell 65% year-on-year in its earnings report. Wells Fargo (WFC) reported record net income of $5.9 billion, up 14%, or $1.05 per diluted common share, for first-quarter 2014, where as JPMorgan Chase (JPM) recorded a first-quarter 2014 net income of $5.3 billion, a drop from $6.5 billion in the first quarter of 2013.

Lawrence Yun, National Association of Realtors’ chief economist, noted in the most recent existing-home sales report from NAR, “Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point. Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”

The housing market has improved since the financial crisis, but it’s not clear how strong that improvement is, given that so much of it is supported by intense government subsidies, protection and backstops.

Even Federal Reserve Chair Janet Yellen concedes that housing is no longer helping – it is hurting the economy.

“One cautionary note, though, is that readings on housing activity – a sector that has been recovering since 2011 – have remained disappointing so far this year and will bear watching,” she said. “Another risk – domestic in origin – is that the recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery.”

Further complicating matters is the conflict between regulatory pressures at cross-purposes – a push for an affordable housing mandate versus regulatory standards for debt-to-income ratios, QM mandates and so on.

That’s where things stand as the market crosses the halfway point on the calendar year.

Anthony Sanders, distinguished professor of real estate finance at George Mason University, sums up the problem by taking a step back from the details.

“True, credit is tighter than during the housing bubble, but average FICO scores on closed loans has been dropping,” Sanders says.“But the problem remains a slow recovery for the middle class in terms of employment and income. Of course, The Fed could speed up tapering and allow rates to rise (cutting off cheap funding sources to investors). As it stands, house prices are rising while affordability for the middle class is shrinking.”

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Upscale Towns – Falling Prices

Interesting post by Scott. The $1M+ market in Provincetown which is anchored by single family homes is performing somewhat differently with rising average sale prices but with fewer properties selling. Watch for a post this week on $1M + sales year to date.

Upscale Towns, Falling Prices

Posted by Scott Van Voorhis

After some torrid increases, home prices are taking a hit this spring in some upscale suburbs and urban neighborhoods across Greater Boston.

The elite top of the market, such as the Lincolns and the Cohassets, are doing just fine.

That is, with the exception of Cambridge, where sales of single- family homes are off 30 percent so far this year, while prices are down more than 20 percent, according to The Warren Group, publisher of Banker & Tradesman.

Rather, it’s that larger tier of affluent towns where signs of trouble are starting to pop up.

Just take Medfield. Curt Schilling recently slashed the price of his seven bedroom, 26 acre spread to $2.5 million – a cut of $500,000 – after years of on-and-off attempts to find a buyer.

But right now the one-time Red Sox star is chasing the market down, with the median home price in Medfield having fallen more than 5 percent this spring, to $545,000. (Check out an evening view of the Schilling homestead below – looks rather cozy for a 7,890 square foot manse.)

0430-curt-schilling-medfield-home-38-studios-rhode-island-1.jpg

A look at the latest Warren Group numbers for April is rather revealing. Other examples include:

Hingham: The median home price has dropped more than 9 percent, to $567,500, while sales are off 21 percent.

Orleans: Sales in this mid-Cape tourist town, home to Nauset Beach, were choppy to say the least, dropping by more than 35 percent. But that’s nothing compared to the median sale price, which plunged 41 percent to $432,025.

Carlisle: The median home price fell more than 10 percent, to $590,000, while sales are off nearly 39 percent.

Amherst: While sales were up, prices fell more than 8 percent to $312,000.

Newburyport: Sales were down 15 percent, while the median price fell more than 5 percent to $465,000.

Charlestown: The median price dropped by nearly 14 percent, to $645,000, while sales were off by 16 percent.

 

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S&P/Case-Shiller: Greater Boston Values Up 10%

Good article by Chris Reidy below. November S&P/Case-Shiller numbers certainly forecast year end figures we have been reporting of Boston neighborhood sales prices up an average of 8% in 2013. The most important result of this good news is in the last paragraph which does follow what we are hearing and experiencing in the field. Sales are moderating and even declining in some neighborhoods while prices do continue to rise.

S&P/Case-Shiller: Greater Boston home values up nearly 10 percent

By Chris Reidy / Globe Staff / January 28, 2014

Home values in Greater Boston rose 9.8 percent in November on a year-to-year comparison basis, according to a report on the US housing market issued Tuesday by the S&P/Case-Shiller Home Price Indices.

The widely watched indices tracks repeat home sales around the United States.

The Boston area’s annual rate of 9.8 percent for November represented an improvement of 1.2 percentage points from the previous month. In the 20-city universe that the indices track, Boston was one of nine cities where values accelerated on an annual basis.

From October to November, home values in Greater Boston rose 1.3 percent on a seasonally adjusted basis, the S&P/Case-Shiller Home Price Indices added.

The November report included a statement from David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, commenting on the latest US results.

“Beginning June 2012, we saw a steady rise in year-over-year increases,” Blitzer said. “November continued that trend with another strong month although the rate of increase slowed.”

The Warren Group and the Massachusetts Association of Realtors are expected to issue separate reports on the state’s housing markets later this week. Those reports will focus on Massachusetts home sales in December.

In reporting on November sales, Warren Group chief executive Timothy M. Warren Jr. stated: “This has been a banner year in local real estate, but one with a focus on rising prices. The sales volume growth has been more restrained and now we see a modest decline. We’re seeing the same thing in Massachusetts that the rest of the country is experiencing: a slight slowdown in home sales, driven by increasing interest rates and tight supply.”

Chris Reidy can be reached at [email protected].

© Copyright 2014 Globe Newspaper Company.
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Goode and Farmer Report – Boston October 2013

Most Boston neighborhoods are showing a very real trend as we look at third quarter sales. The sales increases we have seen quarter after quarter are moderating. Average sales prices continue their upward trend and average days on market are plummeting. In all Boston neighborhoods combined the average total days on market has decreased an average of 47% in 2013. The number of available condos for sale has decreased an average of 6% from this time last year. Inventory numbers are at a record low of 686 condos for sale in all Boston neighborhoods.

All Boston neighborhoods combined saw an 8% increase in the average sales price of condos to $592K from $544K last year. The total number of condos sold increased 6% to 3,599 units from 3,407 last year.

The Back Bay saw a 9% increase in average sales price to $1.215M but a 9% decrease in sales from 402 in 2012 to 365 this year. The inventory of available condos is equal to last year as 73 condos are available for sale.

The South End saw a 12% increase in the average sales price to $772K from $687K in 2012 and a 15% increase in the number of sales to 463 from 427. Inventory of condos for sale decreased 13% to 63 from 72 last year.

South Boston experienced a 10% increase in average sales price to $463K from $420K. Available condos for sale increased by 54% to 88, the largest and only increase in inventory in any Boston neighborhood. The number of sales increased 4% to a total of 489 from 471 last year.

The outlier neighborhood is Beacon Hill which saw a 21 % decrease in unit sales to 110 from 139 last year but did see a 12% increase in average sales price to $892K. Average days on market decreased 57% to a Boston low of 30 days! There are only 21 condos available for sale on The Hill.

The moderating number of sales as well as the crazy decrease in days on market…shows that inventory is of course the problem. While the market continues to show resilience, declining inventory levels are beginning to impact sales as is evidenced on Beacon Hill and Back Bay.

 

Boston Q3 chart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We will watch the fall market closely for the effect of declining inventory levels. The addition of many units for sale in South Boston is one positive sign, and we will see what develops going forward.

 

 

 

 

 

 

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More Sticker Shock In Boston

 

A recent post by Scott regarding prices and inventory levels in Boston and suburbs.

Coming this fall: More sticker shock

Posted by Scott Van Voorhis  September 9, 2013 08:34 AM

Welcome to fall, traditionally the hottest time for home sales, barring spring.

And brace yourself. After a small breather in August as the market slowed down a bit during vacation time, the fall is likely to bring another round of crazy price increases and bidding wars for scarce homes.

Here’s a Globe piece from an old friend of mine, Jay Fitzgerald, which offers a preview of the fall market.

More than 60 towns and urban neighborhoods have already blown past previous price peaks set in 2005 at the height of the housing bubble, the story notes, citing stats from The Warren Group.

And who’s leading the price charge? Well, if you haven’t already guessed it, it is the usual suspects, “desirable Boston neighborhoods and close-in cities and towns such as Arlington, Brookline, Cambridge, and Newton,” Fitzgerald writes.

Here’s a quote from a frustrated buyer interviewed in the piece.

“I always expected high prices,” said Rich Garfield, 31, a software engineer now renting in Somerville’s Davis Square, “but our agent told us right off the bat that everything we looked at would go higher than the asking price, and that’s exactly what has happened.”

If you have lived in Greater Boston for a decade or two, you might be wondering whether the crazy cycle of skyrocketing home prices is starting all over again.

If so, your right, and here’s why.

Here’s Fitzgerald’s piece again:

Mark Zandi, chief economist at Moody’s Analytics, a forecasting firm, said longer-term factors are also at work. Massachusetts has a decades-old history of dramatic run-ups in housing prices precisely because not enough new housing is built to meet demand, said Zandi, who has closely followed the New England economy.

A combination of scarce land and sometimes contentious permitting at local levels has inhibited home building in the state, he said. “It’s ultimately a supply problem.”

 

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5 Reasons To Sell Now

I couldn’t have said it better, and I reiterate that I rarely post “Buy Now”, “Sell Now” articles, but this succinctly outlines the reasons why…and with a national perspective.

Selling a House? 5 Reasons You Should Do It Now

by THE KCM CREW

five fingersMany are talking about why now is a great time to buy a home. Today, we want to look at why it might also be an opportune time to sell your house. Here are the Top 5 Reasons we believe now may be a perfect time to put your house on the market.

1.) Demand Is High

Homes are selling at the fastest pace since November 2009 when the market spiked in response to the home buyer tax credit. The most recent Existing Home Sales Report by the National Association of Realtors (NAR) showed that monthly sales increased over the same month last year. Total sales have been above year-ago levels for 22 consecutive months. There are buyers out there right now (buyer traffic is 31 percent stronger than a year ago) and they are serious about purchasing.

2.) Supply Is Beginning to Increase

Total housing inventory is rising. Many expect inventory to continue to rise as more sellers escape the shackles of negative equity. Selling now while demand is high and before supply increases may garner you your best price.

3.) New Construction Is Coming Back

Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. These ‘shiny’ new homes will again become competition as they are an attractive alternative for many purchasers.

4.) Interest Rates Are Rising

According to Freddie Mac’s Primary Mortgage Market Survey, interest rates for a 30-year mortgage have shot up to 3.98% which represents a jump of more than ½ point since the beginning of the year. Even those trying to be the voice of reason on this issue are projecting higher rates. For example, Polyana da Costa, senior mortgage analyst atBankrate.com said:

“Rates are unlikely to keep going up so quickly and should remain below 5%.”

Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

5.) It’s Time to Move On with Your Life

Look at the reason you are thinking about selling and decide whether it is worth waiting. Is the possibility of a few extra dollars more important than being with family; more important than your health; more important than having the freedom to go on with your life the way you think you should?

You already know the answers to the questions we just asked. You have the power to take back control of your situation by putting the house on the market today. The time may have come for you and your family to move on and start living the life you desire. That is what is truly important.

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Inching Towards Normal

Interesting post from Inman. “56% of the way back to normal”.  I’ll examine in a future post relative to our local markets.(Cute barometer.)

Trulia: Housing market inching closer to normal

3 key indicators 56% of the way back to pre-bubble levels
Inman News

Inman News Staff Writer
Apr 23, 2013
Trulia housing barometer.

The housing market continued to trudge towards a recovery in March, with rising construction starts and falling foreclosure and delinquency rates bringing market conditions closer to those of a balanced one, according to Trulia’s Housing Barometer.

The barometer summarizes three key housing market indicators — construction starts, existing home sales, and the delinquency-plus-foreclosure rate — looking at how current conditions compare to those recorded at the depths of the housing crisis and those recorded before the housing bubble.

Trulia noted that while existing home sales dipped slightly from February to March, they were up 10 percent from a year ago. Residential construction posted a 47 percent annual gain in March, and the share of mortgages in delinquency or foreclosure fell to 9.96 percent, down a full percentage point from the same time last year.

As a result, Trulia’s Housing Barometer puts the housing market at 56 percent of the way back to normal in March, compared to 54 percent in February and 33 percent a year ago.

This month’s improvement is even better than it looks, said Trulia Chief Economist Jed Kolko, because of a shift of sales from distressed to conventional and early signs that the inventory crunch may be easing, which would bring some relief to would-be homebuyers.

– See more at: http://www.inman.com/2013/04/23/trulia-housing-market-inching-closer-to-normal/#sthash.TaipRQUa.dpuf

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Amazing Year-To-Date Sales In Boston

Stunning figures. In all Boston neighborhoods combined, year-to-date as of May 31, the average selling price for condominiums is up 12% to $542K. The number of condo sales is up 19% to 1,443. Total dollar volume is up 20% to $782,000,000. The number of condos available for sale is down an amazing 65% from the same time last year, from 2,132  to 1,293 condos for sale today.

The story continues to be inventory, yet the number of sales in downtown Boston neighborhoods is up markedly or at least even with last year, except in Dorchester where the number of sales was down 17% and where inventory was down 36%.

2 Commonwealth Ave $1.43M

 

In Back Bay the number of condominium sales is up 27% to 166 sales against 131 last year. The average sales price is down 7% to $1,154K and inventory is down 34% to only 174 condos on the market as compared to 264 last year. The total dollar volume of condominium sales year to date in the Back Bay is $191M.

 

 

 

 

40 Worcester St, 1B/1B, $439K

 

In the most popular Boston neighborhood, the South End, the number of sales is up 25% to 186 against 149 last year. The average sales price for a condo year to date is equal to last year at $678K. The unbelievable story in the South End is that the inventory of properties for sale is down 49% to 122 from 241 last year.

The pressure on existing inventory is acute. The fact that we are seeing both a substantial increase in sales units and a substantial decrease in inventory for sale has created an uncomfortable balance between buyer engagement and frustration.

 

 

 

26 Danforth St., 3B/1B, $380K

 

Jamiaca Plain is experiencing the same dynamic as the South End. The average condominium sale price year to date is $363K, a 4% increase from $348K last year. The number of sales has increased 33% to 120 from 90 in 2011. The number of available condominium properties for sale is 96, a 41% decrease from 162 available last year.

 

 

 

 

529 E 8th St, 2B/2B, $463K

South  Boston, our “other” hot neighborhood saw a 27% increase in the number of sold properties to 183 versus 144 sold last year. The average selling price for a condominium year to date increased 3% to $412K from $399K last year. The number of available condos for sale decreased 57% to 112 against 261 last year at this time.

In most downtown neighborhoods the sustainability of high sales numbers in light of the huge decreases in inventory levels poses a real challenge for market balance. As always market forces will come into play. We have begun to see this in the increases in sales prices. Barring a substantial increase in inventory this trend will continue.