Tag: Boston sales outlook

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Lack of Inventory In Boston Getting Serious

My good friend, excellent agent and blogger Briggs Johnson at Coldwell Banker Residential Brokerage hits it squarely on the mark with this post which illustrates the decrease in inventory year over year and its potential effect on the market. I have posted it in its entirety below. Visit his blog. 

September 18, 2012 By 

“The Caravan Indicator”

There are several indicators and indexes that people follow to determine market conditions.  The indicator I am going to use that sparked this blog entry is  going to called the “Caravan Indicator”. What many people don’t know is that behind the scenes here at Coldwell Banker (downtown), every few weeks, we hire a bus to drive us all around town to check out new listings in Back Bay, Beacon Hill, South End, South Boston and the Seaport District etc. Its a great way for us to view new inventory and for us to be knowledgeable of the market in all price points. Today, is caravan day and it was cancelled due to lack of inventory…..Wait, What?! I can understand there being a cancelled caravan in late fall or August when everyone is on vacation, but not now, not September, not in the second week of the second strongest time of year to get new inventory. Really?

I was ready to bounce around the city and view some properties, but, since that wasn’t happening, I did some research to see how limited inventory really is. I went on MLS and looked up current inventory, the amount of listings currently under agreement and the amount of listings that have been sold in the past 2 months. The numbers don’t lie and I found them pretty shocking. Since I really only focus on the downtown neighborhoods. I used the 4 neighborhoods i do a lot of business in . Here are the Stats:

Neighborhood         # of Listings    # Under Agreement      # Sold in last 2 months

Back Bay                            104                                  57                                   124

South End                          78                                   57                                    110

Beacon Hill                        59                                  14                                      41

Seaport District               16                                  7                                        23

 

Last Year (2011)              # of Listings                          % Decrease from 2011

Back Bay                                213                                                           52%

South End                             183                                                           58%

Beacon Hill                            82                                                             28%

Seaport District                   37                                                             57%

 

The way I look at this information is that it is a great time to sell and list a property. There are a ton of buyers out there and they are in desperate need of decent inventory. On the flip side, If you are a buyer looking in these neighborhoods, be prepared to be frustrated and be ready to enter a multiple offer situation (if you are a serious buyer looking in a popular area). In the South End alone there have been 24 places go under agreement in the past 2 weeks.  If you are a buyer looking in the South End under $450k. there are only 9 places on the market and only 3 of them are north of Washington Street. If you are a buyer looking in the 800-1 million range in the Back Bay, there are only 11 listings on the market.  Six of those listings have been on the market for over 100 days, so quality is as compromised as quantity right now. If you are a Beacon Hill buyer looking from 600-900k there are only 3 listings on the market. 2 of those listings have been on the market for over 170 days. Brutal!!

I can understand that sellers are hesitant to list because there  isn’t much to move into if they sell and want to stay in downtown Boston. But if you are a possible seller looking to move out of state or to the “burbs” this could be an ideal time to make the jump.

I know all downtown agents are saying “list your property now” but hopefully some of this data, makes you think about the scenario with a different tone. Have hope and don’t be afraid to enter the market, just be informed and realistic.

Happy Hunting and Start Listing!!

 

 

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Are Buyers Bummed Out In Boston?

Scott at Boston.com comes up withe some great posts and I have posted another one below. Scott talks about a Redfin survey that finds only 46% of buyers surveyed  think it is a good time for house hunting. This is apparent as well in all anecdotal information from the field specifically in downtown Boston. The issue remains lack of good available inventory and the impact that this will have in the “nascent real estate recovery. Jon

Posted by Scott Van Voorhis  September 4, 2012 07:59 AM

So says Redfin in a troubling new survey of buyers in 19 major metro markets across the country, including Boston.

Fewer than half the buyers out there – 46 percent – actually believe it is a good time to be house hunting, according to the online brokerage firm.

That’s a big shift from the first quarter, when hopes for deals and bargains was much higher among buyers as the spring sales season approached. Back then, 56 percent said it was good time to buy, Redfin notes.

However, probably the most dramatic change is in buyers’ expectations of where home prices are headed. The number of buyers who believe home prices are headed up has nearly doubled, to 61 percent from 32 percent in the first quarter.

So what’s made home buyers so glum?

Well bidding wars haven’t helped, with seven out of 10 buyers reporting they had encountered multiple bids on at least one offer, according to Redfin.

In fact, 31 percent of those surveyed said they would back off if confronted with another bidding war, up from 28 percent this spring.

Of course, at the root of the problem is a falling supply of homes for sale, a phenomenon that has endangered the nascent real estate recovery both here in Greater Boston and across the country.

Fewer choices have meant more bidding wars, rising prices and increasingly grumpy buyers. (The Redfin survey is based on the responses of 829 buyers during the week of Aug. 16-22.)

And the stumbling economy – and all those storm clouds over Europe’s rickety banking system – hasn’t helped cheer buyers up either.

The percentage of buyers worried about the economy rose to 27 percent from 20
percent in the first quarter.

We’ll just have to wait and see what the fall selling season brings, I guess.

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analytics general info

More Evidence That Home Prices Have Hit Bottom.

Great article in the WSJ. Nick Timiraos does a great job in putting things in perspective.

By Nick Timiraos of The Wall Street Journal

In each of the last three years, home prices have increased in the spring and summer, when more people are buying homes, before giving back all of those gains and then some in the fall and winter, when activity cools.

But it is beginning to look like that might not happen this year, absent a major stumble for the economy.

Home prices in July were up by 3.8% from one year ago, the largest year-over-year jump in six years. Moreover, prices have shot up by 9.6% from February, when they registered their lowest levels of the housing downturn, according to CoreLogic CLGX +0.40% data released Tuesday.

This adds evidence to the case that U.S. home prices may have hit bottom earlier this year. Even though prices will soften in the autumn, “we have a much better supply and demand dynamic” than in previous years, said Mark Fleming, chief economist at CoreLogic.

So when people say they believe home prices haven’t reached a bottom—that this year’s seasonal gains will be wiped away by January or February of next year—here’s the relevant question: Will home prices fall by 9.6% in the next six months?

Anything, of course, is possible. Home prices fell in the winter—what Mr. Fleming calls the “offseason”—in each of the last three years to record a new low. But they have not fallen by 9.6% in any six-month span since March 2009, which was when the U.S. economy was still in recession.

That’s the good news. Here’s the bad news: While the year-over-year comparisons look good right now, the economy—and workers’ wages—aren’t growing fast enough to justify this kind of increase on a sustained basis.

Instead, the snapback in home prices in the last six months is more an indication of how prices “over-shot” over the past year. Investors, sensing deals, began buying up homes. The most likely scenario for home prices over the next year is that they may rise, but not at the breakneck pace of the past few months (and they’ll fall on a relative basis in the coming months due to normal seasonal factors).

There are other serious headwinds. It’s still hard to get a mortgage, and many households have too much debt. Millions of homeowners owe more than their homes are worth. Millions more have enough equity to sell their house but not enough to make a down payment on their next house and pay a real-estate broker’s commission.

As we’ve written many times before, the strong rise in home prices this year owes as much to sharp declines in inventory as it does to demand-side improvement. Banks have been much slower to take back and list foreclosed properties, easing pressure on home prices but leaving a bloated “shadow inventory” of potential foreclosures.

These homes will weigh on markets for years, though there’s less evidence that they will be dumped on the market at once. While the shadow inventory may not lead to a big drop in prices that some have feared, it will probably keep a lid on future home-price gains.

Finally, lower mortgage rates have dramatically increased the purchasing power of today’s home buyers when compared to one year ago. Some real-estate executives are nervous that demand isn’t stronger given today’s low mortgage rates, and they’re worried about what will happen if rates rise.

The bottom line: Don’t be surprised if the all-time low in home prices is in the rearview mirror. But this doesn’t mean a full-on recovery is here, and there’s little evidence that the current pace of improvement can continue. For now, home prices appear to be bumping along a bottom.

Follow Nick @NickTimiraos

 

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analytics

Massachusetts July Home Sales Hit 7 Year High

Boston Business Journal by Lisa van der Pool, Broadcast/Social Media Editor

Date: Wednesday, August 29, 2012, 2:07pm EDT
Broadcast/Social Media Editor-Boston Business Journal

Massachusetts single-family home sales rose nearly 27 percent on a year-over-year basis in July, according to The Warren Group.

A total of 4,979 single-family homes were sold in the state in July, up from 3,922 during the same month last year, marking the highest level of sales volume in July since 2005.

Between Jan. 1 and July 31, 26,596 homes were sold in Massachusetts, a 24.8 percent increase over the same period in 2011.

“There are a lot of good signs pointing toward a real estate recovery,” said Cory S. Hopkins, editorial director of the Warren Group. “But we are comparing sales to a very depressed market last summer, so it’s important to step back and realign expectations.”

Condo sales also increased in July, rising 34 percent over the same month last year. A total of 1,994 condos were sold in July, up from 1,487 from July 2011, the Warren Group reported.

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Call It A Comeback?

Tara Steele is the News Director at AgentGenius, a terrific real estate blog, covering real estate news, technology news and everything in between. Below are excerpts of  one of her recent posts asking the questions:  Are lowering inventory levels good or bad for housing? Are reduced sales a good sign or not? Is housing recovering, or are these just signs of life? I have posted about the shrinking inventory levels and how this is pushing up demand and prices. It’s a great question to ask. While it is a positive development that inventory is being absorbed, especially foreclosures, the lack of good inventory which is required to to fuel a recovery is an issue.

Is it time to call it a comeback?

Housing has had some recent signs of health, causing a frenzy in traditional media outlets who are calling a comeback for housing, but is it too soon? When a coma patient who has been nearly beat to death opens one eye, no doctor would call the patient recovered, rather showing signs of hope for a potential recovery some day. As housing has been beaten to a pulp and opens one eye and two or three indicators show improvement, many are desperate to cling to hope that everything is recovered, but that just is not the case, and pushing that idea that everything has recovered is unhealthy for those looking for the recovery. Let’s just say that the moment anything backslides, the overly enthusiastic commentators and their following will feel slighted.

At AG, we are not calling it a comeback, in fact, you’ll see with the positive reports coming out of housing recently, we say as much in the first few lines, so that when good news is delivered, there is a huge “but” on the delivery.

Economist, Dr. Kolko weighs in

We have noted that while some economists are allowing themselves to get worked up by tiny signs of life, Dr. Jed Kolko, Chief Economist at Trulia.com agrees with us that the good news should be taken as part of the whole picture, not independently as a sign of recovery.

Yesterday, the National Association of Realtors (NAR) reported that home prices have risen, but inventory is tight, explaining the lowered sales numbers.

Dr. Kolko agreed that the sales data reflects the tightening inventory, as it fell 24.4 percent year-over-year, telling AGBeat that “Although sales increased year-over-year, they’re only 35% of the way back to normal. The June sales level of 4.37m is much closer to the worst of the recession (3.77m in Nov 2008) than to its long-term normal level (5.5m).”

“The shrinking supply of foreclosed homes drives the drop in inventory and sales,” added Dr. Kolko. “The share of distressed-home sales fell from 30% one year ago to 25% in June. Sales of homes priced under $100,000 in the West – which includes lots of distressed homes — fell 36% year-over-year.”

Low inventory levels: good or bad?

Dr. Kolko notes that while inventory feels tight when compared to recent years, “it’s actually only slightly below normal levels. ‘Normal’ inventory is 2.5m, which is roughly 5-6 months of supply when sales are at their normal rate of 5.5m. Now, inventory is 2.39m, which is very near ‘normal’ but way below the elevated level of the past few years.”

Many are enthusiastic about inventory levels, but who does it benefit, and does it hurt anyone? Dr. Kolko said, “Tight inventory is good for some and bad for others. Tight inventory hurts buyers, helps sellers, and hurts real estate agents and others in the industry who depend on sales for their income.”

“Tight inventory is a necessary step on the road to recovery,” said Dr. Kolko. “As prices start to rise, buyers get impatient but sellers want to hold off. Longer-term, rising prices will encourage new construction and lift homeowners above water, both of which will bring more homes onto the market and increase inventory. But inventory has to shrink first before it expands.”

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Boston Condo Prices Set Record… And A Scarcity Of Units Ensues!

Yesterdays Boston Globe article follows for those who didn’t see it. It is all the buzz!… and for good reason.

Globe Staff / July 24, 2012
Condominium values in Boston’s core reached a record high during the second quarter of this year as eager buyers drove up sales, according to data­ scheduled to be released Tuesday.
The median price in a dozen downtown neighborhoods — they include Beacon Hill, the Fenway, the North End, and South Boston — climbed to $515,000 during the three months that ended June 30, according to LINK, meaning half sold for more than that price and half for less. That topped the previous peak of $498,500 in 2008, just prior to the nation’s financial crisis. LINK, a Boston company, tracks the downtown condominium market.
The increase adds to mounting evidence that the state’s housing market is on the mend, housing specialists said.

“The feeling out there is prices are not going to soften anymore,” said Barry ­Bluestone, the director of the Dukakis Center for Urban and Regional Policy at Northeastern University. “We are seeing the real signs of a recovery in the housing market.”

Even during the worst years of the real estate industry’s decline, condominium prices in some of Boston’s more desirable areas fell only modestly, putting the local market in a better position to rebound. Prices and sales were propped up by higher-income homeowners who were hurt less during the recession, as well as by the increasing popularity of urban living coupled with limited inventory, housing specialists said.

“The city attracts young and old by providing fun and beauty, art and restaurants, all without needing a car,” said a Harvard University economist, Edward­ Glaeser, author of the book “Triumph of the City.”

Trisha Collins McCarthy, president of the Massachusetts Association of Realtors, said many condominium buyers like the idea of trading long, congested commutes for city conveniences. “We have more of a population that has said, ‘I want to be near the train,’ ’’ she said.

After dropping for a couple of years, downtown condo prices started to climb in 2010. This year, that growth has been bolstered by continued low interest rates and improving consumer confidence, according to housing specialists.

Condominium sales volume was up sharply during the second quarter of this year, to 1,051, or nearly 36 percent more than during the same three months of last year.

The median sale price of condominiums in luxury buildings — those that offer amenities such as concierge and valet services — also climbed.

The $779,000 median closing price for the luxury condos was 7.8 percent higher than during the second quarter of 2011, LINK said, compared with 7.5 percent higher for the all of the Boston neighborhoods measured by the company.

The number of luxury condo sales during the past three months increased by 22.2 percent to 198, the company said.

Statewide, single-family home values remained essentially flat in June, at $331,000, compared with June 2011, while the number of sales increased by 18 percent to 5,099, according to William Raveis Real Estate, Mortgage & Insurance. It is based in Shelton, Conn., but also does business in Massachusetts.

Even though more people are signaling they are ready to buy a condominium in Boston, real estate agents say they struggle to find enough units to show. Only 531 properties were available in the downtown area on the last day of June, about half the number up for sale on that day in 2011, LINK reported.

Eddy Foley, 45, said he has spent six months looking for a South End condominium priced in the $500,000 range. He found one he wanted, but lost out when someone else bid $34,000 over the asking price.

“It’s torture out there,” Foley said. “There’s really nothing available.”

Carmela Laurella, president of the Boston-based real estate company CL Waterfront Properties LLC, said condominiums priced reasonably are selling quickly.

Indeed, sales on the Boston waterfront jumped by 72.7 percent in the second quarter, compared with the second quarter of 2011. The median price for a waterfront condominium increased by 21.2 percent, to $827,000, LINK found.

“We have more demand than we have property to sell,’’ Laurella said. “We can barely list anything without it going under [a purchase agreement] within a couple of weeks.”

John Ranco, a senior sales associate with Hammond Residential Real Estate in the South End, said times have changed so drastically that real estate agents are now searching to locate interested sellers rather than wary buyers.

“The supply side is really hurting,” Ranco said. “There is a tremendous amount of pent-up demand.”

Jenifer B. McKim can be reached at [email protected]. 

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analytics general info

The Goode and Farmer Report – Boston Q2 Update

The Big Number is 16%. That’s the increase in condo sales in Boston as of June 30. Combined, all Boston neighborhoods saw a 16% increase in the number of condo sales year to date, a 2% increase in the average price of a condominium sold, and a 5% increase in the median sales price. Put together all this good news is more evidence that while not necessarily out of the woods, this real estate market is healthier than most. The one downside to this exceptional sales activity is that inventory levels of available condo’s for sale have fallen 38% to 1,177 properties for sale versus 1,903 at th is time last year.

Boston’s most expensive neighborhood the Back Bay,  saw a 30% increase in sales while the average price  of a condo sold dropped by 11% to $1.162M. The inventory level of properties for sale dropped 31% to 168 condos for sale vs 242 last year.

The South End saw a 24% increase in the number of condo sales to 264 properties and  the average price of a condo sold increased 1% to $684K. The inventory of condos for sale decreased 45% from 208 to 114. Unless this condition corrects itself this will be a factor in market performance going forward.

South Boston, the darling of the my last market report moderated somewhat with a 4% increase in the average sales price to $408K and a 12% increase in sales to 235 properties sold through the second quarter. South Boston has the largest drop in inventory of all downtown n’hoods down 56% from 225 properties for sale last year to 99 available for sale today.

Every downtown neighborhood has it’s own story and most are positive excepting the inventory numbers. Total Boston numbers highlight the good news. Sales volume is up 19% to $1.080B… One Billion, 80 million dollars! Average days on market are down 12% and the inventory of properties for sale is down 38%.  These numbers highlight incredible short term performance but portend serious issues going forward.

 

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Low Inventory Pushing Prices Up In Boston?

Scott Van Voorhis  did a great post on declining inventory levels finally driving up prices in Boston.  I have excerpted the post below. The numbers are staggering in many of the markets shown.

Boston has landed near the top of a list of major metro markets across the country where low inventory appears to finally driving up home prices.

Boston comes in No. 11 on the report, having seen the number of homes on the market drop 37 percent over the past year, as of June 19, according to a new report by Movoto Real Estate. (Movoto is an national on-line brokerage whom I am certainly not endorsing but who did an interesting report). During the same period prices of homes on the market in the Hub have risen 11 percent to nearly $300,000.

Here’s an excerpt from Movoto’s report.

We are seeing a gradual increase in the prices of homes in areas that have been most affected by low inventory. This could be an indicator the housing market has finally pulled out of its slump. We’d like to think so.

Here are the two relevant sets of stats taken from the Movoto report. The first shows declining inventory levels in Boston and other major metro markets across country.

  • Las Vegas, down 66 percent
  • San Francisco, down 65 percent
  • Miami, down 62 percent
  • Fresno, down 52 percent
  • Oakland, down 50 percent
  • Long Beach, down 49 percent
  • Seattle, down 42 percent
  • Mesa, down 41 percent
  • Phoenix, down 41 percent
  • Portland, down 41 percent
  • Boston, down 37 percent

The second set of stats, also from Movoto, shows the rise in list prices in these same cities.

  • Las Vegas, up 52 percent
  • Phoenix, up 30 percent
  • Mesa, up 25 percent
  • Miami, up 23 percent
  • San Francisco, up 23 percent
  • Austin, up 22 percent
  • Oakland, up 17 percent
  • Seattle, up 14 percent
  • Fresno, up 13 percent
  • Long Beach, up 12 percent
  • Boston, up 11 percent

Combine more buyers with fewer sellers and prices start to go up.

That tried and true  economic law of supply and demand is always the reason why prices go up or down. As I say repeatedly… Empirical data does not lie.

 

 

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Boston Condo Inventory Down 32%

The supply and demand dynamic is firmly in place in downtown neighborhoods with not enough property for sale relative to buyer demand. Taking all Boston neighborhoods together, condominium inventory is down 32% from the same time last year – from 2,010 properties for sale last year to 1,360 today. In the South End there are 129 condos for sale versus 205 on the market last year at this time,  a 37% decrease.

Linda Ciborowski, a top South End agent with Coldwell Banker Residential Brokerage, sees two very interesting developments as a result of these depressed inventory levels.  Linda says, “Anything that shows well, is in good condition and in a desirable location sells with amazing speed. I’ve noticed two interesting things that make it even more important to be working with a good broker.”

“Brokers who don’t know the market are pricing properties too low based on old comps or too high based on false expectations. Initial pricing just seems more important than ever.”

 “Appraisals have become very difficult since the properties that have closed in the past 6 months don’t reflect the prices that new listings are going under agreement for due to prices being driven up by low inventory.”

In the Back Bay today there are 171 condos on the market compared with 240 last year. That’s a 29% decrease. In South Boston 145 condos are listed for sale compared with 232 last year, a 37% decrease. Reports are that there are not a lot of listings in the pipeline. Hopefully, we will see a surge in listing activity through the end of April and into May.

This low level of inventory poses a few issues for the strengthening real estate market downtown. The first being that inventory is needed to sustain the strong beginning to the spring market. The second is that high demand and low inventory creates what some may consider “irrational exuberance.” I don’t believe it is irrational. These conditions “on the street” have created this excitement… and the excitement is real!  Just ask any buyer who has missed out on a property or talk to any agent who has dealt with 40 people at each of their Sunday open house. It is exciting… and we will keep our eye on the market as we move into May.

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Real Estate This Week. Buyers Jump In!

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.