Bill Patterson's Boston Real Estate Blog

US Housing’s Journey to The Bottom, FIN?

Business Week has reported that US Housing has hit the bottom and is coming back up. Via its Bloomberg arm, Business Week is saying that the worst is behind the US housing market. We can expect foreclosures to continue and we can expect some ups and downs but the worst is behind us.

You can read the original article here.

While this is old news for the Boston real estate market, it is welcome news for the rest of the state and remainder of the country. While most have been worried about an overabundance of inventory due to rampant foreclosures, our Boston market has been a desert. Inventories are lower now than any previous spring for the past 3+ years and show little sign of spiking. Facts are, most homeowners are more influenced by the national news than they are by the local news. In a case like this, the tail will wag the dog. They will wait on the sidelines until the Evening News gives the green light. However, it’s the local markets that lead the national markets when it comes to trends, and real estate sets this rule in brownstone. Here’s why:

Factors that drive local markets
Jobs.  Unemployment in Mass has been dropping now for over 2 years and things are going quite well. For real estate to be strong, job markets need to be equally strong. While the entire state may not be doing wonderfully, the Boston Metro is in the midst of a Golden Age of job creation, neighborhood development and new home construction

Natural Wonder.  Boston, and the state, have an abundance of natural beauty. From the re-born Harbor in Boston, the Emerald Necklace, to the now clean Charles River, Beaches, Mountains, the Cape, etc. These are all things that push value towards the positive.

Public Transportation.  Even though the MBTA is, undeniably, a complete mess it continues to be a major draw for those entering the Metro area. Desire for proximity to trains is a major factor when it comes to deciding on location. Comment - it would behoove the State to back the MBTA if it’s interested in growth in tax revenues. Employees for local businesses (small to multi-national) rely and depend on the busses, boats and trains for commuting and recruitment. If Mass plans on having a world-class city in its capital, it would be well served to significantly upgrade existing rail newtorks and eradicate the operating deficits and debts with State money. The city rides on the back of the T and the T needs to ride the back of the State. It’s obvious. More employees, more business = more tax revenues for the State to spend as it sees fit. This is to be considered an INVESTMENT - not a line item or cost. While public education is not a direct revenue creator, it is understood as an investment that will lead to greater overall revenues. Public transit needs to be viewed the same way. Profit and Loss is no way to evaluate our schools, we need to also realize its no way to evaluate our transit system. Business requires investment, and our State Govt is indeed a business. We need to accept this and act accordingly.

Major Employers / Universities. This feeds into factor #1 and is very important. Anyone who has lived in a town where the major employer has left can tell you that the major employers are a very big deal. In Mass, BU, Harvard, MIT and UMass are 4 of the 10 largest employers in the state. Universities are stable, large, and drive innovation and raise capital for their locality. The Boston Metro has an overabundance of these which, in turn, has driven our local economy for over over 100 years. Universities provide stability, innovation, a high turnover of residents and large corporate investments.

There are other things that can drive value but the above 4 are critical and are powerful engines for local growth. As they generate steam, the cities they populate thrive. As those cities thrive, they gain in value and push value to surrounding suburbs (particularly those with strong public school systems). Boston has been ahead of the curve for a very long time now. We lost very little value during the economic downturn and we are now poised for exponential growth.

Now, with the rest of the US healing - expect more growth in local real estate soon.

The Spring Market is Looking to Throw a Complete Game

“Offers due by Monday at 7 PM”  ”Offers due by Tuesday at Noon.”  ”All offers to be reviewed Tuesday evening.”  ”MULTIPLE OFFER NOTIFICATION. Please submit your best-and-final offer by Thursday for final review.”

Welcome to the new spring. Sparse listings, a flood of buyers, cash being thrown around like apple seeds. The marketplace for real estate in Boston has exploded. Attend an open house in Boston, or Somerville, or Cambridge, or Newton, or Brookline, or Medford or anywhere inside of 128 and you will see the same thing…..  a ton of people. This is not a hot neighborhood phenomenon (like the South End 2 years ago) or an “Investment Property” phenomenon, this is EVERYTHING AND EVERYWHERE. Buyers are swarming and real estate is flying off the shelves.

Just about every buyer on this market has missed out on at least 3 properties that they were “sleeping on.” Wake up, stretch, grab a coffee and open the MLS to see “UAG” Man!!!!! It is happening all around and if you are looking for a house, I bet it has happened to you too.

PRESSURE
The intense pressure of this large buyer pool (armed and ready with a pre-approval or certification of funds) on such a small listings pool has pushed the prices of just about everything up. Condos, up. Single families, up. Multi’s, up. Investment property, up. So far, the only place in the market that has been unaffected is the million dollar and up market. But, be sure of this… that will go up very soon too.

Days on market, when compared with last year at this time, are down significantly. Inventory of homes are down (by half in some locations!) Unemployment just dropped locally again and rents have spiked by 8-15% depending on your source of numbers. It only stands to reason that the demand is far outpacing the supply.

PROPERTY OWNERS ARE IN THE DRIVER’S SEAT
Right now, property owners are in a very unusual position. If they want to sell, they can be sure to get quick feedback and will be able to sell at a very quick pace. If they want to hold (and rent) they can be sure to be getting the best rents they have seen in a decade. It’s a nice position to be in and it is sure to last for quite some time. However, those owners who plan on holding and renting should be keeping an eye on the big developers as thousands of residential units come on line in the next 2-3 years. Just about every one of these units will be rentals.

Boston Globe - Housing at 1990’s Prices

Today’s Boston Globe has reported that, when considering inflation, today’s housing prices are at levels not seen since the 1990’s. While this does not seem to be the case in the Metro Boston area markets, it is obviously the case when looking outside of 128.

The surprising thing is this does not take today’s record low interest rates into account.

So, the real cost of housing might be at a low not seen by this generation of homeowners… ever?

Meanwhile, days on market, an indicator of how aggressive the buyers are, are plummeting. Listings are selling with multiple offers in the first week (or day) of being on the market. The amazing thing is this is happening in all neighborhoods in the Metro area. The Boston buyer is hungry for listings and those sellers that can sell right now are reaping the rewards. 

If the big banks start lending again…. look out! Prices could make a double digit percentage jump when compared with last year’s prices.

Boston Real Estate, Today’s Market Snapshot

Market Snapshot
Over the past 11 months, the Boston area’s real estate market has shown consistent improvement.  Sales in each of the past 11 months have bested their mark from the previous year as prices have remained stable or risen in nearly every neighborhood. Meanwhile, available inventories continue to be bleak and the buyers are desperate to find a good match that suits their needs.

When looking at the Boston Metro marketplace of condos (All Boston boroughs, Cambridge, Somerville and Brookline) you can see that inventory has dropped by nearly 1,000 units - while days on market have shrunk considerably.

Condominium On-Market Snapshot. Boston, Cambridge, Somerville, Brookline.

These statistics match the empirical evidence that industry professionals have been giving for some time. Inventory, or lack of it, is strangling the local market. While it may be true that the foreclosure glut has flooded the US market with an overabundance of vacant homes being sold by banks, it has not been the case in the Boston Metro. Sellers in today’s Boston market have been getting multiple offers on their homes. Prices are on the rise, buyers are being very competitive.

Broken Record - BRA Green Lights More Units

Well… this is not a rerun but it sure does feel like it.  Last week, 4 more projects got the go ahead.  Three BRA projects got green lights and one big fenway project got the ‘all clear’.

BRA
The Boston Redevelopment Authority oversees almost all zoning issues and construction projects in the city of Boston.  Last week two major South Boston developments got the ok. One project on Melcher St.  63 Melcher will have over 34,000 square feet for residential (likely to be rentals) along with space for commercial along the ground floor and a roof-top garden space. Reports have this project hosting close to 40 units for residential use.

51 Melcher (Phase 2 of the 63 Melcher job) will feature close to 100,000 square feet for office space plus additional space for commercial uses.

49 Melcher (Phase 3 of the 63 Melcher job) will host an additional 20 or so residential units. For these 3 phases, the old Necco St garage will be rebuilt and use for parking.




630 East 2nd St in Southie is the second BRA project. This will host close to 20 condo units. Don’t be shocked if some of these units are held from the sales market and kept as rentals. With rental values so high right now, builders are happy to get on board and hold onto residential real esate.

You can read more about these BRA approved projects in theglobe.



North Station
Fresh from the Archstone Avenir’s grand opening, the North Station area is getting ready for even more residential units.  Expect a 14 story building that will host a large hotel and another 200+ luxury rentals.

The BRA and the North Station projects will break ground this fall.



The Fenway
An enormous development project was given the ok last week by a judge. Zoning issues held up a large development that would be built over the Mass Pike.  This will add to the proposed development of the Howard Johnson location which will include over 175,000 square feet of residential space.  Please read Galen Moore’s excellent piece on this project in the Boston Business Journal.

South End, What Will It Cost Me!?

Housing. Some say that it is an investment, or that it’s simply the cost of keeping a roof over your head.  Either way, it’s sure to cost you something. So, South End….. what’ll it cost me!?

Rental - 2 Bedrooms
Median Rental on Market Today - $2,600.
 
Piano Craft Guild Apartments is a beautiful historic building, where you can choose from a number of innovatively designed loft-style apartments. Surrounded by luxurious spaces, sunlight, and wonderful views, you’ll find unlimited possibilities to reflect your lifestyle. Enjoy our central location, enclosed scenic courtyard, and the friendly service of our on-site management. Discover the many ways to make Piano Craft Guild Apartments your home. - Open Listing

Condos - 2 Bedrooms
Median List Price Today (Under $1M)  - $682,000 (5% down, 4.5% interest / 30 years - $3,300)
 
Bright & spacious, fully renovated South End duplex offers 2 full floors of easy living. Garden level features Chef’s kitchen with sleek SS appls and countertops, Gaggenau cook-top, Miele oven, Bosch D/W, half bath with laundry. Kitchen opens to expansive living area with direct access to patio and parking! Upper floor is home to elegant master with 2 closets, en-suite bath, large 2nd BR, full guest bath and grand entry foyer. Pet friendly, A/C and extra storage. Steps to Flour, Toro & Stella! Denise Fisher, Gibson Sotheby’s International Realty. 617-455-5919

Back Bay / Beacon Hill… What Will it Cost Me!?

Housing. Some say that it is an investment, or that it’s simply the cost of keeping a roof over your head.  Either way, it’s sure to cost you something. So, Back Bay / Beacon Hill….. what’ll it cost me!?

Rental - 2 Bedrooms
Median Rental on Market Today - $3,650
 
Great beacon hill location. Boston Luxe Real Estate. 617-267-4600

Condos - 2 Bedrooms
Median List Price Today (Under $1M) - $756,000 (5% down 4.5 % interest / 30 years - $3,630)
 
Fantastic sq footage and gracious details in this 2 full bedroom condo in the heart of Back Bay…and Parking available too! New kitchen made to enjoy with all Viking appliances, plenty of crisp white cabinets & black granite counters. Open living with fireplace & warm wood mantle, wainscoting. Bath has separate tub & shower, 2nd bath possible. Parking: $73k to buy direct tandem, $350/mo to rent direct tandem garage. Stable bldg in great condition. Stellar comm roofdeck with amazing views! Kathleen Alexander, Keller Williams Real Estate. 617-794-1253

Somerville - What Will It Cost Me!?

Housing. Some say that it is an investment, or that it’s simply the cost of keeping a roof over your head.  Either way, it’s sure to cost you something. So, Somerville….. what’ll it cost me!?

Rental - 2 Bedrooms
Median Rental on Market Today - $1,700

Brookline - What Will It Cost Me!?

Housing. Some say that it is an investment, or that it’s simply the cost of keeping a roof over your head.  Either way, it’s sure to cost you something. So, Brookline….. what’ll it cost me!?

Rental - 2 Bedrooms
Median Rental on Market Today - $2,200
 
Spacious garden level 2 bedroom apartment in the Washington Sq neighborhood of Brookline. Apartment features a huge unique living room with hardwood floors throughout. Updated kitchen with granite counter tops and newer bath. Huge bedrooms (easily fits a Queen size bed. Heat and hot water is included with the rent. MBTA stop close-by! - By Owner, Dean. 617-821-3686

Condo - 2 Bedrooms
Median List Price Today - $541,000 (5% down, 4.5% interest rate / 30 years - $2,600)
 
Coolidge Corner…QA Victorian, quintessential charming 1330 sq ft , 1- 2 BR + 1 ½ Bath condo on desirable one way tree-lined street. High ceilings, bright spacious living room, dining room and eat-in kitchen. Flexible floor plan with sunroom, built in bookcases, ample closets and storage. Large fenced shared yard, garage parking and 1 outdoor space (not tandem) . Private storage in Bsmet, Pet friendly. Exterior recently painted. Town is registered as 2 BR…currently used as 1BR + guest rm. - Faith Loeb, Hammond RE. 617-699-3642

Single Family (2 Bedroom)
Lowest Price Today - $549,000 (5% down, 4.5% interest rate / 30 years - $2,700)
 
Total renovation in 2011 with high quality finishes. Granite counters, tumbled marble in baths, Andersen windows,hardwood floors, skylights and stainless steel appliances. Walk to the park, Jamaica Pond, T and stores. Great condo alternative. - Robert Kohler, Kohler Real Estate. 617-510-9378

Cambridge - What Will it Cost Me?

Housing. Some say that it is an investment, or that it’s simply the cost of keeping a roof over your head.  Either way, it’s sure to cost you something. So, Cambridge….. what’ll it cost me!?

Rental - 2 Bedrooms
Median Rental on Market Today - $3,000
 
Second floor, open-layout condo located in one of the most attractive and prestigious neighborhoods in Cambridge. Seconds to the busy city life in Harvard Square or serene jogging paths along the Charles. Thoughtful and modern design includes a brick, wood burning fireplace and an open living/dining space with hardwood floors. Sun enters the room from three different angles making for an enjoyable space all hours of the day. Stainless kitchen with the works including a pass through window that doubles as a breakfast bar. Large closets in both bedrooms. Private covered patio with access to yard space and grilling area. Attached garage parking is included for one car. 2 minute walk to the Red Line. Central A/C - Advantage Realty, Charles Smith - 561-846-1146

2 Bedroom Condo
Median List Price Today - $580,000 (5% down, 4.5% interest / 30 year fixed - $2,800)
 
Across from Harvard & Lesley U’s; steps to great local shops & restaurants, the Common & Harvard Sq; Open plan layout, impeccably maintained & updated condo; a perfect full time or pied a terre residence; true wood burning fireplace; customized closets; double ended galley kitchen with updates, pass-through & mini breakfast bar; included in sale: all attached lighting, storage, appliances, laundry, window treatments; in other words just move in! Onsite superintendent; good reserves. Louise Olson, Coldwell Banker - 617-844-2755

Single Family (2 Bedroom)
Median List Price Today - $500,000 (5% down, 4.5% interest / 30 year fixed - $2,300)
 

This house has it all! Parking, central air, extensive storage and more in Kendall Square. Semi-attached townhouse with antique wide plank pine flooring, gas fireplace, recessed lighting throughout, vaulted ceilings in bedrooms with skylights, 2 full baths including en-suite, brick/cobblestone driveway and mahogany deck. Short walk to dozens of hot new restaurants including Area Four, Catalyst, Bondir, and Firebrand Saints. Minutes to the MBTA Red Line, MIT, Charles River and Downtown Boston. Nate Hinchliffe, JT Fleming & Company - 508-344-0920