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Boston home prices rise for 2nd straight month

Warren Reynolds — Wed, 28 Jul 2010 15:14:58 +0000

Greater Boston single family home prices rose 1.5% in May, according to the Standard & Poor’s/Case Shiller home price index for the Boston metro area. The increase marked the second month in a row that Boston area home prices rose.

Losses of last fall and winter erased

At 155.95, the S&P/Case Shiller Boston index now has recouped all the losses it experienced during Massachusetts’ seasonal home price lull last fall and winter. The Boston index for May stands exactly at its 18 month high set in August 2009.

Seasonal MA home price swings

Boston home prices have risen nearly 3% since March, continuing a pronounced pattern of seasonal swings in metro Boston home prices.

Throughout the last decade, every fall/winter has seen Boston area home prices recede, while during every spring/summer, home prices in Greater Boston have rebounded.

Boston home prices bottomed in 2009?

Beginning in 2005 through 2008, the overall trend in Boston home prices had been downward.

But in a notable break in the downward bias, the 2009-2010 fall/winter home price slump was very mild.

In fact, the bottom of the last seasonal market slump in Greater Boston was higher than the prior year’s low.

Uncertain outlook for home prices

Like metro Boston, many of the US metro markets tracked by S&P showed home price gains in May.

But many housing analysts pin May’s strength on a spring home buying surge amplified by a rush by buyers to qualify for the now-expired Federal home buyer tax credits.

The expert consensus seems to be that home prices across the US face an uncertain future now that the tax credits and spring home buying season are history.

Many housing prognosticators are sounding warnings of a potential second dip in home prices:

Home Prices May Soon Slide

Home Price Gains May Not Last

Experts have been wrong before

There’s a great deal of uncertainty predicting the behavior of any financial or asset market.

Some forecasts are way off target.

For example, mortgage interest rates were pretty universally forecast last winter to soar in 2010.

And those predictions were shown to be totally wrong when mortgage rates proceeded to fall to record lows in 2010 instead.

So no one knows for sure what the future will bring for home prices in Massachusetts and the US. But you can count on us to keep reporting on this for you in coming months!

Relocation home buyers back in action in MA

Warren Reynolds — Mon, 26 Jul 2010 17:58:58 +0000

There’s good news to report during the Summer of 2010: corporate relocation buyers appear to be back in action in Massachusetts.

Corporate “relos” important in MA real estate

Corporate relocations have played a major role for decades in the Massachusetts real estate market .

But relocation moves were few and far between at the height of the financial crises of 2008-2009. The uncertain business outlook meant there simply weren’t that many employers bringing employees in and out of our region.

Corporate relocations pick up the pace in 2010

But as the US economy continues to stabilized in 2010, there appears to have been a sizable rebound in relocation activity in Massachusetts, especially in the I-495 high tech corridor. That’s good news for everyone in the region.

I personally have been busy with a lot of relocation business this year, especially during July.

Intriguing tale with happy ending

There’s a good story to tell concerning two relo buyers I recently helped find a home in MA.

This couple had made a special home-finding trip from India as part of the husband’s taking a new position in state with a Fortune 500 company.

In a marathon home tour spanning several days in early July, I showed 40 + homes to these relo home buyers.

No sale

We found nothing they liked, except new construction at a development in an upscale MA town just north of the intersection Routes 95 and 495.

But the floor plan that the buyers liked cost $20,000 more than this couple comfortably wanted to pay. And the builder refused to cut a deal to get these buyers under agreement on a new construction home at the project.

The buyers felt stymied and were out of time: Mrs. Buyer had to return to India and Mr. Buyer had to leave Massachusetts to attend an out of state 2 week training session held by his employer.

Resale homes in competition with new construction

There were two resale homes at the same development that were in competition with the new construction homes by the builder.

These resale homes were priced way above the buyers’ top target purchase price.

But the competition between the resale homes and the builder’s new construction presented us with a potential opportunity: would one of the resale homes undercut the builder’s new construction prices?

Making an offer sight unseen

The buyers lacked the time to personally tour these resale homes before they left Massachusetts.

I suggested that the buyers go ahead with their travel obligations while I contact the two resale homes to see if either might want to consider selling at a price these buyers were willing to pay.

The goal was to see if we could get one of the resale homes under agreement while Mr. Buyer was at his training seminar out of state before he had to return to India in late July.

Strategy works!

One of the two resale home sellers was interested in a discounted sale price the buyers could afford.

I met the listing agent at the home, took multiple videos of the interior and drafted an offer, all of which I uploaded to my on-line file sharing account for the buyers to review and approve.

The buyers OK’d the offer which had a special clause allowing them to cancel the purchase if Mr. Buyer was dissatisfied with the home when he had the opportunity to personally visit the property in late July on his way to Boston to fly back to India.

The home seller signed the offer – a major coup for the buyers’ side!

Home inspection alone

I set up and attended the home inspection on behalf of the buyers.

The home inspector emailed the inspection report to both Mr. Buyer at his training seminar and to Mrs. Buyer in India. I helped the buyers review and understand the report via email and telephone.

Mr. Buyer loves home

Mr. Buyer got inside the home for the first time in late July and loved it.

He called Mrs. Buyer from the home (midnight her time in India) and walked through it again, answering all her questions.

The buyers will sign the Purchase and Sale Agreement next week in India and send it back to me for sellers to sign. The earnest money deposit will be made via wire transfer or electronic check.

All this was possible because the buyer trusted my judgment and agreed to make an offer on a home sight-unseen.

They got a great home at an advantageous price that substantially undercut the new construction pricing insisted on by the builder.

5 Skyline Drive Franklin MA 02038

Warren Reynolds — Tue, 20 Jul 2010 16:17:39 +0000

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Updated home for sale in great Franklin neighborhood

5 Skyline Drive, Franklin MA 02038 is a well-cared for home for sale in the Town of Franklin, Massachusetts.

Featuring a beautiful eat-in kitchen, modern baths and central air, this saltbox colonial has a lot updates that are sure to please. It enjoys a private rear yard in a wonderful neighborhood in north Franklin. Franklin, MA has a strong public school system – 5 Skyline Drive is in the Keller-Sullivan school district – the newest school buildings in town!

Finished walk-out lower level

Offering over 1400 sq ft living area, the home has an additional 700 sq ft in the finished walk-out lower level.

You’ll love the kitchen

The renovated kitchen features tile floor, quality cabinets, recessed lights and solid counter top.

Gas cooking and built-in microwave are big pluses.

Modern baths

There are 1 . 5 baths in the home.

The full bath has a marble tile floor, continuous sink, quality fixtures and new lighting.

The half bath on the first floor has a ceramic tile floor and simply sparkles!

Private yard

The rear yard is an oasis of privacy!

A gardener’s delight, the rear yard has a garden area already in place.

There’s a large stone patio and a pleasant deck.

Get inside this home

Contact listing agent Warren Reynolds to make an appointment to see this home. This is a solid value for anyone looking for quality at an affordable price!!

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Massachusetts (MA) real estate – 1st half 2010 market update

Warren Reynolds — Tue, 06 Jul 2010 23:20:20 +0000

The Massachusetts real estate market turned in a pretty good showing for the first half of 2010. Home sale volume and median home sale prices were up across the Commonwealth compared to the first half of 2009.

New video

Here’s a new YouTube video recapping MA real estate market stats and trends so far in 2010:

Future challenges to the market

The most obvious issue facing real estate across the US is whether the national economy will head into another recession in 2011.

At least the MA economy appears to be much stronger than in many other regions of the country, so there are grounds for optimism in the Commonwealth that we will do fine if the national economy muddles through any upcoming economic lulls and downdrafts.

The end of the Federal home buyer tax credit has removed an important prop to the real estate market. We need more time so how the market handles this loss of stimulation.

Advice for home buyers

Home buyers thinking about entering the market should focus on taking advantage of today’s historically low mortgage interest rates.

And you can buy a home in Massachusetts at quite a discount from what you would have paid back in 2005.

Tips for home sellers

Now is the best time to sell a home in MA in the last three years. Economic conditions are more stable and there has been some strengthening in home prices and market activity.

You’d be well advised to price your property to market and treat any and all buyer interest seriously.

What lies ahead

No one knows what the future will bring. These certainly are unsettled financial times.

However, it is all too easy to let fear prevent you from making beneficial investment decisions (on both the selling and buying ends).

The only certainly I can leave you with is this: all market cycles, both up and down, end at some point.

We are now 5 years into the current down cycle so a real estate upswing should be well underway sometime over the next 3 – 5 years!

Greater Boston home prices rise for first time in 8 months

Warren Reynolds — Tue, 29 Jun 2010 19:25:53 +0000

Greater Boston home prices rose a solid 1.4% in April 2010, according to figures released today by Standard and Poors. The jump in the S&P/Case-Shiller Home Price Index for Boston marked the first time in eight months that metro Boston home prices moved upwards. April 2010 is the most recent monthly home price reading available from S&P.

Boston real estate market forming bottom?

April’s home price rise is significant because it may mark the formation of a home price bottom in the Greater Boston, Massachusetts real estate market.

The price increase was a bit overdue based on past years’ price patterns and may have been delayed because of March’s protracted bad weather.

As you can see in the chart below, Boston home prices have shown a strikingly consistent seasonal pattern of home price slumps and recoveries since 2001.

Ever higher Boston home prices during boom

When the market was on the upswing in the first half of the last decade, metro Boston, MA home prices peaked every spring/summer at ever-higher levels.

Each year, the fall/winter slumps were minor and each trough was higher than the prior years’ low point.

Ever lower prices during bust

During the real estate bust that took place in the second half of the last decade, the exact opposite behavior was exhibited by the Boston regional market: the annual spring/summer price increases were anemic and short-lived, while severe fall/winter price slumps kept Greater Boston home prices trending markedly lower every year.

Encouraging market performance 2009 – 2010

The chart below shows a clear improvement in the performance of the Boston, Massachusetts real estate market over the past year.

The seasonal home price slump of 2009 – 2010 was much less severe than during the worst of the market decline.

And for the first time in 4 years, the low point of the most recent seasonal market slump was HIGHER than the low reached the prior year.

This may mean that the metro Boston, MA real estate market is finding a bottom.

Caution is needed

Caution is called for; it is way too early to definitively call the bottom of the current real estate market cycle in Massachusetts.

The recently expired Federal home buyer tax credits had a beneficial impact on the April 2010 market.

It may take a full year or even two before MA home prices are clearly on the mend.

At least we have more evidence pointing to the beginning of the formation of that much-looked for home price bottom in Massachusetts.

Keep tuned for future updates!

Why new Loan Quality Initiative may be trouble for home buyers and sellers

Warren Reynolds — Sat, 26 Jun 2010 15:56:15 +0000

Take a second to Google “Loan Quality Initiative.” I did and found over 365,000 results on this currently hot topic in the real estate profession.

Pay attention to this reform from Fannie Mae

Fannie Mae recently implemented a reform that may cause trouble for home closings across the US.

With so much information and commentary on this topic, I’ll be brief here and provide you with links at the bottom of this post to take you to sites with authoritative content on this if you want to learn more.

And you should want to learn more about Fannie Mae’s Loan Quality Initiative if you’re thinking of buying or selling a home in 2010. (It may be safe to assume – or hope – that the problems being caused by this new Fannie Mae initiative will be resolved in coming months, so by 2011 this controversy will be over.)

New uncertainties after the loan commitment letter

Fannie Mae is now requiring lenders to re-check the financial qualifications of mortgage loan applicants after the mortgage loan commitment is issued and just before the loan closing.

In essence, Fannie Mae is seeking to improve mortgage loan quality and reduce the chances for mortgage defaults.

This new requirement to re-check borrowers’ qualifications just prior to the closing took effect June 1, 2010 and the complaints were almost instantaneous.

Big change from past practice

Mortgage loans are now suddenly falling through due to this Fannie Mae reform even after the mortgage loan commitment is issued.

This is a sea change from past practice – the mortgage loan commitment in the past was a near-ironclad guarantee that the purchase money mortgage loan would close on time.

Trouble for home sellers

Home sellers now apparently can’t assume that the issuance by the lender of the buyer’s loan commitment means their home sales will actually go to closing as scheduled.

There may now be delays in closings, throwing off moving plans.

Even worse, home sales may be entirely lost at the last minute, imperiling a seller’s ability to buy his next home or start his new job as scheduled.

Buyers need to protect earnest money deposits

Home buyers face extra risks in addition to closing delays and deal fall-throughs.

After all, buyers typically place substantial funds into an earnest money escrow account to back up their home purchase obligations.

These funds may be at risk if the loan can’t close as promised in the lender’s loan commitment paperwork.

Buyers may not want to let their mortgage contingency clauses expire without having some additional language written into the real estate contract (Purchase and Sale Agreement in MA).

Such language would protect earnest money deposits in the event the pre-closing loan qualification re-check finds problems that delay or derail the mortgage loan.

Sites with more information

Please click the links below to learn more about the Loan Quality Initiative:

Massachusetts Real Estate Law Blog

SmartMoney.com

BankRate.com

What MA home for sale inventory says about RE market

Warren Reynolds — Thu, 17 Jun 2010 10:52:57 +0000

Monitoring the rate at which MA’s home for sale inventory is “absorbed” (sold) is a good way to keep tabs on the health and direction of the Massachusetts real estate market. (For an explanation of absorption rate analysis, click the link).

Improvement over June 2009

June’s absorption rate figures for MA indicate better conditions now in Massachusetts real estate than at this time last year.

Three markets tracked

This blog tracks three markets in MA: the broadest measure of the Massachusetts housing market as represented by all listings carried on MLSPIN; the local market in the Town of Franklin; and the regional housing market comprised of communities in the Franklin vicinity.

The overall Massachusetts real estate market is carrying 9.5 months of inventory in June 2010 (as compared to 11.2 months last June).

The regional market around Franklin is showing similar improvement: 9.2 months worth of homes in June 2010 versus 11.7 months in June 2009.

The Town of Franklin, MA is maintaining less housing inventory than the other two markets tracked by this blog.

Franklin currently has 7.1 months worth of homes for sale, a notable reduction from the 9 month supply in Franklin last year at this time.

Numbers reflect Federal home buyer tax credits

Note that absorption rate calculations used by this blog look at home sales over the prior six months. So current absorption figures reflect home sales during the market stimulation supplied by the recently-expired Federal home buyer tax credits.

It may take several additional months of sales data before we’ll start to get a reading on how MA is absorbing housing supply without the beneficial support of those Federal tax credits.

Click to access more reports about the health and direction of the MA real estate market.

Mortgage rates near 50 year lows

Warren Reynolds — Sun, 13 Jun 2010 20:48:25 +0000

Mortgage interest rates dropped to near 50 year lows this past week as institutional investors shifted assets from stocks to US Treasuries in the face of worries about continued European financial instability.

If you are looking to buy a home or refinance your existing home loan, this is an excellent time to take advantage of some very favorable rates.

Super-low rates

Last week, the average rate for 30-year fixed mortgages as tracked by Freddie Mac was an astoundingly low 4.79 percent.

This is just a hair higher than the modern era’s all-time low of 4.71 percent reported by Freddie Mac early last December.

Rate decline confounds experts

At the start of 2010, many financial experts were making widely-reported forecasts calling for significant increases in mortgage rate throughout the coming year.

However mortgage rates proceeded to stump the experts by abruptly peaking in early April 2010.

They then fell steadily over the last eight weeks, heading back down to near record lows.

“Whether they move lower or stay where they are, these are great rates,” said Frank Nothaft, chief economist for Freddie Mac in a press release accompanying last week’s rate figures. “These are probably the lowest rates in 50 years or pretty close to it.”

So if you’re thinking of buying or selling a home, there’s great news for you in today’s very low rates!

35 Townline Road, Franklin, MA home for sale

Warren Reynolds — Mon, 31 May 2010 11:30:06 +0000

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35 Townline Road in Franklin, Massachusetts

Substantial colonial home for sale at 35 Townline Road, Franklin, MA in prime subdivision setting offers approximately 4000 square feet of living area (including finished lower level).

4 bedrooms, 2.5 baths, 3 car garage with separate basement access. Hardwood floors, updated kitchen and baths. Two zone central air and 5 zone hot water baseboard heat by oil. 40,000 sq ft lot affords superb privacy in a neighborhood of fine homes.

2 story entry foyer

Impressive atrium foyer sets the tone of refined elegance for the entire home. Foyer hardwood floor, wainscoting, designer Palladian window, double guest closets, pretty staircase with hardwood treads.

First floor study

Study off foyer features crown molding, hardwood floors. To the other side of the foyer is the formal dining room with crown molding, chair rail and hardwood floor.

Designer kitchen

Expansive 26 ft X 16 ft center island with breakfast bar and eat-in area opens to huge family room and adjoining formal dining room.

The kitchen features honed granite counters, hardwood floors and pantry. Extras include built-in desk, wet bar and solarium for plants or herb garden.

You’ll enjoy the old world charm of Italianate faux-brick-and-plaster accents by noted Boston artists the Casilio sisters.

Floorplan affords great flexibility of use in the bonus sitting room off kitchen with direct access to deck – could be guest room.

Attached family room

Vaulted 18 ft X 22 ft family room featuring floor-to-ceiling brick fireplace, double skylights, eyeball lights, built-in speaker wiring.

Entertaining and family fun

The property offers a superior setting for casual entertaining: delightful 16 ft X 16 ft screened porch, l27 ft X 12 ft deck and private rear yard . . . perfect for cookouts, family fun – or just relaxing!

Additional features of first floor

Guest half bath has pedestal sink, large linen closet, hardwood floor.

Tiled mudroom leading from 3 car garage to kitchen is ingeniously decorated with mural and has utility sink and laundry area.

Second floor

Four bedrooms and two full baths on 2nd floor with striking view of entry foyer from hall landing.

Luxurious full baths

Both full baths have new granite counters and tile floors.

Stunning master bath impresses with granite, tile and mirrors; features whirlpool tub, large tile shower, dressing area with surround mirrors.

Main bath has skylight and double vanities, each with sink: getting up, dressed and out in the morning will be easy for the entire family!

Master bedroom

Master bedroom has vaulted ceiling, sitting area and work area.

Huge walk-in closet with built-ins!

Finished lower level

Lower level has built-ins for crafting or student’s study: center isle work area, storage cabinets shelves, built-in in desk. Large unfinished area, separate clothes storage closet.

Learn more

Click the link to request a showing of 35 Townline Road or call 508-613-2889.

Click this link to learn more about Franklin, Massachusetts.

The Franklin, MA public schools link will take you to some good information about the excellent schools in the community.

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Seven straight monthly drops in Greater Boston home prices at an end?

Warren Reynolds — Thu, 27 May 2010 15:55:27 +0000

Home prices in the metro Boston region have been falling for seven straight months, according to the Case-Shiller Home Price Index for Boston issued monthly by Standard and Poors .

However, the Boston Index was basically unchanged in March 2010, perhaps signaling the end to the recent downtrend.

The Boston Index is published with a 2 month lag; the March 2010 Index is the most current reading available.

March Boston home prices stable

At 151.42, the Boston Index was down a minuscule 0.01% for the month.

This is stability is impressive since home sales across Massachusetts during March were very likely adversely affected by March’s widespread flooding in MA.

7 straight months of home price declines in Boston

After topping out at 155.95 last August, the Boston Index has fallen 2.9% during the succeeding seven months.

That’s a pretty unnerving statistic.

This decline would seem to reinforce the recent doom and gloom headlines in the media about the supposedly poor outlook for US real estate after April’s end to the home buyer tax credits:

Experts see underlying weakness in housing

Think housing is recovering? Think again.

Encouraging news in the new Index numbers?

However, there’s reason for optimism about MA home prices lurking in the Boston Index.

Looking at the Boston Index over the last several years, a pattern becomes apparent: home prices have had a pronounced seasonal swing in the Greater Boston area.

For the last four years, home prices have dipped in the Metro Boston area each winter.

Every spring for last three years, there has been a recovery in Greater Boston home prices.

Admittedly, each year has seen an overall decline in Greater Boston home prices.

But note that the 2008-2009 winter slump in Boston home prices was greatly exacerbated by the world-wide financial panic and resulting Great Recession that reached its depths during that time period.

2009 – 2010 seasonal home price slump much less severe

What is encouraging about the most recent 2009–2010 seasonal slump is that the decline was relatively modest compared to prior years.

This amelioration in the downtrend may be a sign that the Massachusetts real estate market is seeking a bottom.

See the video I made last year on how the Massachusetts housing market slowly found its bottom after the last down cycle in 1989-1994:

Will MA home prices trend upwards?

We should see some home price increases being reflected in the Boston Index over the next three or four months, if the seasonal spring/summer up pattern of prior years is maintained.

The big question is whether Boston home prices will rebound this spring and summer only to fall again next winter.

If the pattern of seasonal slumps fails to reassert itself next fall and winter that would be a clear sign of the start of a real estate up-cycle in MA.

If the seasonal slump does return, look to see if it is less severe than past years; that might be a sign of a developing market bottom in Massachusetts real estate.