Brookline Stats – Week of Feb 12, 2018

Comparison of what is on the market in Brookline this year vs last year.  One less property.  Median price is down. 

 

 

 

 

 

 

 

 

 

 

 

 
 
 
 
 
 
 
 
 
Michelle J. Lane
MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

Newton Stats – Week of February 12 2018

Comparison of what is on the market this week vs same time last year.  5 fewer properties and slightly lower median price.  We are trending lower inventory overall this year.

 

Michelle J. Lane

MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

State of the Market – February 2018

by Michelle J. Lane, Realtor

I am writing this on the tail of my post of a couple of weeks ago.  I don’t typically give you updates so frequently, but given it is year end, I have just updated my market report on how the Greater Boston towns have fared over the past few years, through the last slump all the way back to the last peak.  The chart now includes the data for 2017 and can be found by clicking on the image below.

You will notice that most towns have faired well over the past few years, with most having surpassed their pre slump prices.  The towns north of Boston – Somerville, Everett, Malden, and the Boston neighborhoods that had the most room to climb – Mattapan, Dorcester, Chelsea, South Boston, Winthrop have seen the greatest growth. 

I would expect this growth to slow down as interest rates climb.   As I have mentioned in past updates, the real estate market goes in roughly 10 year cycles, where it will climb, level off, come down a bit, then go back up, usually not dipping below the past low.  The last dip we had was in 2012, so it’s been 5 years of growth.  We are due for a leveling off.   The recent increase in interest rates is the start of that.  They have been climbing for a few weeks now and came out today at 4.22% for a conventional 30 year mortgage.    If you want to chat about your home’s value and best time to sell, contact me.

This update is more for the benefit of sellers.  Because of tight inventory, I believe we will still have some growth this spring, but not what we have been seeing.  So, if you are an owner who is thinking of selling, this would be a good year to do so.

Michelle J. Lane

MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

State of the Real Estate Market – Jan 2018

by Michelle J. Lane, Realtor

Housing Value

There are so many topics we can cover in talking about the state of the Real Estate market.  To be succinct, I will briefly cover these three topics.

  1. Tax Reform Bill
  2. Inventory
  3. Interest Rates

Tax Reform

There are many articles out there on the new tax reform bill and how it impacts homeowners.  I wrote one you can find here.  As you probably know, the key changes are that the Mortgage Interest Deduction has been capped to a $750,000 mortgage, down from $1m and that the maximum amount of real estate tax you can deduct is $10,000.  These changes will affect homeowners here in the Greater Boston area.  Today the median home price in Newton is $2,295,000, which would clearly require a mortgage over $750,000 for most people.  Moody’s is estimating that this will cause a 4% loss in home values from where they would have been if the Tax Reform Bill were not in place. 

Inventory

It is early in the year to be able to say where inventories will be for spring, but looking at a snapshot of today compared to the same day over the past 4 years, inventories are remaining low:

Newton Housing Inventory

Interest Rates

Given the Tax Reform Bill reduction in the Mortgage Interest Deduction only affects new mortgages (after Dec 15, 2017), it is possible that sellers will want to hang on to their existing mortgage and stay in their homes, which will further exacerbate inventory shortages.

Are now over 4%.  I expect they will stay there and possibly go up from there.  I say possibly only because rates have defied rate hikes by the Federal Reserve over the last couple of years.  The Fed does expect to make at least two more hikes in 2018. 

In Summary….

Because inventory is still low and people have not yet felt the impact of the Tax Reform Bill, I expect the spring market to still be brisk.  I suspect that the less desirable homes will feel the sting of the changes  by staying on the market longer.  By less desirable, I mean those that need a good deal of updating.  Buyers (who are not builders) are reluctant to buy these.  Once they make their downpayment, they don’t have money left over for updates.  If they have any money left over, they don’t have time to manage the projects, don’t want their children breathing in construction dust, and cannot find contractors to do the work.  

At the entry level prices (in Newton that is around $600K) you will find Buyers who are willing to take on projects in order to get into the city.  However, once you get to prices where they can buy a house  that does not need work, say $800K or more, they would rather get into a bidding war on an updated house than buy a project house.   If you want to know the value of your home, contact us here.

 

Spotlight on Lowell

April 26, 2016

So today I did Jury Duty in Lowell.   I’ve been there before, with my friend/client Laura Roberts, who shares my love of grand, older homes. We went on a roadtrip last year to see a particular beauty.  But I hadn’t been to Lowell Center.  I have to say the center is very quaint with the majority of the area consisting of small brick and stone storefronts from the 19th century.  I was pleasantly surprised as I never thought of Lowell as being so quaint.  In my mind, it was a former mill town that lost its reason for being (the mills) and had become a shadow of its former self akin to the Rust Belt.   

The truth is that Lowell is true to itself in that it still has a robust population that is roughly 50% immigrant, who work primarily in construction and industry.  It has not become a ghost town.  The population has, in fact grown by 5% over the past 10 years or so to about 110,000.

So why am I so curious about Lowell?  Because they have some amazing, grand old homes that can still be had for reasonable prices compared to most of the Greater Boston area.  Yet it only took me 35 mins to get from Newton to Lowell.

For a sampling of what your money can buy – here are the most grand houses on the market in Lowell today.

 

 

Beyond the awesome houses, Lowell does have a lot to offer.  An MBTA commuter line, the Merrimack River, a National Park, Universities, Hospitals. The crime rate is reasonable and declining every year.  It is about half what it was 15 years ago and less than the national average.  And I must say that everyone in the courthouse was very nice!

What it doesn’t have is great school rankings.   So it may not be ideal yet for young families looking for a city with good schools.  

As I took a break from Jury Duty, I passed a woman who was shouting to an invisible adversary and then I was approached by a panhandler.  So not exactly gentrified yet.  But I do wonder if it could be down the road as Boston and the surrounding area become too cost prohibitive.  This tight spring market is pushing prices up ever higher and is pricing people out of the area immediately surrounding Boston. 

Lowell would be great for Boomers like myself,  who don’t really want to downsize their homes but would like to cut costs in retirement.  Or for young couples who don’t plan on having children but want a nice big house not too far from Boston.

Michelle J. Lane

MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

 

Welcome Spring!

April 16, 2017

First, I want to wish all of you who celebrate Easter a wonderful day with your family today, I hope that those friends celebrating Passover have been enjoying their time with family this week.  Many of you are on vacation during the children’s spring break, so it is a convergence of all things that give people pause to enjoy time with the ones they love, which, to me, is the most important thing in life.

For those of you looking to find a home, the market will hit full force after everyone is back from their vacations this week.  That is a good and a bad thing.  Good because more houses will come on the market.  Bad because, once again, not enough of them.  So we have to be prepared for bidding wars and scarcity of options, particulary at the entry level.  I’ll go into the details more about the landscape and how we can succeed after Easter.

In the meantime, enjoy your loved ones, the good food, the good times and this glimpse of summer weather!

 

 

 

Michelle J. Lane

MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

Are Boomers Responsible for the Housing Inventory Shortage?

The answer is to a degree, but not entirely.  

To clarify my explanations below, when I refer to seniors I am talking about the generation that are mid-70s and older.  Baby Boomers are those in the 52-71 age range.

  1. New England is a bit unique in that people here, particularly the older generation, tend to stay put for many, many years. I specialize in selling homes of seniors and selling estate homes.  It is extremely rare to find an older home owner who willingly leaves their home.  If they move it is because their children have decided it is too dangerous for them to stay in the house alone.  You don’t know how many times I have heard some variation of “they are taking me out of here feet first, my children will be selling the house after I die.”
  2. In the big picture, they don’t think it makes sense for them to sell. One issue is that the value of homes in the greater Boston area has risen so much that if someone who has been in their house for 30,40,50 years sells, they would far surpass the $250K profit limit ($500K for a couple) at which point they would have to pay capital gains taxes. If they keep the house until they pass and leave it to their children, then the basis value of the home resets to whatever the market value is when they died. 
  3. Another issue is that there are very few choices for downsizing. If they are not leaving the state for a warmer climate, most seniors want to stay in the same town to be near their friends, neighbors, doctors, etc. Most of the towns outside of Boston don’t have enough inventory of affordable housing for seniors.  Boomers can’t go far because they are still working and need to be near their jobs.  All of this is compounded by the fact that demand is pushing up the price of houses on the lower end of the market, but not pushing up the price of the seniors’ larger houses commensurately.  I’ll use Newton as an example.  In Newton, a 2000sf 3-bed, 2-bath house in good condition might sell for anywhere in the $900K-$1.3m price range.   The home of a senior that might be in the 3,000-6,000sf range might sell for $1.5m-$1.6m.  Why is that?  Because if a younger person is going to buy a house of that size, they want a new one.  They realize the older homes cost more to maintain, heat, etc.  So particularly, Boomers who are working an can afford their homes, figure they may as well stay put.
  4. Boomers are uniquely nostalgic and resistant to change of their towns. Perhaps because our childhoods were at a time of prosperity for most American families and a time of suburban living with a lot of other children to play with.  The greatest resistance to change appears to come from this generation.  If builders knock down old run-down homes to build the new, big homes  we complain that the city is becoming gentrified.  Or we complain that these houses are not in keeping with the old Ranches, Capes and Split-Entries that proliferated after WWII.  If the city tries to build a higher concentration of affordable rentals, we complain it will bring crime to the city or bring people who are taking resources without contributing.  It doesn’t take a genius to figure out that if no new inventory is being added and seniors and Boomers aren’t leaving, there will be a inventory shortage.  Think of it like a revolving door and we are the ones with our foot in the door, blocking everyone behind us from moving forward.

While Boomers might be contributing, we are not entirely responsible for the shortage.  Boston is an area fortunate to be flux with high-paying jobs, but with no land left for housing developments. And we are certainly not responsible for the massive influx of foreign nationals buying homes here – with cash in their pocket and the ability to outbid most other home buyers, pushing prices up.  These people are coming here because of the great schools, the strong job market, and the stable housing market.  Several things could happen to change this in the future, but that is discussion for a future post. In the end, it still comes back to the fact that there s no room here to build more inventory unless we build up or in a higher concentration.    

It will be interesting to see what changes the future will bring – perhaps builders will find a way to build large, over 55 communities in or close to the city.  Or they will build houses that will appeal to Boomers who want a big entertaining area, but don’t need or want to pay for 5 bedrooms and 5 bathrooms.   Right now though, there is no profit for builders in creating smaller homes.

One change we all need to watch out for is inflation and rising interest rates.  If Trump succeeds in taxing everything coming into the country and bringing jobs here at a higher pay scale, inflation will follow.  Which is then followed by rising interest rates.  That could have a slowing affect on home purchases, particularly at the entry level.

I’ll expand more on these last few points in future posts as economic events unfold.

Michelle J. Lane

MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

Spring 2017 Market has Launched

This week, 21 houses came on the market in Newton.

New to the Market in Newton

Compare this to 11 last week.  And properties are going off the market faster than they are coming on.  33 houses went under agreement in Newton this week.

So far, it is still a seller’s market.  I don’t expect that will change until interest rates spike. More about that in my next post.  So if you are a seller, it is not too early to get your home on the market.  Contact Me if you are  thinking of selling.  By the time you get it ready, staged and photographed, the market will be in frenzy mode – if it is not already.

If you are a buyer, unfortunately, the competition is still tough.  If you see something come on that you like, there is no time to think about it.  See it as soon as you can.  And let’s make an offer.

If you want to see what is new in your town, Search for New Listings here.

Let the games begin!

Michelle J. Lane
MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904
michelle@michellelanerealtor.com
www.MichelleLaneRealtor.com

Newton Market Update – Week of July 4

July 5, 2016 by Michelle J. Lane, Realtor

While everyone is starting their summer vacations, the market typically does as well.   As most people know, the spring market is busy because people with families are trying to stay in their houses until the end of June, but be in their new house for the start of the school year.  The window for that to happen is just about closed.  So the market is now all about people selling and buying who are not bound by that schedule.  And, naturally, many of those buyers are home hunting in between vacations.

What does that mean for the market?  For the purposes of analysis, I look at just single family homes for the past two weeks.  It seems to have slowed down the high end, with more at that end being pulled off the market.

Newton Stats

Now you might think that is because the average price of a home in Newton is just so high that there isn’t much under $1m anyway. That is true to some degree.  But if you look at the chart below, you can see that the ratio of houses on the market to those that sold is far greater on the high end.

Newton Stats 2

So the bottom line is that there is not a bad time to sell houses in the $1.5m and under range.  But the high end is a bit tougher.

In terms of available inventory, things are about the same.  This time last year, there were 131 houses on the market.  Today there are 125.  But more of those are on the high end.  35 under $1m compared to 24 today.

So, the obvious trend is that housing is becoming far less affordable in Newton.  No surprise to anyone who is watching the market or trying to buy a house.

What would it take to change that?  As we know, the real estate market goes in cycles.  Roughly 1o year cycles where it goes up for several years, plateaus for 1 or 2, goes down for 2-3 then comes back up to surpass the high of the last cycle.  Serious economic shake-ups can shift the numbers a bit, but that is the gist of it.

So we will never go back to past lows.  But to slow down or correct this upward climb, interest rates would have to go up and jobs would have to leave the area in significant numbers.  Neither seems to be happening anytime soon.  As a matter of fact, the Brexit mess has caused our mortgage rates to go down.

So if you are a buyer looking in the under $1.5m range, keep at it.  It does not appear that things will get any easier with the passing of time.

If you are a seller, there is no bad time to sell.  The withdrawal of homes on the high end is not so much because this is a bad time to sell, but because supply exceeds demand.  But yes, putting them back on in the fall is not a bad idea.

If you are trying to figure out when to sell your house and for what price, contact me to schedule a meeting.

Michelle J. Lane
MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904

 

 

 

 

How much Should you Spend on Home Maintenance?

June 30, 2016 by Michelle J. Lane, Realtor®

As a Realtor who specializes in homes that are part of an estate, I have seen a great deal of deferred maintenance in my time.

The two main reasons are:

  • these are the homes of people who lived through the great depression and have the mindset that they will fix what needs fixing, but no more. They see no point in changing things out if they are not broken.
  • The other reason is these are homes of people on fixed incomes – usually one person who has outlived their spouse for a number of years. So the money to keep the place up is not available.

The area I sell in – Newton, MA and the surrounding area – is considered affluent for the most part.  For the purposes of this article, I am focusing on what would be considered the middle or working class who own homes.  The affluent can spend far more than the rule of thumb would suggest and often do.

The generally accepted rule of thumb is that a homeowner should spend roughly 1-3% of the value of the home to maintain and improve.  Of course, that would vary depending on home values in your area.  In Newton, home prices start at $500K.  Most people are not going to spend $15K per year on tiny bungalow.  So, in expensive areas, where a high-priced home is still small, the rule of thumb is closer to the 1%.

Of course, you are not going to spend this each and every year.  But you do need to put the money aside.  When the roof or any other major component goes, you will need to have that money available to replace it.

You may be tempted to spend it on the more fun things like décor and furnishings.  That’s a lot more enjoyable than replacing a furnace or a roof – what seem like invisible improvements.  But deferring the maintenance greatly reduces the value of the property and hurts its ability to sell quickly, even in a hot market.

You are probably hearing all the stories about bidding wars, especially in the hot markets like the Boston. And you might think that any house will sell.  But bidding wars are happening with the houses that are in move-in condition.  Not on houses that need a lot of repair.  Today’s buyers just don’t have the money to make the repairs after buying a home.  And they are not able to make the repairs themselves.  All the reasons for that will be in a follow on blog post, so stay tuned for that.  This one will be long enough!

When clients have deferred maintenance on their homes, I have to explain why their home is not worth as much as their neighbors that was in better condition when it sold.  I actually have people say they don’t understand why today’s buyers are so fussy.  What’s wrong with Formica countertops and linoleum floors?  The old appliances are built better, etc.  Aside from aesthetics of the home starting to look a bit beat and shabby, it matters because everything used to build your home has a set lifespan.  Sure, we agents call all tell stories of homes that are time capsules where everything put in the house 50 years ago is still there and working.  I even sold a 1912 home with its original furnace that was still running.  But those are the exceptions, not the rule.  Everything is going to go sooner or later.

To give you an idea of when that sooner or later is, the chart in this article breaks down the Average Life Span of Homes, Appliances and Mechanicals.  This will not only help you plan for replacement of these items in your house, but should help buyers know how much they are going to have to put into a house they are buying and when they can expect to spend that money.

The contents of this chart have come from several sources, mainly a This Old House article.   http://www.thisoldhouse.com/toh/article/0,,216991-4,00.html    They even give a rough estimate of the cost to replace each item.

Average Life Span of Household Components

Appliance Items Lifespan
Kitchen Appliances 10-20 years
Central A/C 15 years
Electric Water Heater 11-14 ones that are SS lined can last longer
Furnace (Hot Air) 15
Hot Water Boiler 20-30
Thermostats 35

 

Roofing Lifespan
Asphalt / Rubber 10-25+
Wood Shingles 10-40
Metal 25-40
Clay Tile / Concrete Tile / Slate / Copper 50+

 

Flooring Lifespan
Carpeting 8-10 (I’ve seen it left unreplaced for 50+)
Linoleum / Vinyl / Laminae 25
Engineered Wood / Concrete 50
Bamboo / Hardwood / Tile / Marble / Slate 100+

 

Garages Lifespan
Garage Door 20-25
Garage Door Opener 10-15
Light inserts 20

 

Footing and Basement Lifespan
Poured Concrete / Fieldstone / Concrete Block 100+
Sump Pump 5-12
Bamboo / Hardwood / Tile / Marble / Slate 100+

 

Materials Lifespan
Wood – Floors / Doors / Cabinets / Windows / Millwork 100+
Cast Iron  – Tubs / Pipes 50+
PVC Pipe 50+
Fiberglass 10-15
Bamboo / Hardwood / Tile / Marble / Slate 100+
Porcelain – Sinks / Toilets 50
Engineered Trim 30
Insulation 100+
Hardboard / Flooring Underlayment / Softwood 30
Particleboard / Plywood 60

 

Electrical Lifespan
Accessories and Controls 10+
Copper wiring 100+

 

Exterior Lifespan
Brick / Stone / Engineered Wood / Fiber Cement 100+
Vinyl 20+
Engineered Wood / Concrete 50
Stucco 50-100
Paint 7
Mortar 25-50
Caulking 5-10
Decks 10-30
Aluminum Downspouts / Gutters 20-30
Galvanized Steel Downspouts / Gutters 20
Copper Downspouts 100+
Window Glazing 10+

 

Notice that natural materials – stone, brick, wood, cast iron, have a very long life span.  Which is why homes with these materials in abundance are worth more than homes with linoleum, carpets and fabricated materials.  There are exceptions – PVC lasts as do some engineered woods.  And this will improve over time.  But the difference is that natural materials develop a patina over time that gives them character.  Fabricated materials just get shabbier over time.  Not to discourage any one from using them.  There is not the same supply of natural materials that there once was so new construction has to move to these newer materials.  And some building codes require them.  But scarcity is another element that gives the natural materials value.

All of these life spans are averages – they will vary based on how well used items are and the climate.  And, of course, on how well you maintain the house.  A leaking roof will rapidly deteriorate interior components.  But this should serve as a good planning tool – for maintenance and for knowing what a buyer will mentally deduct to come up with the market value of your home at the time of sale.

Now there are always exceptions.  A good number of the estate homes I sell are more valuable to a builder for the land they sit on than they would be for a home buyer to live in.  So if you are thinking of selling your home and not sure where you fall, contact me before you do any work on your home and I will let you know the value of your home as it stands and with repairs and upgrades.

Michelle J. Lane
MICHELLE J. LANE, Realtor
Century 21 Commonwealth
CELL: 617 584-3904