**This is the first in a new series we are offering on local market conditions. All articles will be written by a NAEBA member in that market area. We hope that this will help you further understand your local market as well as other markets in the area. As always, your best source for information is your local EBA.***
I work just outside of Boston, to the north and west. The housing stock in my area includes small cities near Boston and suburbs. As of Summer 2013 (June 24-September 24,) the median price for a two-bedroom condo in the small cities of Brookline, Cambridge and Somerville is $505,000. Properties farther from transit are generally less expensive in these cities. Small houses, under 1500 SF of interior living space are most uncommon in these areas. The median price was $535,000. A larger house with three or more bedrooms and 1500-2500 SF interior living space are fairly rare. They are selling at a median price of $743,000.
The median price for a two-bedroom condo in the in the close-by suburbs of Arlington, Lexington and Belmont is $335,400. A starter house with three bedrooms and under 1500 SF currently costs a median price of $482,820; this category had the lowest number of sales this summer due to limited stock. A larger house with three or more bedrooms and more than 1500-2500 SF in these suburban areas costs a median price of $682,875.
The median price for a four-bedroom two family house in the in the small cities of Brookline, Cambridge and Somerville is $700,000. A larger two-family with six or more bedrooms sold for a median of $875,000. The median price for a four-bedroom two family house in the in the close-by suburbs of Arlington, Lexington and Belmont is $590,500. A larger two-family with six or more bedrooms sold for $710,000. Sales prices for this type of property vary wildly, depending on condition, since rehabbing costs vary. The sales volume on this type of house is very low, with no more than 40 properties sold in any category. This explains the counter-intuitive prices in this category.
Our housing stock here is generally older than is typical in other parts of the country. The bulk of our houses were built between 1900 and 1940. Much of the post-war (1950-1970) construction here has been torn down and replaced with recent, more expensive, suburban housing. Pricing is very sensitive to condition in a housing stock like this one.
In the period between June 24-September 24, 2013, the single family market has been in a seller’s market because of high demand and low supply. This is particularly noted in a scarcity of smaller single family houses on the market. Prices are generally going up. Sales volume is generally going up.
In this market, the challenges my clients and I work with are because of competition from other buyers. In a market like this, it is important that my clients put their best foot forward at all times. Since negotiation begins as soon as we step in the house, I am advising my clients on making a good first impression on the listing agent. Our offers in this market must include solid, well written pre-approval letters and personal letters to demonstrate that our clients are prepared to buy. We are finding that these small, but significant, additions can provide an edge in competition.
Condo sales market has been in the same high demand state as the single family house market.
Multifamily houses are even harder to buy, since owner-occupant buyers are in competition with developers. In our area, two-family and three-family houses can be converted into small condo associations. These are very profitable in their initial conversion sales, since the market bears higher prices for the units sold separately compared to the market pricing on a two-family house used as a rental. This has attracted investors and developers, making the demand even bigger that for single family houses. My clients have had some success purchasing these houses by writing directly to owners, in hopes of finding one that wants to sell to an owner-occupant and not to a developer or speculator.
Overall, my clients have experienced success in this market by perseverance and careful planning of their offers. An agent in my office, Ron Rothenberg, had this experience twice recently:
His client was not the highest offer in a competitive offer situation; they did not get the property during the initial bidding war. Then the first offer fell through. The listing agent came back to Ron because he kept in touch and also because our client showed how well prepared she was. In one case, our client had the second highest offer; in the other case, the third highest.
I had a buyer successfully buy a two-family house in a very hot market by doing a mailing to owners of prime properties near the Red Line train. They did a 250-piece mailing that yielded four properties to see. They purchased one of those.
Rona Fischman has been an Exclusive Buyer’s Agent since 1992. She owns 4 Buyers Real Estate in Somerville, Massachusetts.