In the third quarter of 2011, Boston featured among the top 15 most expensive housing markets in the country. What a difference a quarter makes. By the end of the first quarter of 2012, it had been knocked down to number 19.
“I feel we are insulated from a lot of traditional goings on across the country,” Shuki Haiminis, principal broker at Estate Residential Group, told us last year. “We haven’t seen a dip at all,” he continued.
Haiminis is correct that Boston weathered the real estate crisis better than most U.S. cities, but area home values are still depressed 13.8 percent from their 2005 peak, according to the Boston Globe.
But, wait – not so quick – says Keller William Realty Boston’s Bart Foster. “Boston has about 14 neighborhoods. While we all know real estate is local, in Boston it even drills down further, to the actual neighborhoods,” he claims. Therefore, it’s a bit challenging to paint the region with a broad statistics brush.
“We have areas like Back Bay where prices have done very well. This year from last year, inventory is down 30 percent, while at the same time we’ve exceeded last year’s sales by almost the same number,” Foster explains. “That’s put a real interesting shift on the market – going from being a buyer’s market to a seller’s market quite quickly. I now see properties go under agreement within weeks, typically with multiple offers,” he concludes.
One thing everyone seems to agree on is that the biggest problem right now in the Boston real estate market is the lack of available homes. Overall, inventory is down 22 percent from one year ago. Typically, when inventories shrink, prices rise. Oddly, during the first 10 days of October, greater Boston home prices were up a miniscule 0.1 percent from September 2012 and flat from the same time a year ago.
Foster says to expect that statistic to drastically change in the coming months, due mainly to the sales he’s seen recently.
What all this means for area homebuyers is that they should get ready to rumble for a house in good condition that’s priced well. Theirs will typically not be the only, or even the best, offer on the house.
“We’re seeing more cash offers than ever,” claims Foster. “Some people are putting down full cash offers on condos while a lot of others are laying down 30 to 40 percent. This way they don’t have to worry about appraisals because they’ve got so much equity,” says Foster.
Homeowners who have been waiting out the downturn in the market should know that although demand is strong in all price ranges, homes in the $500,000 to $700,000 price range are probably most in demand, according to Foster.
“I am finding that buyers who have been locked out of the market for years are now looking to buy,” said Bert Beaulieu, regional vice president for the Massachusetts Board of Realtors®. He credits the surge in interest from first-time buyers to current low mortgage rates.
Tips for Buying Real Estate in the Boston Area
Get your loan approved: Before you go in to buy a home, have your finances ready, Beaulieu said. Get your credit in order and approach a bank to firm up your loan.
Know your goals beforehand: Too many people used to look at real estate as ATMs, said Beaulieu. But the market has changed. Be realistic about your price expectations. If you find your dream home, buy it. Don’t focus only on the price. Look at other factors such as proximity to work, good school districts and public transportation. It’s another matter, of course, if you are approaching the market solely as an investor.
Work with a professional: Real estate agents know the market and the process. Hire a good real estate agent to be your advocate and guide. Meet your agent in the office and take a family survey about what kind of home you want. You and your spouse or partner need to agree on what kind of place you want to call home.
Carve out the area where you want to move: Beaulieu says homebuyers should be clear on particular neighborhoods in which they want to purchase and then ensure they can afford to buy in those neighborhoods.