My featured post on Curbed this week focuses on the batting order of my real estate team.
Which developer do I have batting lead-off?
Which development team is hitting clean-up?
Which Boston luminary is my starting pitcher?
Check out my post and find out.
My column in Curbed this week is about the highest end of the Boston condominium market.
Is Boston’s ”ultra” market up or down?
What Boston neighborhood has an emerging ‘ultra’ market?
Who buys the city’s most expensive condominiums?
What market seems to have the most impact on Boston’s best condominium sales?
Check out my column and find out!
It used to be that proper Bostonian real estate buyers had the decency to wait until there was something to see before asking developers to take their offers.
Enjoy the nostalgic sentiments of years gone by, because in today’s inventory challenged market all you need is a steel frame to create an offer frenzy.
Last week in Curbed, I reported how Millennium Place had sold 130 units at Downtown Crossing with a steel frame.
This week, check out my post in the South End patch to see the latest Boston development to achieve enviable sales while clad only in a steel frame. This project is actually sold out.
My column this week on Curbed was about Above Asking Price Offers.
Which Boston property garnered the offer that went the most over ask?
How much over the asking price did it go?
Which Greater Boston neighborhood is the one where above asking price offers are most prolific?
Check out my column to find out.
Banker and Tradesman, the local real estate publication of record, ran my first column: “Want to Buy a Boston Property? Take a Number.”
The column discusses the extraordinary sales pace of the Boston Condominium Market and the amount of offers salable properties–like the one in the Brookline building pictured below– are receiving.
Back Bay real estate ownership for the long term is a financial no-brainer, but what about for the short-term? What if, unfortunately, you closed on your condo the week before you found out that you were being transferred? Could you sell without making your next move the poor house? Or what if shortly after cramming all your belongings in to your one-bedroom, the doctor dropped the news that your family was expanding? Could you make your condo purchase, a quick layover, in route to the acquisition of your dream home?
Ordinary buyers are told that residential real estate is not financially structured for short-term ownership. Yet, the need to quickly re-sell may happen more than you think. Want proof? Just review the title for 121 Beacon Street, #1. That condo sold in 2003, ’04, ’05 and ’06. Or consider the MLS history of 308 Commonwealth Avenue, #D, which sold five times in 97 months.
What happened to Back Bay buyers who through a change of circumstances quickly became Back Bay sellers? I reviewed 11 years of Back Bay re-sales to try to find out, identifying more than 200 Back Bay condos which sold and then re-sold less than two years later.
I was surprised to discover that 82 percent of the re-sales sold for not less, but more. In fact, over two-thirds re-sold for at least 5 percent more than the buyers’ recent purchase price. Although this analysis is strictly based upon sales prices and does not take into account closing costs or whether upgrades were made after the purchase, it’s extremely happy news—that’s because one of the biggest concerns for would-be buyers is whether they would have the ability to resell quickly and effectively if their life situation necessitated it. For Back Bay buyers, the numbers show the answer is overwhelmingly “Yes.”
If the majority of quick re-sales made money, why did some lose money? Certainly, some of the quick re-sales lost money as a result of over-paying, but the biggest losers seemed to have little to do with the choice of a particular condominium or building and everything to do with timing. Take the circumstances surrounding 227 Marlborough Street, #9. When the buyer closed on this “stunning, renovated penthouse duplex” on Sept. 15, 2008, the Dow closed at 11,532. The day the owner put it back on the market, June 25, 2009, the Dow closed at 8,472. The financial world had changed and so had the value of his condominium, which closed for 18 percent lower than the last purchase price.
My favorite quick re-sale, however, like the majority of quick re-sales, has nothing to do with losses. Buyers closed on a unit in the Mandarin Oriental in December 2011 for $5.36 million. Yet, the buyers, a couple, preferred the additional 3,000 square feet offered by another condo in the same illustrious building. So, on Jan. 27, 2012, they put their recently closed condo back on the market and simultaneously put the larger unit under agreement. On Feb. 9, their condo sold for $5.575 million, $200,000 more than the couple had paid. And on Feb. 10, they closed on their new condo for $10.3 million. That’s one extreme re-sale!
The Boston condominium market is clearly under the influence of a performance-enhancing drug known as “low interest rates.”
If you doubt it, take a look at the current inventory. It’s all muscle! At the end of January 2010, the Boston condo inventory stood at 1,554 units. At the end of January 2012, it was 1,000-plus. Yet, this past Jan. 31, it was barely 500 units. Hey, Barry Bonds’ metamorphosis from elite player to all-time home-run king had less of a physical transformation!
Not only is the market fat-free, but it has gotten quite a bit faster, too. Note the speedy absorption of for-sale condos by ready, willing, and able buyers. In the last month (Jan. 8 to Feb. 7), 295 Boston condos went “under agreement” and an additional 126 went into “active-status-back-up,” according to the multiple-listing service. This means, in the last 30 days, possibly as many as 421 Boston condos found buyers. As there were only 463 available Boston condos on the market as of Feb. 8, at the current sales pace it would take buyers slightly over a month to buy the entire available inventory. That’s incredible and it’s a pace about as natural as Lance Armstrong’s in the Tour de France.
Consider also the incredible borrowing power of today’s buyers. It was just a few years back, when very good buyers would spend $2,000 a month to borrow around $335K (at 6 percent interest). However, today’s low-interest-rate-enriched buyers can borrow over $100,000 more with the same $2,000-a-month payment (at 3.25 percent interest). Is that fair? It might be about as fair as Sammy Sosa being able to hit 64 homers in a single season.
Simply put: Without any special coaching, experience or expertise, and lacking the aid of a promotion, raise or bonus, today’s buyers can buy more house than virtually any of their predecessors. Incredible! Like Jose Canseco, these buyers can get results without doing the work.
Low interest rates can benefit would-be sellers as well. Take all the folks who were going to retire their Boston condo and put the equity toward a dream home—that is, until they found out that, with low interest rates, their condo could be rented for a profit. The success some of them enjoyed in the following rental seasons puts even the post-Red Sox glory of Roger Clemens to shame.
While the price to be paid for performance-enhancing drugs is not always apparent in the short term, it becomes more obvious as time goes by. Some members of the brokerage community undoubtedly recall the challenge of selling homes when interest rates were in the teens. Future sellers may want to consider their listing services down the line when interest rates hit what some may deem another phenomenal high: 6 percent. LOL.
The Town of Brookline recently assessed the house of Red Sox majority partner, John Henry, at $19,485,200. The new valuation represents an increase of more than $6 million over the house’s valuation by assessors a year earlier and more than $10 million from two years ago. The increases in valuation resulted because the Cottage Street home was previously under construction. A recent call to the Brookline Assessor’s office, however, confirmed the home is now assessed as 100% complete.
The house is brand-new, ground-up construction, containing the largest amount of living space of any Brookline home, and of course it features many luxury finishes. Yet my analysis of public records show it as only the second most valuable home in Brookline Whose home came in first? The Yankees…just kidding. The highest valued house according to Brookline assessors was Reebok founder Paul Fireman’s $21 million-assessed abode. As Henry’s house is now complete, it is unlikely that even a change in management would cause it to finish first in assessed value.
Below are couple of details about the home:
Bathrooms: 9 full, 6 half
Fuel Type: Gas
Living Area: 22,758 square feet.
Lot Size: 2.61 Acres
Garage Size; 1,534 square feet.
David Bates is a realtor in Greater Boston. In addition to this blog, he writes for various publications about the real estate market, including www.Boston.Curbed.com and Banker and Tradesman.
If you like Dave's insights about the market, then--obviously--you should consider doing business with him.
When you consider doing business with Dave, contact him by email or cell.
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