Boston’s Multifamily Sales Lowest Since 1997
David Bates / July 28, 2011-12:12 pm
An MLS analysis of Boston Multifamily (2-4 family) sales in the first half of 2011 shows only 310 closings. That’s a 26 percent drop in multifamily sales versus the first half of 2010 and the lowest closed sales number recorded in MLS since the first half of 1997, when 291 Boston multifamily homes sold. This paltry first half total and its $336K median price is a far cry from the 2005 heyday for Hub triple-deckers; according to MLS statistics, 724 Boston multifamily homes at a median price of $525K closed in the first half of 2005.
Multifamily home sales typically make up about 10-12 percent of the total annual real estate purchases in the city. So why was the drop in multifamily transactions more than twice the drop in Boston condominium transactions (-27 percent compared to 2005) and Boston single family homes (-23 percent compared to 2005)? Certainly, a good portion of multifamily homes are bought by investors, and the climate for real estate investment radically changed. And for owner occupants, the “American dream” may be owning a home with a white picket fence, but that home is typically not a two-family home.
Another significant contributing factor, according to Kevin McGoff (phone 781-777-9976), a top real estate loan officer with Metlife who has 20 years’ experience doing loans in the Greater Boston market, is that “tighter underwriting has really hurt.”
“For investors, FNMA requires 25 percent down with very strict underwriting of reserves and qualifying ratios,” he says.
Kevin also notes that now, even an owner-occupant on a two-family is required to put 20 percent down and fill out all sorts of documentation of income. On the upside for the immediate future of local multifamily market sales is a rising rent environment and that, according to Kevin, Massachusetts buyers can get “FHA financing, which still allows for 3.5 percent down with great rates.”