According to the National Association of Realtors, the national average of housing affordability in 2009 was 169, which basically means that the typical family had an income that was 169% of the qualifying income to buy the median priced home in the community in which they lived.
Boston.com published a list of the 20 Massachusetts towns with the highest median income and the 20 towns with the lowest median income, so I came up with the median home prices in those communities (circa: 2009) and plugged the numbers into NAR’s affordability index calculation to determine which towns on the list were the least and most affordable.
Of the 34 towns I could obtain both median family income and median home sale prices, Weston, the Massachusetts town with the second highest median income, was by far the least affordable town to own a home. Weston had an affordability rating of just 65, meaning the median family income in Weston was only enough to qualify to buy 65% of the median priced home sale in Weston. So, it might be concluded that not only would the residents of Lawrence be more qualified to buy a home in their community than the residents of Weston, but Weston might be the least affordable town in all of Massachusetts. Surprising? I thought so. We don’t typically think that the citizens of our wealthiest communities are the most challenged to buy a home. Yet Weston wasn’t the only affluent community where residents appeared to be house rich and cash poor. The nine towns with the lowest affordability ratings in my analysis were among the state’s highest income communities. And perhaps, just as surprising, six of the state’s poorest communities were among the eight most affordable towns for residents to purchase a home.
Below I have listed the five least and five most affordable towns, with their affordability rating, from my analysis.
1. Weston – 65
2. Dover – 83
3. Wellesley – 84
4. Cohasset – 97
5. Concord – 99
1. Athol – 215
2. Southborough – 180
3. New Bedford – 176
4. Wenham – 171
5. Springfield – 165
1. 150 Woodland Rd $17,431,000
2. 39 Sears Rd $10,873,000
3. 53 Sargent Crossway $10,489,000
4. 209 Sargent Rd $9,514,000
5. 40 Cottage St $9,434,000
1. 5 Willow Rd $16,338,000
2. 38 Winsor Way $13,684,000
3. 63 Winsor Way $13,200,000
4. 118 Chestnut St $12,009,000
5. 5 Concord Rd $10,793,000
1. 48 Sargent St $14,708,000
2. 98 Montvale $7,805,000
3. 100 Essex Rd $7,135,000
4. 32 Suffolk Rd $6,626,000
5. 40 The Ledges Rd $6,626,000
1. 221 Balls Hill Rd $12,605,000
2. 130 Buttricks Hill Dr $5,736,000
3. 495 Hugh Cargill Rd $5,270,000
4. 1235-E Monument St $5,149,000
5. 709 Monument St $5014,000
1. 144 Edmunds Rd $9,792,000
2. 5 Sabrina Road $8,395,000
3. 99 LIvingston $7,756,000
4. 170 Pond Rd $7,414,000
5. 209 Cliff Rd $7,129,000
1. 168- R Brattle St $9,311,000
2. 88 Appleton St $7,977,000
3. 168 Brattle St $7,653,000
4. 163 Brattle St $7,414,000
5. 12 Lake View $7,202,000
1. 4 Moore Rd $8,579,000
2. 45 Waltham Rd $8,103,000
3. 52 High Rock Rd $4,011,000
4. 16 Ellie Ln $3,230,000
1. 6 Wilsons Way $8,057,000
2. 21 Claybrook Rd $6,862,000
3. 8 Hamlns Xing $6,220,000
4. 55 Farm St $5,620,000
5. 192 Claybrook Rd $5,180,000
1. 6 Winchelsea Ln $6,452,000
2. 133 Weston Rd $6,075,000
3. 109 Todd Pond Rd $3,948,000
4. 23 S Great Rd $3,841,000
1. 1184 South St $4,702,000
2. 636 Charles River St $4,074,000
3. 410 South St $4,048,000
4. 484 Charles River St $3,398,000
5. 914 South St $3,257,000
1. 7 Bennington Rd $4,441,000
2. 23 Burroughs Rd $2,835,000
3. 17 Hayes Ave $4,157,000
4. 132 Marrett Rd $3,621,000
5. 28 Oakmont Cir $3,153,000
1. 101 Orchard St $997,000
2. 115 College Ave $981,000
3. 137 Sycamore $960,000
4. 23 Chester $944,000
(Based on a BatesRealEstateReport analysis of MLS Public Records Section in December 2011)
I did an analysis of 2011 Single-Family-Sales median sale prices based on the year the home was built. It made for what appeared to be a very simple and understandable chart that simply showed the older the era of the house, the less the median sales price. But don’t get fooled by it. It’s not age that is devaluing the home, like miles on a car, it’s that the newer the era of the home, the more features and benefits the home has which are creating value.
For example, the average size of the newly constructed U.S. home grew from 983 square feet in 1950 to over 2,300 square feet in 2004 according to the National Association of Home Builders. Over that time period, consumer demand for extra-large and supersized homes in Greater Boston mirrored the national trends. In my analysis of the single family homes that sold in 2011 and were built between 1945 and 1969, roughly 4% were larger than 3,000 square feet and about 2% were larger than 4,000 square feet. Compare that to the 32% of homes constructed after 2000 (and sold in 2011) which were more than 3,000 square feet and the 14% which were larger than 4,000 square feet.
The newer, bigger homes had more bathrooms as well. Of the single family homes that sold in 2011 that were constructed between 1945 and 1969, only about 40% had more than one full bathroom and about 6% had at least three full baths. But of those constructed after 2000, 95% had more than one full bathroom and over 25% had at least three full baths.
There are a host of other features adding value to newer homes as well, including more efficient heating (insulation, high efficiency, etc), better cooling systems (central a/c) and fewer known hazardous materials (no lead paint, uffi or asbestos).
So, in terms of value, maybe some folks see the age of a home as a direct correlation to value and maybe others see… “The Bates Formula for Predicting Super High Home Values” as the lens for understanding value? LOL
Do you want to lower your monthly real estate payment?
Buy in a community with a low real estate tax rate.
Towns assess your home’s property tax contribution by first having the assessing department determine a value for your home and then multiplying the value by the town’s property tax rate. You’ll owe the town x number of dollars per thousand of the value assessment. So if you bought your $500K assessed home in Dover ($11.70 per thousand assessed) instead of Sherborn ($17.72 per thousand assessed), you’d pay $5,850 (500x$11.70=$5,850) in annual property taxes instead of $8,860 (500x$17.72=$8,860). That’s a savings of $250 a month, $3,000 a year or $30,000 over 10 years.
About a dozen Massachusetts communities offer a residential exemption on property taxes which is a further savings for owner occupied home owners. To get a residential exemption in these communities all you have to do is owner occupy the home you buy and let the city know that you are owner occupying it. For example, Cambridge offers a residential exemption and Newton doesn’t. So if you bought your $500K assessed home in Cambridge ($8.16 per thousand assessed) instead of Newton ($10.90 per thousand assessed) you would not only save $2.74 per thousand assessed, but you would also be able obtain a residential exemption of $198,095 off the assessed value on your Cambridge home, a savings of around $1,623 on your property taxes. End result, your Newton property tax bill would be $5,450 a year and your Cambridge tax bill after the residential exemption would only be $2,463 a year, a savings of around $250 a month, $3,000 a year, or $30,000 over 10 years.
I have ranked the property tax rates of 50 key Massachusetts communities below. I have also noted the communities which offer Residential Exemptions as well as the amount of the exemption.
1. Springfield $19.49
2. Sharon $19.47
3. Wayland $19.35
4. Westborough $18.24
5. Amherst $18.20
6. Sherborn $17.72
7. Boxboro $17.38
8. Sudbury $17.03
9. Carlisle $16.13
10. Framingham $16.03
11. Everett $15.89
12. Randolph $15.47
13. Revere $14.44
14. Lexington $14.40
15. Dedham $14.37
16. Watertown $13.92 (Residential Exemption: $1,182.40)
17. Westwood $13.83
18. Chelsea $13.81 (Residential Exemption: $685.20)
19. Malden $13.58 (Residential Exemption: $925.10)
20. North Andover $13.52
21. Lynnfield $13.49
22. Quincy $13.42
23. Belmont $13.24
24. Concord $13.10
25. Waltham $13.09 (Residential Exemption: $1,027.44)
26. Boston $12.79 (Residential Exemption $1,628)
27. Somerville $12.71 (Residential Exemption: $1,738.02)
28. Natick $12.60
29. Melrose $12.46
30. Arlington $12.41
31. Beverly $12.41
32. Lincoln $12.37
33. Stoneham $12.21
34. Winchester $12.10
35. Dover $11.70
36. Cohasset $11.59
37. Wellesley $11.43
38. Weston $11.39
39. Brookline $11.30 (Residential Exemption: $1,864.50)
40. Needham $10.90
41. Newton $10.90
42. Saugus $10.62
43. Norwood $10.10
44. Hyannis $9.38
45. Cambridge $8.16 (Residential Exemption: $1,679)
46. Provincetown $6.81
47. Chatham $4.28
48. Nantucket $3.58 (Residential Exemption: $1,000+/-)
49. Edgartown $3.40
50. Chilmark $2.13
(Based on an analysis of MLS Public Records section conducted in February 2012. With the exception of just a few towns, 2011 Tax Rate is the rate listed. Residential Exemption amounts were determined by contacting town’s assessors office)
Town/City Address High Sale
Weston 75 Doublet Hill $15,600,000
Wellesley 209 Cliff Road $6,800,000
Manchester 28 Masconomo $5,100,000
Brookline 35 Single Tree $4,900,000
Newton 33 Kingsbury $4,550,000
Marblehead 8 Davis Road $4,120,000
Cambridge 46 Brewster $3,869,000
Dover 203 Dedham $3,799,000
Duxbury 33 River Lane $3,325,000
Lincoln 78 Winter $2,950,000
Needham 11 Village Lane $2,800,000
Belmont 30 Audubon Lane $2,675,000
Lexington 8 Alcott Road $2,600,000
Winchester 3 Robinson Cir $2,600,000
Swampscott 50 Littles Point $2,500,000
Westwood 665 Clapboard Tree $2,500,000
Concord 79 Macon Farm Way $2,400,000
Andover 7 Manning Way $2,394,289
Mefield 66 Foundry $2,300,000
Sherborn 46 South main $2,025,000
Sudbury 40 Skyview Lane $2,000,000
Milton 118 Woodland Road $1,805,000
Rockport 15 Phillips $1,750,000
Ipswich 178 Argilla Road $1,700,000
Marshfield 1230 South River St $1,600,000
Natick 20 Apple Ridge drive $1,500,000
Beverly 7 tall Tree Drive $1,455,000
Quincy 17 Landgrane $1,305,000
Arlington 46 Candia $1,250,000
Canton 2 Navaho Drive $1,225,000
Wakefield Lot 11 Carriage Lane $1,100,000
Sharon 7 Kings Road $1,075,000
Somerville 8 Kingston $965,000
Waltham 59 Gilman $939,900
Saugus 2 Long Pond Dr $841,500
Melrose 8 Stratford $775,000
Meford 34 Mammola Way $768,500
(Based on information collected from MLSPIN for the settled dates 1/1/11 – 12/31/11)
Needham, a town bordered by three perennial high-volume million-dollar-selling communities (Newton, Wellesley and Dover) is about to become a town known for its own high volume of million-dollar sales.
In 2004, Needham recorded 50 million dollar single-family sales in MLS. In 2007, it registered 63. And in 2010, with 71 million-dollar sales, it was the 5th most prolific suburb in Greater Boston in that category. Needham is also the only community that this blog covers that had more million-dollar sales in 2010 than it did in 2007 or 2004.
Why has Needham boomed when other million-dollar towns busted? I believe it has to do with the fact that this nice suburb — complete with a solid school system — is becoming an “up-and-coming” million-dollar community.
Residents of more established communities believe buyers will flock to their community based on reputation. As such, sellers in those communities typically don’t spend time updating and upgrading (maybe that’s why you don’t see Home Depots in established luxury communities like Newton, Wellesley and Dover?). Up-and-coming towns, on the other hand, are always known for great finishes. These communities use new, bright and shiny features and benefits to make up for the lack of a high-browed reputation. This certainly seems to be the case with Needham versus its neighbors. In 2010, 62 percent of Needham’s million-dollar sales had been built within the last three years. That’s about five times the rate of neighboring Newton (about 12 percent) and 2.5 times the rate of neighboring Wellesley (about 25 percent). Outside of real estate, “new” beats “used” every day of the week, so it’s no wonder that many buyers chose Needham’s new construction over the “classic” options in neighboring communities.
And if million-dollar buyers were just considering new construction homes, they would see Needham’s new million-dollar construction listings sold for $1.37 million on average, more than $500K less than Newton ($1.89 million average) and $800K less than Wellesley ($2.17 million average). So it’s no wonder why many new construction buyers bought in Needham.
If these value discrepancies continue, Needham’s million-dollar sales growth is sure to continue, as well.
If you are going to buy a single-family home in the most prized parts of Boston — the Back Bay, South End or Beacon Hill — then 83 percent of the time you are going to spend more than $1 million (MLS cumulative statistics, 2004-2009). But if you are going to live in a single-family home outside the city, then Weston is the town that you are most likely to spend $1 million. Between 2004 and 2009, 64 percent of Weston’s homes sales were for more than $1 million.
With 56 percent of the single-family home sales topping the million mark, Brookline was the second most likely place where your home purchase cost over $1 million dollars. Lincoln was third (53 percent) and Dover fourth (49 percent).
Wellesley nearly doubled the amount of Weston’s sales that topped the million mark (956 to 490), but because Wellesley sold nearly three times as many homes as Weston, it meant that only 48 percent of the Wellesley’s single-family sales were more than $1 million, which meant it ranked fifth.
Newton, the tenth-largest city in the state and the most voluminous for million dollar sales (933 single-families and 96 condos), ranked 11th for percentage of single family sales over $1 million (27 percent)
What does the highest-priced home sale in a community tell us about value in that community? Was the ultimate value the community could produce in any given year limited by the excellence of the best available property for sale? Or was the maximum dollar amount garnered in that town for residential real estate limited by forces outside the community? Perhaps, at that particular time and in that particular community, consumers would not pay one dollar more for a property? And in our competitive world, if a town can have a higher-priced sale than its neighbors, does it mean that it’s somehow perceived as more valuable by consumers than the lesser-priced maximum sale in another community? These are questions to ponder as we look at the 2009 highest-priced sales ranked by community.
Although each community gave its best, only one managed to have a home that had all the right features of “location, location, location,” condition and amenities to find a buyer willing to pay $7 million — and that was in Beacon Hill. Outside Boston, Manchester did the best with a sale that topped $6 million. Beverly and Wellesley sold residential homes in excess of $5 million. Cambridge, Dover, Winchester and Brookline had sales that topped $4 million. In one of the toughest years ever in real estate, 24 different towns in the Greater Boston MLS were able to have homes sell in excess of $2 million.
In some communities, there was a significant difference between the highest-priced sale and the second-highest-priced sale, which seemed to indicate that the highest-priced sale in a town was determined by how good was the best available property. Such was the case in Natick, where the highest-priced sale was more than 60 percent higher than the next best.
In other communities, there truly seemed to be a ceiling. While no less than 50 cities and towns in the Greater Boston MLS accomplished million-dollar sales in 2009, Braintree, Quincy and Pembroke topped out at $975,000. Was there anything that would’ve taken one of them over the top? Was there anything that would have caused a buyer to pony up another $25,000 so that the community would have had a million-dollar sale, like Worcester did, or were buyers subtly delivering the news that those are not to be considered million dollar communities?
Conventional wisdom holds that you shouldn’t buy the highest-priced home on the street — but what does it say about buying the highest-priced home in an entire town? That’s a question perhaps best answered by the buyers of the properties listed below, which were the highest-priced sales in their communities.
Where does your town rank?
|4||Beverly||75 West Street||$5,000,000|
|6||Dover||72 Farm St||$4,420,000|
|7||Winchester||3 Central Green||$4,100,000|
|9||Weston||281 Country Drive||$3,775,000|
|10||Nahant||3 Swallow Cove Road||$3,575,000|
|11||Newton||107 Waban Hill||$3,475,000|
|12||Barnstable||262 & 265 Ocean Drive||$3,250,000|
|13||Carlisle||211 Bellow Hills Road||$3,250,000|
|14||Marblehead||33 Bradlee Rd||$3,211,000|
|15||Westwood||Lot 126 Summer St||$3,010,910|
|16||Sudbury||Lot 14 Kato Summit||$3,010,000|
|17||Needham||47 Southwood Lane||$2,859,000|
|18||Mashpee||31 Starboard Lane||$2,850,000|
|19||Lincoln||39 Tabor Hill||$2,600,000|
|21||Dartmouth||72 Elm St||$2,325,000|
|23||Duxbury||21 River Lane||$2,125,000|
|24||Lexington||24 Burroughs Road||$2,110,000|
|25||Wayland||Lot 7 Hidden Springs||$2,100,000|
|27||Topsfield||123 Asbury St||$1,875,000|
|30||Hull||20 Summit Ave||$1,700,000|
|31||Gloucester||130 Hesperus Ave||$1,620,000|
|32||Hamilton||675 Bay Road||$1,600,000|
|33||Lynnefield||6 Joseph Lambert||$1,580,000|
|35||Mansfield||31 Carriage Lane||$1,560,000|
|36||Andover||15 Regency Ridge||$1,520,000|
|37||Essex||51 Lufkin Point||$1,520,000|
|38||Medfield||273 Noth St||$1,490,000|
|39||Hopkinton||Lot 55 Connelly Hill Road||$1,454,000|
|40||Scituate||16 Barrys Landing||$1,375,000|
|42||Plymouth||44 Five Lanterns Ln||$1,340,625|
|43||Wakefield||127 Chestnut St||$1,265,000|
|45||Newbury||18 High St||$1,200,000|
|46||Norfolk||3 Keeney Pond Road||$1,150,000|
|48||North Andover||Lot 5 Abbey Ln||$1,075,000|
|49||Waltham||58 Matthew Lane||$1,052,000|
|51||Braintree||Lot 4 Oregon Ave||$975,000|
|52||Pembroke||32 Canoe Club Ln||$975,000|
|54||Watertown||25 Russell Ave||$967,500|
|55||Foxboro||4 Alice Bradley Lane||$949,000|
|56||Holliston||6 Deer Run||$940,000|
|58||Hanover||43 Forest St||$910,000|
|62||Burlington||10 McCafferty Way||$784,900|
|63||Saugus||12 Vinegar Hill||$770,000|
|65||Danvers||40 North St||$735,000|
|66||Peabody||5 Lantern Ln||$710,000|
|67||Lowell||24 Harland Ave||$682,250|
|68||Norwood||Lot 3 629 Nahatan||$680,000|
|69||Stoneham||2 Thomas Cir||$650,000|
|70||Millis||Lot 16 Orchard St||$629,000|
|71||Haverhill||45 Seven Sister||$525,000|
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About David Bates
The Bates Real Estate Report is an original content blog about the Greater Boston real estate market. The reports focus primarily on the Greater Boston condominium market, and at the same time can touch on other items of interest and happenings of note in the general Boston market. It is written by a real estate agent who works the condo market and who has a passion for Boston real estate. In addition to this blog, his commentary on the market can now be seen in a variety of leading local real estate publications. If you like his insights, obviously, you should consider using him as an agent.
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