I came across a great blog today regarding news on where the market stands today, where it’s going and what needs to happen in order for it to reach it’s full potential. The bottom line is that the market has definitely been on the upswing of late and it can be seen and felt locally with the excellent year over year volume numbers we’ve been experiencing so far in 2012.
Click this link to read more about the market trends: http://actvra.in/xkF.
The National Association of Realtors (NAR) recently released their annual "2011 Profile of Home Buyers and Sellers, MA Report." There are many great figures and statistics that can be found in the report of which a few stood out to me:
~ 94% of buyers in MA used an agent to assist in the process of buying a home in 2011. Nationally, that figure has risen 20% over the last 10 years.
~ "For sale by owner" (FSBO) home sales made up only 10% of national home sales in 2011 and only 5% of homes sold in MA in 2011. Of the 10% nationally, 40% of the sellers knew the buyer and in MA 100% of FSBOs knew the buyer.
~ The average home sale price for FSBOs in MA was $325,500 compared to the average home sale price of $399,900 for homes sold using an agent.
The moral of this story and what the trends clearly show is that buyers and sellers of real estate understand that the real estate market has become increasingly difficult to comprehend since the housing bubble "transition" in 2005. One may contribute the increased complexity to the ever changing mortgage market (90% of purchases in 2011 had a mortgage) or possibly the increased scrutiny of appraisals (see my previous blog post titled "Understanding the Role of an Appraisal").
No matter what the reason, the fact remains that this is not the rubber stamp days of the late 90s and early 2000s. If selling a home were like riding in a canoe, todays market would be considered a class 6 rapid vs the relatively calm waters of 10 years ago. The stumbling blocks that face buyers and sellers today are too numerous to count and now more than ever it is important to have a qualified agent in your corner to help navigate the waterways.
It seems counterintuitive that with all of the doom and gloom we hear about regarding the economy in the media, and a high unemployment rate, that vacancy rates would be lower now than any time in over ten years. You can’t rent an apartment if you do not have a job or the ability to pay for it, right? The current market conditions in the Boston Area are reminiscent to me of when I started in the rental business in the late 1990’s. The competition for apartments was fierce; there was little availability, apartments rented very quickly, and the tenants would invariably pay the full broker fee. These conditions appear to be returning- with rents closing in on all-time highs.
A variety of factors could be behind the tight rental market and rising rents, including a resilient Boston area economy, a reluctance or inability of people to purchase homes, and an unfavorable supply/demand situation for those looking to rent. Boston is home to world renowned Education and Medical Institutions which are highly resistant to economic downturn. According to Governor Patrick, Massachusetts has a lower unemployment rate than 44 of 50 states. People are renting now in greater numbers by choice and some, out of necessity. With home values continuing to decrease, people have an incentive to rent and wait for even lower prices still, and despite record low mortgage rates, people are having difficulty coming up with down payments, and/or qualifying for mortgages due to more stringent loan standards.
These factors, in addition to an insufficient supply of new rental units coming on the market due to the availability and cost of land for building and a large influx of graduate students in the last ten years has resulted in the tight rental market that is showing no signs of letting up.
As you step outside your front door to start your morning- whether it’s the couple steps to your car, your saunter to the nearest T or the all-too-familiar walk with the pooch to your neighborhood Dunkin Donuts for the mandatory first coffee of the day, nothing outdoor related in the Boston area has been synonymous with the term "Red-Hot Spring" as of yet. And with the beautiful snowfall we just got last night, the future ain’t looking so hot either (excuse the pun).
But if you’re looking to buy in Metro Boston, you may be experiencing something quite different.
The Metro newspaper recently interviewed Adam Umina, Metro Realty’s Sales Manager, about his views of the current sales market and his real estate forecast. I won’t waste your time cutting and pasting bits of the article when you can read the whole deal RIGHT ON THEIR WEBSITE.
