December is upon us and feeling overwhelmed will be commonplace. The seasonal to do list is endless with shopping, entertaining, decorating, work obligations along with the ramped up versions of our childrens activities. The added burden to keep your home in “showtime condition” just might be the last straw. I understand the thought process, if you are too busy, certainly the buyers are also too busy. You may feel as if your efforts will be for naught for such little activity-but how is your house going to sell if it isn’t on the market? Buyer activity does slow down to some degree over the holiday period, but inventory also drops considerably. Motivated buyers continue to look in December. Declining inventories usually translate into higher prices. I am not suggesting that your home is going to shoot up in value because it’s the holiday’s. I am suggesting that waiting until the spring for your garden to look pretty will not get you a higher price. Why, because the inventory will start rising as spring approaches. Real estate is quite simply a supply and demand business.
I have often heard buyers say, “where will I put the tree”, or can I get everyone around the table for Thanksgiving and Passover? Realtors always stress de-personalizing a home so buyers can imagine themselves with their things and not yours. Unfortunately, I sometimes think that some homes take on a sterile lifeless look if not done carefully. Most houses exude coziness during the winter holiday season; a fire burning in the fireplace, cookies baking, and greenery all evoke a feeling of warmth. When is your home ever more inviting?
With reduced inventories and motivated buyers you may find that you truly do have something to celebrate this holiday season; you may experience a touch of nostalgia about this house, but you will also be energized by the prospect of creating new memories in your next house.

Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

•• Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
•• Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream.
Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined?
Each home buyer’s tax credit is determined by tow additional factors:

1.The price of the home.
2.The buyer’s income.
Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

Last week I took my buyers to a new listing in Needham. The house was great for $599, it seemed almost too good to be true. The open house was scheduled for the next day and my buyers were the first to view the house. They both loved the house and wanted to make an offer. We walked around outside and saw that there was a sizeable wooded field across the street but you could see that cars or trucks had been going onto the field. I inquired with the Broker about the land and was told that the land is zoned for 4 houses each on a one-acre lot. We drove around the corner and down a side street to the other side of the land. The buyer got out of the car and headed down a wooded path only to discover a few deer, a large flat area surrounded by trees and brush, but nothing going on. Satisfied we went back to my office and wrote an offer. Since we wanted this offer accepted before the open house, we made an above asking offer. The sellers countered and my buyers agreed, we had a deal. The open house went on as planned and the buyers took one of the mom’s to see the house, as expected it was mobbed with prospective buyers and my clients were thrilled. The inspection was planned for Monday. I arrived at the property 10 minutes after the inspection started but my partner was there. She said you could here drilling of some type across the street. I walked over to investigate a little further and was stopped by a gentleman testing the soil. We chatted a few minutes and asked when the groundbreaking would begin for the new homes. Looking a little uncomfortable, he told me he did not know anything about homes, they were testing the soil for a building. Alarmed, I immediately drove over to the building department, I gave the address and told my story but there was nothing “on the books” for this lot. I walked over to the engineering department and told my story again. The engineer pulled out the town maps and lo and behold, we saw the field had become a cul-de-sac with a new name. Sure enough, there were 4 one-acre plots on the lot. I went back to the building department and now asked for the information on the new street-oh, she said, “that is our huge project”. She handed me an enormous package and in it contained APPROVED plans for a 49,000 square foot building and parking for 70 cars, all directly across the street and within view from my buyer’s new home. I drove back to the house and briefed the buyers about what I had discovered, the husband and I went back to take a look at the plans. The look on his face was enough to know that their dream home would turn into nightmare home. We went back to the house; the inspection was still taking place and relayed all the information to his wife. Needless to say we halted the inspection, Susan and I paid for the inspection and left. I later called the Broker to inform her that the buyers were definitely walking away and to return their $1000.00 good faith offer, of which she has.

Luckily, for all of us, no harm came to the buyers and they did not lose any money. Never again will I see something that doesn’t look right to me and take someone else’s word. I am not suggesting she mislead us, I don’t think she knew. Nevertheless, my instincts were right to question the future plans and under normal circumstances, I would have gone to City Hall, but since time was of the essence, it was not possible. Do not put down your P&S money without knowing as much as you can about the site of your future home.

Fall continues to be very busy with buyers in all segments of the market. The stagnant high-end market has also seen a turn around since many buyers have stepped up to the plate in the past month or so.
So far the 3rd quarter of ‘09 130 homes have pending contracts and 199 have sold. 2008 saw 99 homes pending in the 3rd quarter and 168 properties sold, a 30% increase in pending contracts and about a 20% increase in solds. The most significant change has been in the high-end. That segment of the market came to a virtual hault until the summer. The break down follows:
2008 UAG
9 homes 1-1.499 million
3 homes 1.4-1.999 million
4 homes 2-2.499 million
0 homes avove 3 million
2009
17 homes 1-1.499 million
4 homes 1.5-1.999 million
1 home 2-2.499 million
1 home 2.5-2.999 million
5 homes 3-4 million
So why are homes moving again? Quite simply, the prices have dropped. The median price of a single family home 3rd quarter of ‘08 was $817,000, vs. $754,000 for the same time period in ‘09; a decline of slighlty less than 8%. Interest rates are also lower than this time last year, although guidlines seem to change on a weekly basis. Historically, October has always been the smost volatile month on Wall Street; if we do not see any debacles there, I would expect the housing market to be on the upswing in terms of volume. I do not see prices rising substantailly if at all, but I do expect a more steady housing market here in Newton. Realistic buyers and sellers are the key to healthy real estate market.

The past 3 months have been incredibly busy. Summer is usually a very quiet time with fewer buyers out in full force. This summer, 286 houses are under agreement or sold. The sales have occurred across all price ranges. Of the 286; 246 have already closed and the average list to sales price was a remarkable 98.5%, a very good ratio. The average list price was $902,000 with an average sale price of $887,000; houses remained on the market roughly 75 days. The breakdown follows:

1 $100K-199K
8 $300K-399K
17 $400K-499K
42 $500K-599K
33 $600K-699K
31 $700K-799K
23 $800K-899K
20 $900K-999K
52 $1000K-1500K
12 $1500K-1999K
5 $2000K-2499K
2 $3 million+

These numbers reflect a growing sense of confidence buyers have in the real estate market. Interest rates are extremely favorable and lenders appear to be settling in to standard lending practices. I believe the worst may be behind us; in fact, our inventory is quite
low at this time.

May Existing Home Sales fell short of expectations. Month over month home sales only increased 2.4% versus expectations of 3%. This is notably weaker than the strength of the pending home sales reports where the latest report was a rise of 6.7%. There is true irony in the shortfall. Normally, in this environment, the finger would quickly be pointed at the banks, but that is not the case. The National Association of Realtors has pointed the finger squarely at the appraisers. According to NAR, “However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan,” and “Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales.” The 180 degree reversal in appraisals illustrates the essence of the bubble-bust environment in which we live. Just 3-4 years ago, it seemed as if appraisers added value to a property simply because the sun came up that morning. Fraud was rife, and as we all know, many unqualified buyers bought homes they could not afford. Today, asset values have significantly corrected, housing has been in a 4 year downturn, we are 18 months into the longest post war recession, and as buyers finally materialize, the appraisers are afraid to give the valuations that support the prices buyers are willing to pay. There are essentially $10.5 Trillion in mortgages out there and a significant portion of those were made at higher price levels. Now, when the smart and patient buyer steps in at low levels, the valuation is an issue. In any market, if someone does not pay above the last sale price, then you will never see a rally. Homes are not nearly as liquid as equities, but the self interest of free markets will prevail (sorry, free markets with government subsidies). Obviously, it is preferential to see these deals closing, regardless of the distortion in the market place. It is still a positive sign that trends are shifting in the right direction.

The high end market has been stagnant since the meltdown in the financial markets last September. While it has been raining here in Newton most of the Spring, the high-end housing market (homes priced above 1.5 million) is seeing some sun. During May and June 13 homes have gone under agreeement or sold. That is a significant increase over the 10 homes under contract from January thru April. The average list price was $2,310,269 and average sale price is $1,997,083. The list to sales ratio is about 86%. Worth noting, the average days on market was 217 days, 5 of the 13 were on the market between 221 and 808 days. Homes more recent to the market average 86 days and will probably garner closer to their asking price. On a personal note a 2.5 million dollar home in excellent condition I brought to market last Thursday has had 16 showings, and 3 second showings. We are negotiating one offer and are told we are getting another offer. Compare this to a beautiful home I listed in March for 2.8 million I had a total of 8 showings in 2 1/2 months before we decided to take the home off the market.
San Francisco entered the decline before Boston and seems to be recovering ahead of us also, although suburban Boston did not see the steep drops San Francisco did. MDA DataQuick reported on San Francisco home prices. Although they are down 34% year over year, they were up 12% month over month and are up 18% from the March cycle low. The rise in median price is a sign that the high end is starting to see some signs of life. Sales of homes $800,000 or more were 13.2% of all resales, the best reading since October’s 14.8%. Jumbo mortgages accounted for 25.5% of the Bay Areas sales, which is also the best reading since October’s 25.8%.
Home sales in Newton under 1 million dollars are brisk, with some receiving multiple offers and most receiving close to the asking price. However, pricing is still key, overpriced homes are not selling at any price points. The condo market continues to be very weak with the recent tightening of mortgage guidelines for condos. There are loans for condos, but it helps to have a knowledgeable mortgage broker.

Buyers’ agents are agents who are experienced in representing the needs and desires of the buyers. Many buyers incorrectly believe that if they don’t use a buyers’ agent they can get the seller to “discount” the property in-lieu of paying the full 5% to the listing Broker. A seller enters into a listing agreement (a legal and binding contract) with the listing Broker for an agreed upon percentage of the final sales price; usually 5%. The 5% is roughly divided 4 ways, the listing side gets 2.5% and the selling side gets the other 2.5%. The 2.5% is then split between each office and sales agent. If the listing agent sells the property directly, the firm that agent works for gets 100% and is shared with the listing agent. Most agents cannot negotiate the company commission. The contract states that the agent has a fiduciary responsibilty to represent only the seller. Included in that representation, it is the agents job to negotiate the best possible price for that home. An agent cannot represent both the buyer and a seller in a contract. The agent may not disclose personal information about the seller without the sellers consent. If for instance you wander into an open house and you decide you want to make an offer with the sellers agent, you the buyer and the seller must agree in writing that this is taking place. Be aware, the sellers agent is still representing the seller, you are not represented by anyone. Futhermore, the seller’s agent and the firm they work for stand to receive 100% of the commission. So the agent has a different finacial stake in your specific offer. No agent cannot promise you she/he can do better on the price if you buy directly from them. It is illegal. Of course the agent wants you to make an offer with out another agent, they receive the buying and selling side of the commission. It has been my expereince that buyers without buyer representaion pay more for the property.

Reliable advice and information is the key factor in making a good decision. A buyer’s agent will provide you with information, but not necessarily limited to the following.

The original purchase price of the house

The mortgage amount still owed on the house

Comparative market analysis for similar homes in the neighborhood

The original list price and any price adjustments since listing date

The number of days the house has been on the market

If the house has been listed for sale in a previous year and did not sell

Information about a house having been under contract but is now back on the market

Evaluating improvements the seller may have made to the house and whether the seller obtained proper permits. A town permit requires all subcontractors to be licensed by the state

The relationship to assessed value and market value

Accompanying you to the inspection and re-negotiating on your behalf if nesessary

Introduction to reliable mortgage lenders, home inspectors, closing attorneys

Keeps track of important dates (mortgage commitment, inspection contingency) and communicating their importance to you.

Protects your P&S money..by keeping track of these dates and communicating effectively with seller’s agent, mortgage broker and attorney.

Provide a list of pre-schools, churches, temples, restaurants, transportaion, however, we cannot make evaluations or offer an opinion regarding the schools and temples etc.

So why do buyers think they are getting such a good deal when they buy a house without the aid of a broker? They haven’t been educated. Most believe the seller’s agent is also representing them. A seller’s agent must be honest and disclose what she knows about the house, but their fiduciary responsibility is to the seller. Would you go to court without representation? Would you have surgery without discussing what was going to happen with your Doctor? Buying a home is a huge financial and emotional undertaking, you shouldn’t go it alone..

Where have all the homebuyers gone? Buyers are asking where have all the realistic home sellers gone. Sellers need to look in the mirror and ask what they would pay for their own home. The kitchen you renovated in the 80’s looks the same way the 50’s kitchen looked to you when you bought the house 30 years ago. That modern 70’s bath with groovy tiling is now just an eyesore. While wall-to-wall carpeting was all the rage, it-is-no-longer, ditto for the wallpaper. Moreover, that knotty pine lower level you entertained your friends in back in the day is now just a musty basement. The truth is, someone is buying the bones of your home, and they want to create their own memories. You don’t like the cabinets, the tile, the siding or the paint colors on your next home either. Buyers don’t care about your daughter’s wedding in the backyard and how beautiful it was. Honestly, when was the last time you spent money on the garden other than weekly maintenence. We cannot be in both a seller’s market and a buyer’s market at the same time. It is highly unlikely that you will sell your home for a premium and buy your next house at a discount. If your home is not selling, it has nothing to do with your Realtor’s marketing plan. It’s the price; price melts away objections.

Every house has a fair market value; the price point at which a buyer is willing to pay and a seller is willing to sell. Both parties need to be realistic, but in a buyers market the sellers need to be more flexible. As a seller, is it more beneficial for you to sell your home now or ride out this cycle and wait for the next boom? Does it make sense to list a home with a fair market value of $1.5 million for $1.650 and wait until next year or beyond to get the higher price? Do you think the market will be 10% higher next year? The catch is- the market needs go up 20% because your house is listed 10% above fair market value. Just ask the sellers who finally sold their homes after a year on the market what their early offers were, the price they found insulting; I can assure you it was substantially higher than what it ultimately sold at. I am not suggesting you accept a low-ball offer, but ask yourself, is it the buyer or me who is unrealistic? Remember, sellers who understand fair market value set the price for future sales. You don’t want your home making the competition look good.

Most sellers are emotionally stuck on an arbitrary number and have trouble accepting a lower price. Oftentimes this number was something a friend said at a cocktail party. The conversation usually sounds like this, “did you see the house across the street sold for 1.5 million? Well your house is so much nicer you could get 2 million”. Of course, this person has no real estate qualifications, but now the sellers feel like they are losing money, you can’t lose money you never had.

The question only you can answer is, do you stand to gain more from waiting? Will you be substantially better off if you sell in 1 -2 years, as compared to selling at today’s market value? Most often the answer is no.

I posted these numbers April 1st using MLS market sold statistics. Do these numbers make- sense-yes and no, all parameters must be taken into account, not just price.
First, MLS statistics have Newton’s median price up about 2%, not down, the median price was $717,500 in 2008 versus $735,000 in 2009. MLS uses only homes listed publicly for sale by a member of Multiple Listing Service. I got a lot of flack for posting average numbers in my last blog post which showed 2009 down 7% from the same period last year. $875,124 in 2008 versus $807,163 in 2009.
Since April 3rd we have seen inventory rise to 245 single family homes,
184 condos for a total of 428. 105 above 1 million, and 31 above 2 million. 54 homes have gone under agreement in the past month, however, 99 new listings have come on the market, so twice as many new listing are coming on than going off. This is not rocket science; we are clearly in a depreciating market. Sellers who understand this concept and act first to lower prices or list with a realistic price will reap the rewards, because buyers out there.

Let’s look at what I posted on April 1st.

Newton Housing Stats 1st Quarter ‘09 vs. ‘08
Posted by szerlip under Uncategorized | Tags: Greater Boston Real Estate, Newton/Brookline Real Estate, REAL ESTATE |

The 1st quarter year over year results are in for Newton Single Family Homes

‘09
Homes Sold 45
Average Sale Price $811,100
Median Sale Price $735,000
Days on Market 90
Highest Price $3,000,000
Lowest Price $314,000

‘08
Homes Sold 77
Average Sale Price $875,124
Median Sale Price $717,500
Day on Market 113
Highest Price $1,850,000
Lowest Price $375,000

Prices are down about 7% from 1st quarter of ‘08. Volume is down a whopping 40%, but days on the market is also down, from 113 days in ‘08 to 90 days in ‘09. The market is struggling the most at the high end. So far this year there have been nine sales above $1,000,000 compared with 21 at this time last year. Only two house have sold above 1.5 million 1st qurter this year, last year 12 homes sold above 1.5. At this point Newton has 26 homes priced above 2 million dollars, (a record) expect to see homes withdrawn or price reductions to get the high end moving again.