President Obama’s budget proposal to reduce the amount of mortgage interest deduction on families earning over $250,000.00 a year is a major impediment to a real estate recovery. The National Association of Realtors is unequivocally opposed to this plan. The average house price in the Newton/Brookline area is $900,000.00 or so. A $250,000 salary barely lets you afford the average house here. If this is plan enacted it will cause a secondary round of price depreciation and cause more havoc with an already fragile banking system. The NAR is going to do everything it can to prevent this from passing. In the coming days I will post a link to so you too can get involved. The housing market needs your help.
The Case Shiller index was released and although Boston performed quite well compared with other parts of the country, Newton performed even better. Here are the numbers; the median single family home price dropped 20.2% during January in all of Massachusetts when compared to sales during the same period a year earlier. Boston prices were down 1.3% from the year earlier, the best performing city of the 20 tracked. Newton was up about 16%! The median price of a home during the month of January 2008 was $667,500, January of ’09 was $800,000. The number of sales dropped from 44 in ’08 to 25 in ’09.
Do I really think the market is up 16%? No I don’t, but the numbers don’t lie. I feel the biggest impediment to an absolute recovery is the high end market. The high end market is languishing for sure, there is too much uncertainty with the stock market, job security, and bonuses to propel those buyers to take the plunge. On a positive side we are seeing a definite increase in relocation business. Some of the Universities and hospitals are hiring.
My final word is know your market.
Here is the link for the Globe article.
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Does the Boston Globe have a thing against Newton? When was the last time you opened the paper and there was a positive article about Newton. Yesterday the Globe trashed talked Newton about how fiscally irresoponsblie the city is and how the taxes are so high… blah blah blah….so I did a little digging. Many will not be happy about this including my husband, but Newton’s tax rate isn’t high enough. Take a look at the facts; Newton has a tax rate of 9.96 per thousand.
Newton has one of the lowest tax rates around and the city provides the most services. If I lived in Sudbury I could pay a tax rate of 15.29 and drive my smelly garbage to the dump on a hot humid Saturday afternoon, or pay a private company to dispose of my garbage for $30-50 per pickup. Newton sounds better all the time.
The old adage of location, location, location is back in vogue. Judging from yesterday’s article in the Home section of the Boston Globe the old reliable towns have suffered the least in home prices. The truth is, there is a reason why certain towns retain a cache, yes, yes, good schools are important, but is that the only reason? When I drive around Newton, Brookline, Wellesley and Weston you see thriving town centers, ok maybe not Weston, but you see a history in these towns. Let’s talk about Newton first; Newton has a symphony orchestra, a music and ballet school an established Art Center, a phenomenal library, 4 colleges and a fabulous commute to Boston or Logan. If I decide I want to go to Boston, I just go, I can be there in 12 minutes by car or I take the Green Line. The outer suburbs; going to Boston becomes an event. Wellesley has probably the best downtown and a slew of new restaurants along with the Library, shopping…Brookline has a very involved community, different villages offering different things appealing to young and old. When I meet a new buyer I always try to get a feel for what they like, while cautioning them that you are buying more than a house you are buying a lifestyle. Many young buyers get caught up with the BIG HOUSE and BIG YARD, but that is all they have in outlying suburbs. You meet people just like yourself, upwardly mobile with good jobs who think the American dream is a bigger house and yard, but is a big house and yard all you want from where you live? No thriving downtown, no libraries, symphonies etc…why…because the towns are too new, all the money is spent getting the schools and infrastruture up to speed. I believe the most important quality a vibrant town offers is its older citizens. These are the people that fought for the libraries, the schools, the arts, even the zoning restrictions. I can’t tell you how many interesting people I have met just walking the dog. You cannot meet your neighbors if you live on a 2 acre property at the end of a cul-de-sac. You can’t walk into town and have a cup of coffee at the local coffee shop or bakery because people don’t linger at Dunkin Donuts. What makes strong communities?– the businesses in town that are second and third generation, the art and book stores that have recently opened, the hair salons, the upscale and ordinary clothing stores owned by people who live here. Many owners live here but their employees may not, but they can get here by public transportaion. And most definitley, all the retired people who don’t want to leave because it’s so comfortable here, their friends and grandchildren are here, and yes, the Museum of Fine Arts is only 12 minutes away.
Well the federal stimulus package was passed by Congress yesterday, but will any of it help the local housing market? The most important piece of the bill regarding real estate was raising the loan limit on conforming loans from $417,000 to $523,750 in Greater Boston. The average price of a home in Newton is somewhere around $900,00 and $1,000,000 in Brookline so a $523,750 cap seems perfect, right? Apparently, Congressman must already have or want a home on the Vineyard or Nantucket because the loan limit there is $729,750. These new rates are also in a category called “expanded conforming”- translation- they can be changed, hopefully the limit will be made higher. Presently the conforming rate is around 5 1/2% the expanded conforming rate is 5.74% and the jumbo is around 6 7/8%: a huge difference in mortgage payments.
What does all this mean for Newton? If the average price of a home is $900,000, a buyer would have to have a 42% down payment equivalent to approximately $375,000 to qualify for the expanded conforming rate. Well that seems doable doesn’t it? It was not unusual a few years back for this to be common because housing prices were rising; buyers sold homes at much higher prices than they paid and used the additional equity as a down payment for their next house. This is simply not happening now; while Newton/Brookline have been spared a huge drop in values, values are off from their peak in 2005. Savings accounts have been decimated, jobs are being eliminated, bonuses cut, food/clothing prices are rising. We need more relief. We need to impress upon our Congressman and Senators that we need the relief here in the western suburbs, raise the conforming rate back to $729,000 like it was part of last year. A million dollars may buy a mansion in the mid west – here, you simply get a nice house.
I am delighted to announce that I have joined the office of Sotheby’s International Realty here in Newton. I am energized about the prospect of working with Marcia Karp, Susan Liberman and Margie Kern. They have successfully owned Karp, Liberman, and Kern for 23 years before merging with the Sotheby’s network in 2006. These three women are some of the most respected women in the local real estate market. This partnership allows me to collaborate with knowledgeable professionals, along with a fabulous staff, and have the power of the Sotheby’s trademark behind us. Sotheby’s is committed to providing highly personalized services in combination with global capabilities. I look forward to working with them and you.