The real winner of the 2009 western suburb real estate bake-off was Brookline. The numbers are in: Brookline had 124 single family sales in 2008 with and average selling price of $1,325M, during 2009 there were 125 single family homes sold with an average selling price of $1,315M a decline of less than 1/2 a percent. Newton didn’t perform badly either, with 499 single families sold in 2008 with an average selling price of $904K, 2009 saw 511 homes sold at an average price of $840K with a decline of about 7%. Moving further out to the west, the toniest suburb Weston, declined roughly 10.5% from a high of $1,550M on volume of 98 homes to $1,386M and 98 homes sold. Normally Wellesley is rock stable, but 2010 was not a great year for Wellesley, the average selling price in Wellesley was down roughly 15% from 2008. Wellesley had 268 homes sold in 2009 averaging $1,152M versus 271 homes sold at an average of $1,351M in 2008.
Does this data bring us back to location, location, location or something else? I believe it is a combination of two factors with location and proximity to Boston holding up Brookline prices for sure, and to some degree Newton. There will always be a demand for an easy commute and good schools. Wellesley certainly has the best downtown area of the suburbs, so why the drop? First off I think it is a blip caused by an overly ambitious/optimistic building community where 4 million dollar houses on small lots were cropping up all over Wellesley. The only people able to afford these houses were people employed in the investment houses, well, that was fine until September of 2008. It is clear that much of the price declines in Wellesley stem from an overly large segment of the population employed in finance. The high-end homes are putting downward pressure on the more moderate priced homes. As the 4 million dollar homes become 3 million, the negative implications of that just spiral down. We are seeing some buyers considering Wellesley if they feel they can get a bargain in comparison to Newton.
Newton has relatively little inventory at present, a good thing for prices. The housing market has been looking for bottom for the past two years and thankfully we didn’t fall off a cliff, but have we hit the basement or the first floor? There is a slight glimmer of hope on that front if inventory does not rise and consumers feel confident enough that they are not going to lose their jobs. I do not believe a robust rebound is imminent, depending on the labor market and the stock market, I believe we will be treading water through 2010 and possibly 2011. The one big caveat is interest rates. if we see a rise in rates I believe we will see a decline in prices. Newton benefits from location, schools, and a more diversely employed population.
The economy seems to be a slow motion and the real estate market is echoing that to some degree, it appears we are in a stable but unhurried atmosphere with regards to housing and for now that is the good news.