Over the past few years the number of people who have decided to rent our their condos in Boston rather than sell them has certainly increased, and in some cases dramatically so. The side of effect of all this renting is just beginning to show it’s face. We’ve already talked about how rentals are now priced sky high, (see here) but there is now a second side that is starting to show it’s face.
Owner Occupancy Rates
Most people have never really focused on this little used metric when buying a home, but it’s incredibly important. The most important use of this statistic is when it comes to getting a mortgage. Most mortgage companies want to see minimally 50% owner occupancy and most would like to see more than 60%. For many condo buildings in Boston this has never been a problem but with the increase in de-facto landlords many buildings are now flirting with this number. The result, it’s become another obstacle for many buyers to overcome, not just from a mental standpoint but from a closing standpoint.
The mental aspect is that buildings with high owner occupancy rates are generally better maintained, since the people living there have a vested interest in how the property looks. Since so many owners have now become de-facto landlords however, this type of thinking might need to shift. It needs to be recognized that some of these people will not be landlords much longer as the market improves.
If you have questions about Owner Occupancy Rates or other questions related to buying a home, contact our office at 617-449-3642.
It’s inevitable that as we begin the new year, we look back and see in full review what happened last year. This will be the first in that series but it’s important to take note as we look ahead to 2012.
So what part of the market was the most active in 2011? Across the city the best performing price range in 2011 was the $1-2 million range. The sales volume for condos in this price range was up just slightly over last year. To drill down further though, you’d find that the truly best performing market was Back Bay condos under $500,000. The sales of condos in this price range, in this neighborhood were up 18%. This large jump, when many sections of the the market saw a decrease in sales volume is most certainly a result of increased rental rates. As rental rates around the city increase more and more people are looking to purchase their first home. For many people this number is right around $500,000. This segment of the market we believe will continue to be strong this coming year as more people continue to face rental increases.
The photo above is of a new sub $500,000 condo on Commonwealth Ave in Back Bay. For more information on this home check it out here.
You only get one chance to make a first impression, it’s the same for houses as it is for people. Some statistics say as people we make a decision about whether we like someone in the fist 5 seconds of meeting them. This is generally based on facial expressions, body language, what they are wearing and perhaps some of the first words out of their mouths. Houses just like people make quick first impressions too. There’s curb appeal, the feeling you get when you’re inside, the way it’s decorated and kept up/cleaned. The major difference though, is price. You have to remember you’re paying for the home, so price is a key component of that first impression.
Pricing a home is just as much art as it is science, but it’s important to get it right the first time. Homes that aren’t priced correctly tend to stay on the market longer and potentially have multiple price drops before they finally sell. Recent Back Bay sales data shows what a difference pricing your home correctly the first time can make. Homes that are priced right the first time generally sell in the first 100 days and sell for 6% more than their counterparts that are on the market over 100 days. The big difference though is that homes that sell in under 100 days are 4 times more likely to be sold for asking price or better.
If you’re interested in finding what your home is worth contact our office at 617-449-3642. Our knowledgeable and experienced agents will help you determine the best price for your home.
This weekend I had a conversation with a couple who are thinking about investing in real estate. Concerned with the instability of the stock market, and complaining about the lack of interest they are earning at the bank, they thought real estate might provide better and safer returns. This couple is not alone in looking at real estate as an investment lately.
While much of the US still appears to be finding the bottom of the housing crisis, the greater Boston area has been thriving relatively speaking. Homes in the Back Bay neighborhood are not selling in the volume they once were, but prices are certainly up. The pricing maybe pushing some first timers away, but as a result it’s causing rents to reach the highest levels they’ve ever been. (see our story here) For those with cash though, there are plenty of attractive investments out there.
Most banks are offering their best customers 1% with most offering cd rates around .4% so it’s no surprise wealthy clients are looking at their options. Decent Boston condos are offering returns in 5% neighborhood due to strong rental demand and a predicted short come of housing for several years to come. For those that are more serious about real estate investment, they are finding multi-families that are generating between 10-20% returns.
Investing in real estate is not for everyone and as with any investment it comes with it’s own risks, but with markets in turmoil and banks offering next to nothing, real estate becomes an attractive option. For a personalized real estate investment guide contact our office at 617-449-3642.
Last night on CNBC’s Mad Money with Jim Cramer, the show had some interesting news for those watching the real estate market. Jim Cramer was sadly pointing out that despite the facts, the housing sector continues to be the whipping boy for the media. His primary example, the venerable Wall Street Journal.
On July 28th the WSJ ran a headline that said “Home Prices Rise but Outlook for Sector Dims.” Then again yesterday they ran a similar story, “Home Prices Edge Up but Outlook Darkens.” So despite continued good news in the actual market, we’ve gone from a dimming of the market to a darkening. If this “look at the facts don’t listen to the headlines” story sounds familiar it’s because I said this a month ago. (See Here) So what has all this fear mongering cost us? Well according to Cramer it’s cost us a 10% dip in the market. On the upside it’s probably done wonders to boost attendance Stephen Colbert’s Keep Fear Alive March. Remember, always look at the actual numbers not the headlines.
Back Bay Condos, Boston Real Estate Market, Financials | Chris Dunn | 
January 23, 2012 3:50 pm | 
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