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.
This past week mortgage rates tied their all time lows with the national average on a 30 year fixed rate reaching 3.94%. Low rates have pushed up first time buyer sales in Back Bay, where the number of properties sold under $500,000 is up 20% from last year. This should come as no surprise given the dramatic rise in rental prices in the neighborhood over the past year. More and more people are starting to realize that owning in the city can be cheaper than renting especially during a housing market like this. The numbers are also helped by parents of young professionals, who are in some cases, providing the down payment for the children to purchase that first home.
If you are interested in buying a home for the first time or have questions about buying your first home contact us and we’ll be happy to walk you through the process and answer all of your questions.
More and more parents are helping their kids buy their first home. Wealthy boomer parents with cash, are using the money to provide a down payment for their child’s first home instead of putting the money into the stock market. Many of these parents, are hoping to help their children take advantage of the low-interest rates and in some areas of the country, depressed real estate prices.
This national trend can be seen around Boston as some parents look at the high cost of rent as a fruitless expense and would much rather see their children put the money towards the purchase of a home. The gift of a down payment makes it entirely possible for a child to be able to make the monthly payments while they build up equity in a property they actually own.
For more information on gifting a down payment to your child contact Pat Tobin at MetLife. If you’re interested in discussing options for your child give us a call at 617-449-3642.
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.
Mortgage requirements continue to tighten, but one thing remains constant; buying a home on a freelance salary continues to be more difficult than on a regular salary. The number of freelance workers is on the rise thanks to a tough job market. As a result mortgage companies are seeing a rise in this type of application. So what can you do if your a freelancer looking to qualify for a loan this fall?
First you can provide proof of a down payment. It doesn’t matter whether it’s a gift from a family member or account statement showing the money sitting in a 401k/savings account. The important thing is being able to prove in a verifiable way that you have the down payment ready and waiting.
Second you can prepare for a tougher review of your application. Gather your tax returns from the past 3 years. If your income had a big jump in the past year be prepared to answer questions on why. When you work on a freelance basis one of the most important things your application can show is that your income is on the rise. They want to see that you’ve had steady income bumps over consecutive years.
Third be prepared to seek out local banks. Local banks are often willing to go beyond what’s on application itself and look at the person applying for the loan. Local banks are the go to place when new developments need financing, because they are willing to look beyond typical lending restrictions.
Getting a loan on a freelance income isn’t impossible but it’s important to remember the three points above in order make the process easier. If you have more question on home loans or qualifications be please be sure to contact Pat Tobin at pwtobin@metlife.com .
The end of an era is coming, the death of the 4% interest rate is not far off. If you’ve been watching mortgage rates for the past few months you’re well aware rates are on the rise, but it looks like they are about leave the 4% arena for good. In the past few weeks here in Massachusetts we’ve seen mortgage rates dance above 5% for a little bit but come back down. It is unlikely though we will see them go back down to the 50 year lows they were at earlier in the year. As mortgage rates begin to rise you can expect to see a small surge in the market with people looking to make a purchase before rates get too high.
Back Bay Condos, Boston Real Estate Market, Financials | Chris Dunn | 
January 23, 2012 3:50 pm | 
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