Relevant Real Estate Statistics!

I think that most people would agree that we live in a world of too much information. The business of residential real estate is no different. When you try to digest too much data or information, you end up feeling like you know a more facts but not really what it all adds up. I compiled a list of statistics from the MLS database on what I consider the “downtown” Boston neighborhoods. The following chart shows what I think is most interesting and most relevant about the immediate past 5 years in downtown Boston. Year 1 is 3/8/2012-3/8/2013 and Year 2 is 3/8/2015-3/8/2016, etc. through Year 5, the immediate past year 3/8/16-3/8/17.

Quick Glossary
# = Number of total Lisings sold
DOM = Days on market from listing to contract for sale
SP = Mean Sale Price
SP:LP = The ratio of the final sales price to the last listing price. A “100” means the property sold for the last asking price.

Year      #              DOM                 SP                              SP:LP
5            2566         32                $770,000                      100
4            2661         30                  695,000                       100
3            2655         32                  637,000                       100
2            3082        33                  585,000                         99
1            3048        33                  530,000                         98

Inventory
These statistics tell most of the story of the downtown real estate market over the last 5 years. First, inventory is up – about 20% over the last 5 years. I think this is the result of the large number of new high end construction projects in the downtown markets, as well as the consistent and constant development in the neighborhoods.

DOM
To understand the meaning of the DOM statistic it is helpful to know that the national average for the past 5 years is about 86 days, and it rarely dips below 70 in any given month. The Boston average has hovered at about 30 for the last 5 years. Property sells FAST in Boston.

SP:OP
Along the same lines, the SP:OP ratio has creeped up from the high 90s to 100%. Property sells at about asking price in Boston.

Prices
Prices are up 45% in 5 years with an average appreciation of over 9% per year. The immediate past year saw the largest increase with prices going up about 10.8%

Conclusion

The evidence is clear that the market has been strong and consistent for the last 5 years. Can it go on forever? Probably not, and, as always, the $64,000 questions is when the market will turn? I will be looking for the statistical signs of a slowdown and I will let you know when I see them!

Is The Real Estate Market Too Tight?

re-market-tightYou have probably heard about the dearth of residential real estate listings in the Boston area. So how tight is it and does it even matter?

It is in fact very tight from an historical perspective. However, my interpretation of the data is that inventory has been falling for a while, and has gradually reached a point where people are noticing that there is so little for sale. The following is a recent snapshot of 3 different areas that represent a good cross section of the entire Boston area. [all data is directly from MLS].

All Brookline Residential Properties for Sale:
March 30, 2015: 64
1 Year ago:           99
2 Years ago:        94
3 Years ago:       201
4 Years ago:       249
10 Years ago:      177

Downtown Boston (Back Bay, South End, Beacon Hill, South Boston, Midtown, Waterfront, Leather District) Residential Properties for Sale:
March 30, 2015: 287
1 Year ago:          299
2 Years ago:       304
3 Years ago:       682
4 Years ago:     1028
10 Years ago:    683
Note: Many of the new ultra-luxury high rise units coming on the market are sometimes not reflected in MLS and that can distort this data.

Newton:
March 30, 2015: 131
1 Year ago:           150
2 Years ago:        138
3 Years ago:        279
4 Years ago:        311
10 Years ago:      297

Clearly, inventory has been shrinking the last few years and is substantially down since 2011, and from the numbers 10 years ago. I don’t think there is anything alarming or “bad” about this situation. It is merely how the market is different than it has been. When there is too much inventory or the market is slow, the popular news focuses on all the heartache associated with homeowners not being able to sell their homes. Now, the popular news focuses on all the heartache associated with bidding wars (see The Boston Globe, Low Inventory + Low Price=Bidding War, March 31, 2015 p.1) and notes that agents have begun to price properties low to promote bidding wars. I think the Globe is correct about the facts, although they emphasize the negative effects on the folks who are on the short end of the stick this time around. The bottom line is that it is a good time to be a seller rather than a buyer.

A Different Type Of Tear-Down: Court Orders Million Dollar Marblehead Manse Demolished For Zoning Violation

One Very Expensive Lesson

This is a human interest story that contains a good reminder for those of us who often believe that when it comes to dealing with certain authorities, it is better to ask for forgiveness than permission. In this case, that strategy proved disasterous. I have posted it here courtesy of Attorney Marc Canner’s and Attorney Rich Vestein’s Massachusetts Real Estate Law Blog.

marblehead-home-teardownAfter a 16 year long saga, wealthy Marblehead mansion owner Wayne Johnson’s battle to save his house from a court-ordered wrecking ball has come to an end. The underlying legal saga is convoluted and complicated, but the end result was swift and destructive — the million dollar mansion is now rubble.

Johnson’s battle started in 1995 when he recorded a plan dividing his land into two lots. One lot contained an existing single-family dwelling. The second lot contained a garage.johnson-tear-down The house lot complied with all zoning dimensional requirements, but the garage lot didn’t comply with lot width requirements. The Building Inspector incorrectly determined that the garage lot complied with all applicable zoning requirements.

Johnson’s neighbors appealed the Building Inspector’s decision, arguing that the new house would greatly diminish their valuable ocean views. The local zoning board allowed the issuance of a building permit. After the building permit issued, the plaintiffs filed an appeal in Land Court and asked for an injunction to prevent construction on the garage lot. The Land Court judge warned Johnson that proceeding with construction was at his peril. In a decision by another judge in May, 2000, the court ordered the building permit to be revoked. However, the court ruled that the house could remain in place while Johnson attempted to obtain appropriate zoning relief.

Johnson, however, was unable to obtain zoning relief. After several unsuccessful appeals, the Land Court ordered Johnson to remove the house by October 4, 2010. Johnson failed to comply with that order, and the neighbors attempted to hold Johnson in contempt. With the threat of contempt and possible jail looming, Johnson finally threw in the towel.

The Land Court ruling can be read here:
Schey v. Johnson

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