Archive for the ‘Boston’ Category
December 23, 2008
The National Association of Realtors released data today showing that the November 2008 median home price dropped 13% from the November 2007 median price, even as mortgage rates plummeted to their lowest levels in the 37 years since anyone has been keeping track, to an average last week of 4.96% for 30-year, fixed-rate mortgages.
Since the price drop-data is for November while mortgage rates declined in December, it may be that the market just needs time to respond. But one analyst called the price drop “breath-taking” and “god-awful.” The WSJ quoted an economist as saying that “the housing industry is in the process of reducing capacity to dangerously low levels.” A second economist said that, “outside of distressed properties, the [California] market is nonexistent almost.”
This made us wonder whether it’s really true, in California or elsewhere, that most of the homes for sale are foreclosures being liquidated by banks.
Since Redfin’s database includes virtually all the homes for sale (basically everything except what’s on Craigslist), including bank-owned listings as well as for-sale-by-owner (FSBO) listings, we can measure what percentage of homes for sale are bank-owned. And we can do this with unusual precision because we map all the data down to the level of a city, neighborhood or postal code.
Here’s what we found for nine of the largest cities we cover, sorted from the highest concentration of listings in foreclosure to the lowest, as of December 22, 2008. We measure the ratio of for-sale-by-owner listings as a percentage of the total homes for sale in each city, and then do the same for foreclosures.
And it’s true that in major California cities south of the Silicon Valley peninsula, about 1 in 4 homes for sale have been foreclosed, and others are being sold by sellers trying to avoid foreclosure (short sales). But the number of short sales may soon be decreasing, as banks are now soliciting short sellers to modify their loans at the new low rates so folks can keep their home.
I used to worry that the low rate of foreclosure in Seattle and San Francisco was a disaster waiting to happen. Prices will fall through the floor in those markets if the percentage of listings being sold by banks increases in either place to 20% or 25%.
But because the downturn in Seattle and San Francisco prices started a little late, and mortgage rates fell soon thereafter — unemployment, not increasing mortgage payments, will be the main driver for foreclosures here — maybe Seattle and San Francisco can avoid the huge pile-up of distressed inventory that is dragging down the market in Southern California.
What do you think? Why do Seattle and San Francisco have such low foreclosure rates? And will this continue?
(Photocredit: Ironside on Flickr)
October 1, 2008
I remember exactly where I was when I got the news that the Boston-area MLS — the database that brokers use to share listings — would allow Redfin to drop its registration requirement: sitting at my desk, reading ESPN.com while I fondled a Rubik’s cube (world record for solving, 9.86 seconds).
I remember running down a hallway and bursting through the double doors of a closed conference room to tell all the Redfin bigshots the big news. Our dignified compliance manager, Mary Black, flushed with an unholy glow, had somehow gotten there ahead of me.
And now, hardly a week later, Redfin has shipped a new version of its site that lets Boston consumers use Redfin the way everyone else does: without having to register your name or email address. This means consumers can get all the information about Boston-area homes for sale without wondering when a real estate agent will call, or getting buried in spam.
Why Registration Is a Big Deal
Why is registration such a big deal? Well, imagine if you had to register with Google before you ran a search. And imagine if Google was in an industry notorious for using that information to strap you into a gigantic drip-marketing system?
You would say what most Boston-area consumers have said to our website: no thanks. The graph below, taken from yesterday’s presentation to Redfin’s board, shows the results. Boston traffic is the green line, which after a year of toodling along, just got passed by Chicago (orange line) in its second month of operations. Pathetic!
But that’s all going to change. Now that we’re the first site to offer complete registration-free access to all the MLS homes for sale, we hope that our Boston traffic will shoot through the roof, and that our bu
siness there will too. We’re gearing up a big marketing campaign next week.
Many thanks to Kathy Condon, John Breault and the entire MLS Property Information Network Board for taking such a huge step forward.
What Does This Mean? The Big Picture
A long time ago, Redfin made a big bet that we could work within the system as a broker, showing all the homes for sale even as we changed how consumers worked with a Realtor and what they had to pay. For years that was a crazy bet. Maybe it still is.
But we’re seeing MLSs across the country negotiate a truce between brokers of all stripes so consumers can get more information about listings. That’s good for consumers, good for Redfin and, at a time when people have wondered whether MLSs and brokers would change with the times, good for the industry too.
Redfin Boston supporters, spread the word!!! And gentle Redfin blog readers, what do you think? Is the Boston-area MLS decision part of a bigger trend? We’ll keep you posted on what happens to Boston traffic.
April 25, 2008
On Monday, we looked at what makes a property hot in Boston, so we’re closing the week with a look at a market on the other coast: Los Angeles. The big question: will we see the same trends coast to coast?
We found there really are (hot) pockets of sunshine in the Los Angeles housing market, and this is not according to my trusty Magic 8-ball. We analyzed 2,364 real estate records for single-family listings in Los Angeles County, Calif. that entered the market between Oct. 1, 2007 and March 31, 2008, and sold.
We looked at the Los Angeles real estate market next because, well, you asked.
Here’s a rundown of the neighborhoods with the most listings that sold within seven days on the market; the numbers in parentheses calculate the hot properties as a percentage of the total houses that sold in those areas:
- Beverly Center, Miracle Mile: 12 (26%)
- Brentwood: 12 (27%)
- Los Angeles, Southwest: 10 (12%)
- Sunset Strip, Hollywood Hills West: 10 (11%)
- Westchester: 9 (17%)
For the areas where there were a significant number of hot properties, we compared the listings that sold in seven days or less with everything else that sold in those areas. Our goal was to develop a clear portrait of the hot property, so our buyers would know when they really had to hop to it. And here’s what we found:
- Beds and baths were the same for both types: there was no pattern in terms of bedrooms and bathrooms. Hot and “not” (not properties took more than eight days to sell) properties both had three bedrooms and two bathrooms. The coasts agree!
- Hot properties are bigger, slightly: The median square footage for hot properties was only slightly larger (.2%) than not properties, but the median lot size was 3% larger. Clearly, the LA sprawl doesn’t mean buyers get more space. Boston homebuyers got 13% larger lots with pretty similar sized homes – 1,669 square feet in Boston vs. 1,735 square feet in LA.
- Hot properties are newer: the median year built (1948) for hot properties was four years later than for the nots. Bostonians bought slightly older homes, but maybe that’s because most east coast homes are older?
Hot properties are expensive: it turns out that hot properties weren’t exactly priced to move. In fact, the median list price of hot properties ($1.1 million) was 16% higher. And the high price isn’t just because the houses are bigger: the median dollars per square foot was nearly 16% higher for hot properties ($633) as compared to the nots ($548). The median list price of Boston’s hot properties was $459,000 … you can get two for the price of one in Boston.
There wasn’t a huge difference in the days on market for the hot areas (43) and the entire Los Angeles market (45), but, on average, the hot properties sold in almost five days (Boston hot properties sold in about 4.5 days).
The bottom line is that hot properties are slightly bigger, newer and more expensive. There are distinct areas and house types where properties still sell fast, which continues to support our reason for doing this study in the first place — the real estate market isn’t really clinically depressed; it’s more of a split personality, with the good stuff selling fast, and the rest languishing.
Did you just buy a home in one of these neighborhoods? What was your experience?
Bonus link: The Wall Street Journal reports on the heartwarming side of the housing bust. [Warning: shameless Redfin plug] Read about a couple who escaped their 100-mile, LA-freeway commute.
April 21, 2008
Redfin’s Chris Glew — Redfin Advantage essayist, Boston hockey fan and student of ancient Mexican turds — stopped another fur-flying meeting in its tracks last week with an arresting observation. He said that even in this slow real estate market, he could tell just by looking when a new listing was going to sell in a couple of days. “I see it all the time,” he said, to a now-quiet room.
Whereupon further fur flew. Someone said that the only common characteristic would be a fire-sale price. Others talked about school districts, sex offenders, safe neighborhoods. And then someone quoted the founder of modern surgery, a corpse-stealing pragmatist who challenged the French mania for grand medical theories: “why think when you can experiment?”
Why indeed!
So the Real Estate Scientist leapt into his white lab coat and began sorting through 9,212 real estate records: single-family listings in Suffolk County, Massachusetts that were sold between October 1, 2007 and March 31, 2008.
Why the Boston real estate market? Because our ex-hippie, oils-painting, die-for-the-customer, hired-all-his-cousins market manager — Alex Coon — laid it on the line, betting that such listings exist, even in the dead of the miserable Boston winter, and that most of them would be in Newton. He was right!
Here’s a rundown of the towns with the most listings that sold within seven days on the market; the numbers in parentheses calculate the hot properties as a percentage of the total houses that sold in those areas:
- Arlington: 18 (23%)
- Boston: 21 (7%)
- Brockton: 16 (8%)
- Haverhill: 11 (12%)
- Needham: 14 (20%)
- Newton: 27 (16%)
- Wellesley: 12 (14%)
But it’s not just the location of the listings. Even in these markets, the average days on market was 85 days. The average for the entire Boston area was 105. This suggests that at least one reason hot properties were hot was the property itself.
So for the areas where there were a significant number of hot properties, we compared the listings that sold in less than seven days with everything else in those areas. Our goal was to develop a clear portrait of the hot property, so our buyers would know when they really had to hop to it. And here’s what we found:
- Beds and baths were the same for both types: there was no pattern in terms of bedrooms and bathrooms. Hot properties and pariguayos (party-watchers, aka slow-to-sell properties) both had 3 bedrooms and 2 bathrooms.
- Hot properties are bigger: The median square footage for hot properties was 7% larger than the pariguayos. The median lot size was more than 13% larger. Maybe that seems obvious to you — bigger is often better — but when we began the analysis, we had imagined hot properties as cute little cottages.
- Hot properties are older: the median year built (1949) for hot properties was 29% earlier than for the pariguayos.
- Hot properties are expensive: it turns out that hot properties weren’t exactly priced to move. In fact, the median list price of hot properties ($459,000) was 78% higher than the pariguayos. And the high price isn’t just because the houses are bigger: the median dollars per square foot was nearly 40% higher for hot properties ($275) as compared to pariguayos.
The bottom line is that hot properties are bigger, older, and more expensive. That there are distinct areas and house types where properties still sell fast supports Chris’s notion that the real estate market isn’t really clinically depressed; it’s more of a split personality, with the good stuff selling fast, and the rest languishing.
You could take that theory a step further, and say one reason the market is bad is because the inventory is low-quality, first because some of the least appealing properties are being forced onto the market by foreclosure and second because lots of unappealing inventory is hanging out from the year before when the rate of new listings was higher. We’ll have to test that theory out on another day.
Bostonians, what do you think of these findings? Real estate watchers, what other markets would you like to see us analyze? Many thanks to Redfin’s Rick West for doing all the hard analytical work.
Bonus Link, from the Original Friend of Redfin: Washington Redskins cheerleaders stun massive Indian cricket crowd.
Also, since cycling season is about to begin, we are releasing some new footage of the Redfin cycling team on a training ride:
Photo: Shutterscript on Flickr.
