Bidding Wars Boost Boston Sellers’ Confidence, Incidence of Low Appraisals

Year-over-year, the number of single family homes for sale in Middlesex County increased by a normally substantial 30%, but as we said last month, the big jump is more a reminder of last year’s terrible winter than a representation of what a fantastic spring we’re having.  With sales on the rise from last year (by 23%), but down from February (by 14%), we’re paying most of our attention to the jump in inventory. It seems that this year’s increase in demand has not gone unnoticed, and it has given homeowners the confidence to enter the market and list their homes for sale. But even this notable rise in inventory is not enough to keep up with demand, illustrated by the sheer volume of bidding wars in the area.

In March, 54% of the offers our team wrote ended up in bidding wars with prices literally rising before our agents’ and clients’ very eyes. While bidding wars are great for sellers, they can be very stressful and frustrating for buyers.   One of the problems is that appraisers just can’t keep up with the increasing purchase prices driven by all this demand.  Buyer, seller and their agents agree to a purchase price based on the best and most recent comps. Appraisers sometimes come in from out of town, and aren’t tracking the local market on a day-to-day basis like our agents are, so they often choose different comps, or don’t make some of the necessary price adjustments that agents have considered, often resulting in a low appraisal.  Since the seller knows he left three or four other close offers sitting on the table, it’s usually the buyer who has to bring the extra cash to the closing table if he wants to keep the deal together, or another buyer will.

To make matters worse, Boston has a relatively long closing cycle, with 45 to 60 days being the norm.  Sold prices aren’t reported until a deal closes, so even the newest comps appraisers have to work with are already two months old and not in tune with the hot market.  Because our agents are working in the same neighborhoods week after week, writing several offers a day, they have a very close pulse on home values and the market as a whole.

Back in mid-March, Peter Phinney, an agent on Redfin’s Boston team, helped his clients win a bidding war against three other offers on a house in Jamaica Plain.  Their winning offer was $16K over the asking price, and Peter hand-delivered it to the listing agent before the open house had ended. “We all knew that the appraisal could be an issue, and indeed it came back $10K under the agreed upon purchase price (but still $6K above asking). The problem was that there really were no good comps for this home. There just hadn’t been enough sales nearby in the last twelve months,” Peter said.

The buyers’ mortgage broker, Sofia Travayiakis stepped in and got in touch with the listing agent to go over the appraiser’s comps one by one.  Because Sofia is a well-respected local lender who knows the market, she was able to help both sides agree to a $10K price reduction to meet the appraisal value and get the loan approved. Peter emphasized, “The take-away here is that in a market this competitive, appraisal issues are becoming more and more common, and it has simply never been more important to choose a strong local team that can work together to advocate for you from beginning to end.”

For a complete picture of the Boston area market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Boston-Real-Estate-Market-Report-March-2012.

Case-Shiller: A Brutal Winter for Home Prices

It’s time (a bit past time, actually) for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – December data is released in February).

Here are the basic Case-Shiller stats for the Boston area* as of January:

Sixteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between December and January (one less than between November and December): Washington DC joined Phoenix and Miami with an increase. No data was available for Charlotte in January. Oddly, San Francisco had the largest drop at 2.5%.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Boston’s tiers fell in January. Month to month, the low tier was down 2.4%, the middle tier fell 0.7%, and the high tier decreased 0.1%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Another gain here, with the best January showing since 2006, when 11 markets were increasing.

Read the rest of this entry »

Redfin Brings Transparency to Title, Inspection, Mortgage, Staging

Big news! Today, Redfin Boston is launching a major expansion to our charter as a technology-powered real estate broker: Redfin Open Book, a local reviews site for lenders, inspectors and title companies.

Later this spring, we’ll add the stagers, landscapers and handymen used by sellers to get their home on the market.

Our goal is to ensure our customers get the best service at every step of a deal, by bringing together the best local team and holding that team accountable for the best result.

The Goal: Better Service
Unlike Angie’s List, Open Book is completely free. And unlike Yelp, it’s completely focused on the folks who serve our customers when buying or selling a home.

There are no kickbacks from anyone we include or recommend. In fact, there’s no revenue model at all for Open Book, not now nor in the foreseeable future.

The goal is simply better customer service. The best real estate agent in any market is good because of her own skills, but also because of her team, and her ability to hold that team’s feet to the fire when a loan or a listing is on the line.

As Redfin’s online traffic and transaction volume grows, our influence over all the folks who provide real estate services grows too. We want that influence to lead to better performance across the board for our customers.

This means that our focus is quality, not quantity. We don’t want to be the phone book, showing every lender or inspector in town. We want to be a reliable guide to the partners you should actually use, in any market we serve.

Today, people mostly take their agent’s recommendation for an inspector or a lender. But we think customer recommendations are important too, in finding an inspector who will tell you when to walk away from a crumbling house, or a lender who will steer you toward a cheaper loan, even if it pays him less.

This is crucial information, which is why Open Book, while intended for our own customers, is available to everyone browsing our site.

Our Advantage: Redfin-Certified Reviews
No one else could build such a reliable reviews site for real estate vendors.

Because we honcho a transaction the whole way through, hundreds of times a month, we know which inspectors and lenders our customers are using. Redfin’s online Deal Room, for tracking who is supposed to do what to close on time, stores information about thousands of vendors in a big database.

And we already survey every customer, deal or no deal, so it’s easy to ask each customer about his lender, inspector or stager. This means that we can validate every review, to avoid the bogus reviews from vendors’ friends and competitors that plague most review sites.

At some point, we’ll probably solicit reviews from the general public, but we’ll always highlight the reviews that came from actual customers, just because we can verify that the customer did in fact use the vendor she’s reviewing.

Our Investment: Redfin-Certified Partners
As with our brokerage, we aren’t just offering technology; we also offer a human touch. The inspectors, lenders and stagers who get the best reviews qualify for an additional level of certification, as Redfin partners.

Redfin has hired a team of former Redfin agents to interview potential partners, briefing each one on Redfin’s mission and our service expectations. We then monitor the partner’s performance. The ones that make the grade are certified as official Redfin partners. In Open Book, a tiny Redfin ribbon appears beside their profiles.

These are the folks our agents are most likely to recommend to our customers.

Over time, we’ll ask each certified partner to deliver premium service to our customers. This may entail attaching digital photos to an inspection report, or offering to refund the inspection fee if an unexpected repair crops up within 60 days of the closing.

We expect to drive plenty of customers toward our partners; if history is any guide, we’ll have to be careful to ensure no one gets overwhelmed.

And of course we’ll also be careful to strike a balance between ensuring our partners build a profitable business, and giving Redfin customers premium service. Inspectors, stagers and lenders who want to apply to be a certified partner can email us at openbook (at) redfin (dot) com.

Markets Launching Today: Boston, Chicago and Seattle
Until today, the reviews had been available only in the Bay Area and Washington DC. Today we expand the service to Boston, Chicago and Seattle.

To find Open Book, just click the “Buying” link at the top right of any page on Redfin.com, and choose “Open Book” from the menu. As we capture more reviews in the coming months, we’ll launch Open Book in more markets, for a wider range of services.

Want to Know What the Real Estate Market is Doing? Check the Weather Report.

With all we’ve been hearing about massive inventory shortages across the country, and things not feeling much different here, it is surprising to see that inventory in the Boston area has actually increased substantially both month-over-month and year-over-year.  In Middlesex County, the number of single family homes for sale last month was up 29.1% from where it was in February 2011. This sounds like great news, and in fact it is good news, but the numbers are a little deceiving.  Demand is also on the rise, and even with hundreds of new listings on the market, the ones that are well-priced and in good condition receive multiple offers and fly off the shelves.  In Middlesex County, 17.2% more single family homes sold last month than in February 2011. But remember last year’s winter?  By February, more than 60 inches of snow had fallen! It was nearly impossible, even for someone who really wanted to sell her home, to find a spot in her yard where a ‘For Sale’ sign would stick out above the snow. You don’t need us to tell you that this season has been quite different, and the same goes for the real estate market.  The blossoms, birds and buyers have come out early, with sellers starting to spring up as well.

“My clients submitted one of 11 offers on a Lexington home that hit the market last Friday,” said Risa Bell, Agent on Redfin’s Boston team.  “More than 100 people attended the open house on Sunday, and offers were due Monday evening at seven.  Our offer was very competitive, with an offer price considerably higher than asking, plus almost 50% down, and we still lost out.”  While many potential sellers are reluctant to put their homes on the market now with prices still relatively low, “today’s prices are tomorrow’s comps.”  Risa explains, “Homes that go under contract today will close in seven or eight weeks, and their sales prices will then be published.  Higher priced comparables and reports of rising home prices will justify higher listing prices, which will be welcome news for those hesitant homeowners.”

For a complete picture of the local market’s recent stats and trends, download the Redfin Market Report here: Redfin-Boston-Real-Estate-Market-Report-February-2012. Want to know how the Boston real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:

MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
$YOY = Year-over-year change in the median price per square foot.
Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75

Case-Shiller: Boston’s Low Tier Ticked Up in December

It’s time (a bit past time, actually) for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – December data is released in February).

Here are the basic Case-Shiller stats for the Boston area* as of December:

Eighteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between November and December (one less than between October and November): Only Phoenix (for the third month in a row) and Miami saw an increase. This month Detrioit beat out Chicago and Atlanta for the bottom spot, falling 3.8% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

Boston’s low tier inched up in December, but the middle and high tiers both fell. Month to month, the low tier was up 0.4%, the middle tier fell 2.3%, and the high tier decreased 1.1%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Tiny improvement, better than a year ago, but worse than December 2009, when 5 cities saw an increase.

Read the rest of this entry »

Case-Shiller: Another Winter for Home Prices

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – November data is released in January).

Here are the basic Case-Shiller stats for the Boston area* as of November:

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between October and November (the same as between September and October): Only Phoenix saw an increase, for the second month in a row. This month Chicago bumped Atlanta out of the bottom spot, falling 3.4% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Boston’s tiers fell in November. Month to month, the low tier was down 0.3%, the middle tier fell 0.9%, and the high tier decreased 1.7%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Just five months ago, all twenty cities saw month to month gains. Now just one is not the red.

Read the rest of this entry »

Middlesex County Home Sales Plummet in January After Busy December

But the good news: winter is still nowhere in sight.

The number of single family homes (SFH) sold in Middlesex County fell by a sharp 36.2% from December to January. But don’t be alarmed! All this really means is that December was much busier than normal and a reflection of the high-volume touring and offer writing months we had in October and November.  Sales slowed down to normal again through the holiday season, which is why we saw the huge drop in sales in January.

Prediction: Barring a Huge Catastrophic Snowstorm, Sales Will Shoot Up This Spring
Here’s some more good news: in January, our agents showed 12% more homes than we did last January. “Buyers took a very short holiday this year, and due to this crazy winter with almost no snow, the buying season is picking up speed about two months earlier than it did last year,” according to Hannah Driscoll, agent on Redfin’s Boston Metro team.  A 9.7% increase in the number of homes for sale in January adds some fuel to the buyers’ fire, and because in real estate supply drives demand, this supports the notion that sales will rebound in the coming months.

For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Boston-Real-Estate-Market-Report-January-2012. Want to know how the Boston real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

• MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
• $YOY = Year-over-year change in the median price per square foot.
• Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75

Case-Shiller: Seasonal Slide in Home Prices Continues

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – October data is released in December).

Here are the basic Case-Shiller stats for the Boston area* as of October:

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between September and October (vs. eighteen from August to September): Only Phoenix saw an increase. Wait, Phoenix? Yup, Phoenix. Atlanta fell the most in October (again), falling a whopping 5.0% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Boston’s tiers fell in October, with the middle tier taking the biggest hit. Month to month, the low tier was down 0.5%, the middle tier fell 1.0%, and the high tier decreased 0.8%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Just four months ago, all twenty cities saw month to month gains. Now just one is not the red.

Read the rest of this entry »

We’re Showing A Lot More Skin in Boston

Just like Cheers, Redfin strives to be the place where everybody knows your name.  But now, without even knowing your name, we’re shedding a layer and showing you a lot more information about the homes that interest you.

You may have noticed that we released an iPad app and the Redfin Home Report this week.  We’re thrilled that we were able to make another upgrade just for our Boston customers.  We’re now able to show you a lot more information about homes in the Boston area than we have ever been able to before without asking you to register on our site.

Some of the details we’ve been dying to show you for years and are now able to share without asking you to sign in include:

• Marketing Remarks
• Year Built
• Property Size
• Days on Redfin
• Parking Information
• Homeowners Association Information
• Tax Information

And we’ve highlighted the new additions here:

But that doesn’t mean you shouldn’t register on our site! For the last several months, we’ve been collecting Redfin Agent Insights, comments left by agents who have seen a home in person. Now, at long last, we can share them with our registered customers in Boston. You’ll know one of our local agents has seen a home and commented on it by the little yellow star on the map. Scroll down the home details page to see who has commented on the home and click to have their notes emailed to you immediately.

Soon, we hope to be able to share our agents’ comments with you directly on the home details page like we do in most of the other markets we serve. Thanks for your patience as we keep pushing to do what we love most: share as much information with you as we possibly can that is straight from the multiple listing service and our agents.

Should I Wait Until Spring to List My Home? – Boston Edition

Over on the national blog, we just posted another big analysis of hundreds of thousands of listings and sales. Here are the numbers for Boston, where winter is still a winning time to list your home for a quick sale, a better chance of selling, and a better price: