Another Step Closer to…Where? (April Insider)

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Greetings Boston Redfinnians!

The spring weather is finally here. As we survey the damage to our ice-dammed roofs and clogged water drains, the warm sun gently alights on the battered real estate market. We’re still reeling from the effects of the winter cold, but the sales cycle is starting to thaw.

A Trickle after Last Year’s Flood

City Compared to March 2011

Compared to April 2010
Single Family Houses
Boston +28.1% +21.2%
Condos
Boston +23.4% +12.0%
Cambridge +25.6% +16.8%
Somerville +31.7% +9.9%
Brookline +29.0% +34.7%

Change in # of Houses for Sale on April 30th 2011

Spring is heating up and listings are trickling back into the market. Inventory has risen about 20% from last month, with a similar increase compared to last year. Inventory always increases in spring, but things were a little skewed last year; the home buyer tax credit drove sales to levels that we probably won’t see this spring.

Sales Impacted by Last Year’s Tax Credit

The impact of last year’s tax credit becomes clear when we look at the number of closed sales. Overall sales have picked up by about 5% from last month — not too bad. But closed sales are down by a whopping 30% since last year, when the tax credit was still in effect.

City Compared
to Mar. ’11
Compared
to Mar. ’11
Adjusted for
# Weekdays
Compared
to April ’10
Compared
to April ’10
Adjusted for
# Weekdays
Single Family Houses
Boston +29.2% +41.5% -38.7% -35.8%
Condos
Boston +16.4% +27.5% -27.9% -24.5%
Cambridge -2.2% +7.1% -49.4% -47.0%
Somerville -14.7% -6.6% -47.3% -44.8%
Brookline +33.3% +46.0% -28.8% -25.4%

Change in # of Houses That Sold in April 2011

It seems the tax credit did indeed increase home sales — just not in a sustainable way. We predict that a lot of sales numbers will be down from a year ago, but last year’s tax credit caused an artificial spike in the 2010 numbers, so we’re reluctant to call this a traditional falling market. We’ll be looking at the rise in inventory very closely — specifically at fluctuations in days on market and months of supply.

Prices Are Strong…for the Right Homes

On the micro-economic level, we’ve certainly seen a large pick-up in the number of tours we perform month-to-month and even week-to-week. Site traffic has also picked up considerably, with a correspondingly high volume of transactions, not to mention multiple-bid scenarios.

City Median Price in
April 2011
Median $/SqFt Change
since March 2011
Median $/SqFt Change
since April 2010
Single Family Houses
Boston $306,750 -13.2% -20.1%
Condos
Boston $387,500 +9.5% +15.5%
Cambridge $419,500 +7.8% +8.1%
Somerville $365,000 -3.8% -10.3%
Brookline $368,250 +12.3% -2.1%

Change in Median Price of Houses That Sold in April 2011

The busiest areas seem to be close in to the city, but a well priced, attractive home will move quickly in most neighborhoods. Nancy Roos, one of our superstar agents, has seen an increase in buyers looking to find decent-condition, well-priced homes in Arlington, Lexington and Winchester.

“The towns represent different price points,” says Nancy, “but I had six offers this weekend and five of them were multiples. Unfortunately one of the clients got buyer’s remorse, which often happens when you are paying above asking price.”

Nancy’s advice: “Make sure you know your ceiling, and fully understand what paying at or above asking price means to you and your search. The perception of overpaying for a property is very powerful and can quickly lead to regret.”

Looking Ahead

The real test for our market will be the next two months, which are typically the busiest time of the year for sales. Interest rates have continued to stay low, but many people believe that rates will rise in June, when the Fed is reportedly going to stop buying mortgage-backed securities.

Marcus Sohn, a preferred lender from Leader Bank, suspects that “rates will stay low for the next 3-4 months, and then begin to slowly rise as employment returns and the Fed tries to curb inflation.” Marcus goes on to say that “rates are still at a 20-year low. I suggest that consumers do their best to keep track of the discussions in the media about interest rates, and to weigh the potential rise in rates against their home buying calculations.”

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