How soft are the house prices, and where are they going? (Boston: sales, real estate)

[kdjack]

Hi everyone. I have a thread going on where to live in the area, but I'm looking also for some market advice for homes. I've read a few things that have suggested house prices are not as soft in MA as they are in other parts of the country. I'm wondering what percent below asking most homes are selling for and how willing owners are to negotiate. I've seen other markets where houses are selling for as much as 10-12% below asking and some where people are actually offering the asking price. When I'm ready to make an offer, I don't want to insult anyone with a lowball offer, but I'd also still like to get the best deal I can. Also, knowing what the % below is, I'll be sure not to find the "dream house" that is out of my range when they won't come down far enough on price. Finally, does anyone know if the market there is expected to drop or continue to drop in value? My husband is also looking at a job in Orange County, and most people there warn that houses are expected to drop in value by as much as 15% in the next year. If that's were the case in the Boston area (which I don't think it is) I would want to wait a bit longer to buy. Thanks for any advice you have!

[xS☺B☺s]

City Data offers good graphs about real estate values. Just go enter zip codes of places your interested and you'll see links to lots of charts and info like this:

[scarletfire]

It seems like a lot of home sellers are pricing their homes much more aggressively so I'd be surprised to see people taking 10-12% off the list price very often in this area except with bank sales but that being said, it varies a lot depending very much on the independent circumstances of the seller and how pressed they are to sell quickly.

Once you find a home of interest I'd also recommend asking your buyer's agent to provide you with a comprehensive list of recently sold comparable homes. Zillow will provide some of this data but because it's based on public records it often includes some amount out outdated or erroneous information (for ex if someone added onto their home or went through a major remodel this often isn't reflected).

Best of luck!

[HowGoesIt]

Everything depends on location. Last I checked, home prices in places like Brockton, Lawrence, and Worcester were dropping like a rock. As expected, better locations (north end, beacon hill, brookline, etc) will be affected much less than the less desirable areas. This real estate decline is all about location.

[kdjack]

Thanks for the advice. I'm not familliar with zillow, so I'll have to check that out. Any other market advice is still appreciated. It's still tough to tell using some of the sights I've seen though, as the houses may not "match" what we are looking for. Oh well, I guess we'll do the best we can. Thanks again!

[smarty]

Yahoo bought zillow.

Housing prices is strongest in Boston, Brookline, Newton, Cambridge. As a general rule, town closer to Boston has firmer prices. Towns have reputable schools have firmer prices.

Once you go outside, most house price has dropped. If prices have not drop much, the number of sales drop dramatically. It really is dependent on the town. With Question 1, High income towns will have advantage over towns with lower income with elimination of state aid.

Orange County is very different than Boston as their housing price increase so much in the past. The drop of course will be much steeper.

[LeavingMA]

They just mentioned the average home price in MA dropped below $300,000 for the first time since 2003. Every place is down from the peak of the market in 2005...some cities and towns a lot more than others.

[Charliekeet]

The median price for the state has dropped, but Boston metro is still wildly inflated (based on median income vs. price). Once you get to know the area well, you'll look and wonder why a tired, cramped Cape with no yard & that needs some work is still $400,000 if you want to live within Rte 128. Unless you buy a foreclosure.

[Rusty_Shackleford]

Originally Posted by Charliekeet

The median price for the state has dropped, but Boston metro is still wildly inflated (based on median income vs. price). Once you get to know the area well, you'll look and wonder why a tired, cramped Cape with no yard & that needs some work is still $400,000 if you want to live within Rte 128. Unless you buy a foreclosure.

Zoning laws can cause these situations. If developers can't build enough apartments or condos to meet the demand for housing, then all existing housing can inflate well beyond what it costs to build housing, (since building isn't allowed, because of permit/zoning regulations) and well beyond what the average family can afford. Like the "winners curse" at an auction... if there are so many bidders, and only one item available, the one who pays the highest gets the item (pays a ridiculously high price for it)

According to a detailed study, titled "Zoning's Steep Price" (you can find it online), Boston's suburban homes are one of the priciest in the country outside of Florida and the west coast, when "priciest" is rated by what a house costs compared to the cost of land plus the cost of construction. These numbers are from way back in 1999. So I doubt Boston's housing will ever again be affordable in relation to income, even after this bubble crashes, unless all the excessive laws against development change (IE when hell freezes over ) In the meantime, expect hundreds of thousands of residents to continue to migrate to other more affordable states (though immigrants will take their place). Cheap housing after the bubble would make sense if supply could respond properly to demand... but supply cannot respond, due to legal restrictions. The land that is available for construction is used for constructing big expensive houses rather than starter homes, because that is what a limited supply inherently causes.

This site has a table of recent past sales prices. A home at the 25th price percentile in 2006 would have went for 300k... now the 25th percentile is 235k.
HousingTracker.net: Median Home Asking Price & Inventory Data for Boston, Massachusetts

[LeavingMA]

Also, construction costs here are more expensive than other parts of the country. Add that to the zoning issues brought up and the lack of buildable land and home prices will always be on the expensive side here. They are still down from the peak though in 2005.