By Joe Wolvek
No, the national news is not good and year over year number of sales citywide is off. However, a good deal of real estate business in the core downtown Boston markets is getting done and I expect it to continue to be so. The number of sales is lower in those markets, but not as much as citywide, certainly far from the situation across the state and the nation. Perhaps counter intuitively, median price and $ per square foot continue to be high due to tightness of supply.
While prices and sales volume continue to drop in New York, driven mostly by the wave of layoffs in the financial services industry, here in Boston, while we certainly won't be immune from layoffs, our jobs market and economy are much more varied, which should insulate us from a good deal of the pain.
One of the reasons that we're going through this is obviously the great wave of foreclosures and bad debt out there. While there are not many foreclosures in the downtown Boston markets, the rising tide of foreclosures nationally caused in large part by the upward adjustment of ARM rates is obviously tightening credit, making mortgages harder to get.
The bad news is that this barring some major restructuring of this debt, this wave could continue through a good deal of 2009. There's certainly plenty to be concerned about in the economy right now. The good news is that after that, the upwards adjustment of the ARMS that are causing this should be over, and we will start to come out of this. There may also be more help for homeowners in trouble via programs that will lower their rates. Additionally, interest rates for new sales and refis have just become even more favorable (as of 12-2 5.5%-5.7% for a qualified borrower on a 30 year fixed--call your lender now!) and could go down further to historically low levels. And there's certainly hope that the huge stimulus package that will probably go into effect in January will help, in addition to the Fed lowering other rates and taking additional action to loosen up the credit markets.
In comparing the third quarter this year with last year, as I was for the second quarter, I continue to be a little bit surprised to tell you that we did well in the central downtown markets. Most of the year-over-year comparisons such as $/SF, numbers of units sold, etc., are not bad, and some are even quite favorable. As I said, we shall see what happens...
As far as Boston is concerned, our jobs outlook seems good relative to the rest of the country. Our level of supply is currently relatively tight to moderate depending upon the neighborhood. We are protected from overbuilding and oversupply because of the lack of buildable land. One of the big problems in places like Florida, Arizona, and Nevada, was that there was a huge availability of inexpensive land for developers to overbuild upon.
Due to the season, I would expect that it will continue to slow up a bit. Also, here in Boston, in addition to consumer caution, I think adverse effects will have more to do with the lack of availability of credit than anything else. The tightening supply of mortgage money has definitely continued to effect certain transactions. The rules continue to get stricter with regard to both borrowers (credit rating, income vs. debt, etc.) and properties (condo owner occupancy, reserves, presence of a commercial entity in the building, appraisal).
The market does not behave as a whole, in unison. It is divided into geographic and financial segments, which are all behaving differently. Both buyers and sellers should be aware of the market conditions in the particular segment they're involved with. Working with an experienced and knowledgeable agent can give you a big edge. Now, more than ever, it is important for buyers to get experienced help in executing a positive and comprehensive plan in order to make the right decisions, in sorting out the worthwhile properties, and getting help in negotiation and the transaction itself. And now more than ever, it is necessary for sellers to take advantage of the extensive marketing exposure, as well as market positioning, and negotiating experience that I bring to the table. I've been doing this for 15 years. If you would like more detailed info, or help purchasing or selling your property, please contact me. I stand ready to help you in either searching for and purchasing property, or marketing and selling your property.
For more information on the market, go to
Joe Wolvek’s website.
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Boston real estate market, go to Gibson Sotheby's International Realty, Boston's real estate experts.
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