Monday, January 15, 2007

Market Conditions Reports for Princeton and Harvard

One of my New Year's resolutions is to post regular Market Conditions reports for the towns I cover, with statistics and perspective on what is happening in the respective real estate markets for each of these distinct areas.

Here is my current report for the town of Princeton. It presents a sobering picture of what home sellers are facing, showing a 17-month supply of homes, based on the purchasing patterns during the last six months.

Today's report for Harvard shows an uptick in activity in the under-$500,000 price range, with three homes in that tier of the market having accepted offers since the beginning of January. The high-end picture is sobering, with a 24-month supply of homes in the $900,000 and over range.

Wednesday, January 10, 2007

Buyers' Contingency Strategies May be Backfiring

I have been involved in two situations during the last three weeks in which buyers with homes to sell submitted lowball contingency offers. Their strategy backfired.

Sellers are not fond of working with buyers who have home sale contingencies, but in this market, they have had to do so. It's possible to structure these deals so that everyone wins. But in order to persuade a seller to consider the contingency, the buyers must make an attractive offer, and they have to demonstrate that they are taking aggressive action to ensure that their home sells within a reasonable period of time.

In one recent case in which I was representing the seller, the buyers submitted an offer that was about $20,000 below the assessed valuation. The offer was sent to my clients without a preapproval letter, and with not one, but two home sale contingencies. One of the homes that the buyers needed to sell was not even on the market at the time of the offer, and we were informed that because of the holidays, it would be at least two weeks before it would even be listed. Needless to say, the sellers were less than enthusiastic about negotiating with these buyers, and the offer quickly fell apart.

Another seller client recently received a similar contingent offer, more than 12% below the asking price, contingent on the sale of an out-of-state property. The buyers asked for three months to put their current home under agreement. This would have put the sellers in the unenviable position of having to wait out the spring market for a sale that may or may not ever happen. Even with a 48-hour right of first refusal, it would not have been a "win-win" situation.

What surprises me, I guess, is that the buyers in each of these situations weren't savvy enough to make the sellers an offer they couldn't refuse. If they had done that, these two properties might be under agreement today.

Monday, January 08, 2007

Is the Massachusetts Market Springing Back?

No one is sure whether it's the unseasonably warm weather, or a meaningful shift in buyer sentiment, but there are rampant anecdotal reports of increased activity in the local housing market, at least in the greater central Massachusetts region.

For example, I am working with some buyers who are interested in purchasing a condo in southern Worcester County, and we've been looking at a variety of units in Grafton, Millbury, Northbridge, Hopedale, and Uxbridge.

My buyers decided to add the town of Auburn to their list of possibles, but when I called, over the weekend, to arrange an appointment for a cute townhouse there, the listing agent told me, in a tone of disbelief, that he'd just received two offers on this unit, and that the seller expected to choose one of them within the next few hours. This townhome had been on the market for about three months, with little activity, and suddenly, everyone wanted it!

There are 13 condominiums currently on the market in Auburn, with an average price of $225,408 and an average time on the market of 138 days, according to MLSPIN. (Two of these units have accepted offers but they are available to be shown for "backup.") This represents a six-month supply, based on the fact that during the last 180 days, 13 units have sold in Auburn for an average price of $192,431.

So it looks like even though current list prices for condos in Auburn are about 10% higher than the most recent selling points, buyers are making offers and whittling down the inventory.

Whatever the reason, this is good news!