This New Year is bringing mixed feelings for Boston area buyers and sellers. Although 2020 was a rough year for many due to layoffs and pitiful help from the government which had caused the shuttering of many businesses and accompanying layoffs, there were bright spots here and there in the economy and in Boston's real estate market. It is true that home sales outside Boston really exploded in 2020. Where buyers would think they could pick up a cheap home in the outlying regions, they instead found themselves in bidding wars and escalating prices in the unlikeliest of places. Myself, I had a buyer looking out west in the Leominster area. I told my client that houses in the area in good condition were going about $100,000 over their assessed values. My client is now a proud owner of a Leominster home. So, when I say I will serve my clients anywhere in eastern Massachusetts, you know I'm telling the truth!

Homeowners in Boston have enjoyed a great, seller's market. In fact, some parts of Boston have enjoyed a lengthier seller's market with terrific appreciation thanks to bidding wars (multiple offers) within days of their listings coming on the market. However, there's a saying, "All good things must come to an end". Although several neighborhoods of Boston are still experiencing a seller's market where listings are still in short supply, other areas are in a balanced market where the number of available listings (supply) and buyers (demand) are considered to be in balance. On the other hand, the flight of city office workers now getting to work remotely from home has increased the number of homes for sale in Boston to a level that has pushed the other half of Boston's neighborhoods into a buyer's market with downward pressure on prices. For sellers who have bought in the past couple of years and wanting/needing to sell, they are already looking at losing money. What this means for all sellers is that now is still the time to list their homes on the market at a reasonable price because even those who are already having to price lower than desired will see their prices drop even further as time moves on. Those who have waited for 2020 or 2021 are now feeling the financial pain of waiting too long to sell. Fortunately are those whose seller's market has extended even through 2020! But they, too, should count their blessings and sell NOW before they find themselves trying to sell in a buyer's market of downward spiraling prices.

The graph included here shows how real estate markets are cyclical. Prices and activity topped out by 2005-2006 which is illustrated by the high numbers of homes that failed to sell in 2006. On the other hand, prices began to rise 2010-2012 as inventory began to dry up. Generally speaking, 2014-2018 were good years for sellers. But as you can see from the graph, homes that are not selling are on the rise again. This means one thing only... Boston is heading into a buyer's market.

Sellers labor under the false impression that the best time to sell is in June when schools close for the summer. Some believe more correctly that spring is the better time to sell. However, for most areas around Boston, the best time is January. In many communities, March is the month where most homes sell. For others it might be April or May. Typically, sales begin to falter come June. Of course, each area is different and weird things can happen to throw things out of kilter like a pandemic, but I prefer to let statistics (the science!) show the way.

November and December present a unique challenge statistically. You would think that fewer homes sell with holiday making occupying most people's thoughts, but even though December sales are ofttimes few and far between, the same time a year earlier or a year later can astonish you!

Normally there are specific areas in or around Boston that are especially great for sellers or great for buyers. Due to the time of year, almost every town or neighborhood is looking good for sellers. The only three areas experiencing a buyer's market are in Boston proper - the neighborhoods of Downtown, Chinatown, and West End. A flood of new listings in the next few weeks should turn the tables back to where they were in October and clearly defined buyer's and seller's markets will reappear!

Please CLICK HERE to see a list of over 60 towns/neighborhoods and how they rank based upon end-of-year statistics. Remember, these statistics should change drastically in the near future. Therefore, sellers should put their homes on the market now and take advantage of current market conditions. Buyers might do better to wait until the dust settles in March!

Here is November's market activity for the greater Boston metro area. You will find that most of the suburban towns are still enjoying a seller's market with low inventory while many Boston neighborhoods are no longer in a seller's market. Is it because Bostonians are fleeing the city and searching more green space now that many are able to telecommute for work? It is interesting to note that towns even as far as an hour from Boston like Leominster have also experienced a strong seller's market with rising prices through the fall.  

First, let's look at which Boston neighborhoods are still in a seller's market:

1. Hyde Park
2. West Roxbury
3. Roslindale
4. Mattapan
5. Dorchester

Boston neighborhoods which are already in a buyer's market:'

1. Seaport District
2. Downtown

The following chart lists 60 major towns and neighborhoods. You can compare one town or neighborhood to another using the Historical AR column. The lower the number the greater chance of multiple offer scenarios. The higher the number are areas where buyers should be able to negotiate a good deal. See details below the chart to understand how to interpret the data in the table.

1. Avg sales YTD. The numbers in this column reflect the total number of sales for the area between Jan 1 and Sep 30 and divided by 9.

2. Sold in Sep 2020. The numbers in this column reflect the number of properties in each area that received offers from Sep 1 - Sep 30, 2020. This number is presented to offer you an opportunity to compare whether sales for September are higher or lower than the average number of monthly sales. Historically, September and October enjoy robust sales. Consequently, we should expect the number of sales in this column to be equal to or greater than the average number of sales YTD.

3. Active 10/4/20. This column is of great significance for buyers and sellers. The higher the inventory the better for buyers. The lower the number, the better for sellers. Why? Low inventory creates a high demand for what is available and creates bidding wars. High levels of inventory create a glut and decreasing property prices.

4. Inventory Supply. The numbers in this column indicate the number of months it might take in order to sell all of the properties on the market as of Oct 4. This calculation is based upon the number of sales in September only. Therefore, the numbers in this column are only valid if sales in October and November are the same as September. This might be true for October, but November and December typically drop due to the holiday season and the onset of winter.

5. Historical AR. The numbers in this column reflect the number of months it will take to sell off the current inventory as of Oct 4, 2020 based upon the average number of sales for the past three years. The past 36 months of activity more accurately reflect the potential number of sales over the next several months and not just October. If the number in this column is 3 or less, this indicates that the area is enjoying a seller's market with the potential of bidding wars. When the number is between 3 and 6, we are likely looking at a balanced market where properties are continuing to sell but not necessarily with bidding wars. If the number is higher than 6, then technically, we are looking at a buyer's market with rising inventory and falling property values.

Boston Area Winners and Losers for October

Home buying around Boston has been very stressful for buyers in many areas of the Boston metropolis even in October! However, the market is poised to flip in favor of buyers. Many neighborhoods of Boston are already experiencing a buyer's market. Here follows a list of the seven areas which qualify as experiencing a buyer's market:

Downtown
Chinatown
Fenway
Bay Village
Beacon Hill
North End
Back Bay

Since sales slow way down in December, next month would be a good time to buy even in areas which qualify as seller's markets.

And here follows the areas that are super hot and ripe for multiple offer situations:

Ashland
Weymouth
Sudbury
Dedham
Framingham
Melrose
Braintree
Hyde Park
Wayland
Norwood
Malden

The above areas include a few Boston neighborhoods but mainly outside of Boston.

The following chart lists 60 major towns and neighborhoods. You can compare one town or neighborhood to another using the Historical AR column. The lower the number the greater chance of multiple offer scenarios. The higher the number are areas where buyers should be able to negotiate a good deal. See September's chart for details on how to interpret the data in the table.

Boston Area Winners and Losers for September

The real estate market around Boston has been very active in many areas this summer. September has seen sellers receiving multiple offers on their properties and consequently many disappointed buyers losing out to multiple offer situations. However, there is a way to be the winner every time instead of the loser! One of the best ways of avoiding a bidding war altogether is to try and find your next home in an area with an oversupply of inventory or for a property that has been on the market for more than 30 days. Here follows a list of the seven areas which qualify as experiencing a buyer's market:

Downtown
Chinatown
Bay Village
Fenway
Back Bay
Beacon Hill
North End

And here follows the areas that are super hot and ripe for multiple offer situations:

Ashland
Foxborough
Framingham
Weymouth
Sudbury
Dedham
Melrose
Braintree
Malden
Mattapan
Medfield

The following chart lists 60 major towns and neighborhoods. You can compare one town or neighborhood to another using the Historical AR column. The lower the number the greater chance of multiple offer scenarios. The higher the number are areas where buyers should be able to negotiate a good deal. See details below the chart to understand how to interpret the data in the table.

1. Avg sales YTD. The numbers in this column reflect the total number of sales for the area between Jan 1 and Sep 30 and divided by 9.

2. Sold in Sep 2020. The numbers in this column reflect the number of properties in each area that received offers from Sep 1 - Sep 30, 2020. This number is presented to offer you an opportunity to compare whether sales for September are higher or lower than the average number of monthly sales. Historically, September and October enjoy robust sales. Consequently, we should expect the number of sales in this column to be equal to or greater than the average number of sales YTD.

3. Active 10/4/20. This column is of great significance for buyers and sellers. The higher the inventory the better for buyers. The lower the number, the better for sellers. Why? Low inventory creates a high demand for what is available and creates bidding wars. High levels of inventory create a glut and decreasing property prices.

4. Inventory Supply. The numbers in this column indicate the number of months it might take in order to sell all of the properties on the market as of Oct 4. This calculation is based upon the number of sales in September only. Therefore, the numbers in this column are only valid if sales in October and November are the same as September. This might be true for October, but November and December typically drop due to the holiday season and the onset of winter.

5. Historical AR. The numbers in this column reflect the number of months it will take to sell off the current inventory as of Oct 4, 2020 based upon the average number of sales for the past three years. The past 36 months of activity more accurately reflect the potential number of sales over the next several months and not just October. If the number in this column is 3 or less, this indicates that the area is enjoying a seller's market with the potential of bidding wars. When the number is between 3 and 6, we are likely looking at a balanced market where properties are continuing to sell but not necessarily with bidding wars. If the number is higher than 6, then technically, we are looking at a buyer's market with rising inventory and falling property values.

What Landlords Need to Know

 

 

 

Cash for Keys: What Landlords Need to Know

Cash for keys is a lesser talked about topic when it comes to running a rental business and is also unknown to many renters. It can be a tricky subject and landlords must be careful to follow local and federal laws when offering cash for keys agreement. While the concept might be unfamiliar to you, it is a great alternative to the eviction process which can be expensive and time-consuming. Knowing all your options when it comes to removing or changing tenants will help you seamlessly run your rental business.

 

What is a Cash for Keys Agreement?

 

 

 

A cash for keys agreement is exactly what it sounds like – you offer a sum of cash for your current tenant to vacate the property. You might be wondering if that type of agreement is legal in the first place. It is, as long as you follow the right procedure and have checked your local and state laws regarding cash for key agreements. Some types of situations where cash for key agreement might be a smart option are if a tenant is damaging property, if the tenant can’t consistently pay rent, or if the landlords want to sell the specific rental property. More often than not, tenants are open and motivated to accept cash for keys agreement – if they can’t afford rent, the idea of getting cash to vacate can be a win-win situation for both parties. 

 

It’s also a great alternative to the eviction process as evictions can take months and be quite costly for both landlords and tenants. Evictions require specific steps and legal procedures that are different in every state – typically, landlords have to give notice, then file an eviction with the courthouse, and participate in the eviction hearings. It’s important to know your options as a landlord and consider what’s best for you and your property long term.

 

Cash for Keys Process

The process for cash for keys is simple, fast, and efficient, plus, it only requires a few short steps:

Communicate with your tenants – Having an honest conversation with your tenants and explaining to them what cash for keys is will be the first step you need to take. Also, explain to them how an eviction would be pricey for them, long-winded, and could potentially stay on their records.

Give them the cash for keys agreement form – getting a written agreement with both parties’ signature is essential and necessary for your records.

Transaction Records – make sure you have proof of the transaction via a receipt or written if it was paid with cash – give the tenant a copy of the receipt as well.

Cash for Keys Amounts

The amount for the cash for keys agreement will obviously depend on where you live and the cost of living of your location – also, be sure to check certain laws locally or statewide. Generally, the amount is usually half a month’s rent plus security deposit, or a full month’s rent. Another option is to offer how much court fees would’ve been if an eviction notice was filed – typically, it can range from $1,000-$3,000.

 

Things to Avoid When it Comes to Cash for Keys

While the process can be fairly simple, there are some things you should probably avoid:

 

Fair Housing Violations – remember to always follow fair housing laws and to make sure you are not discriminating against tenants purposefully. 

Self-help Evictions – A self-help eviction is any type of action landlords take to evict a tenant that is not in the legal state and local laws. This includes things like changing the locks, turning off the heat or water, or removing a tenant’s belongings. 

Negotiating – It’s best not to negotiate the price with the tenants. You could make an adjustment after speaking with them if they have valid reasoning, but it’s best to know exactly how much you can offer and to have solid reasoning and explanation for the amount.  

Foregoing Security Deposits – While you might have signed cash for keys agreement, you should still treat the tenants’ security deposits like you would for any tenant moving out. This means doing an inspection and deducting for damages as you normally do with a written notice and explanation sent to the tenant with their remaining deposit.

 

 

 

Cash for Keys Form

Having the proper agreement will make sure both you and your tenant are on the same page and have communicated properly. It will also provide a legal and binding record that you both agreed to. 

Overall, cash for keys agreements can be the perfect solution for not only landlords but also tenants who need cash and who don’t want to go through the complicated and expensive eviction process. Make sure you follow the correct protocol and are always checking your local and state laws regarding your actions. Remember that proper tenant screening will help you avoid situations like cash for keys or evictions from the start.

Thinking about becoming a landlord? Are you one already?

One word: **Beware** There are so many different laws and regulations that can get you in hot water if you do not follow them all to the letter. Why? If a renter believes he is being wronged and decides to Google his rights, your ignorance of the laws or blatant disregard of them can create a legal mess for you. There are 4 major areas of concern that can land you in court and/or cost you money:

1. Security deposits;
2. Lead-base paint;
3. Short-Term Rentals; and,
4. Discrimination.

This post deals with #SecurityDeposits.

Basic Points Governing Deposits!

1. The Security Deposit Belongs to the Tenant, Not You

Yes, you are authorized to collect and hold in escrow a security deposit; however, deposits still belong to the tenant *until the landlord is authorized to use it*. Consequently, you, the landlord, are required to escrow the money in a *separate, interest-bearing Massachusetts bank account*. I recommend that you set up an account labeled *(rental address) Special Account*. You are required to do this and within 30 days of collecting the security money, inform your tenant of the specific bank/location where the money is to be held.

2. The Deposit Interest Belongs to the Tenant, Too

When the landlord holds a security deposit from a renter for 1 year or longer, they are required to pay interest on that money whether it was put in an interest-bearing account or not!! Since the security deposit belongs to the tenant, you are required to pay interest annually to your tenant.

3. What If You Fail to Open an Interest-Bearing Account?

It’s going to cost you! If you refuse or fail to notify your tenant which bank is holding their money, you must pay a rate of 5% per year on their deposit. Yes…. that’s the law! Considering that banks pay much less, you will want to ensure that you are not paying more than you have to. For example, if you collect a security deposit of $2,000, and choose to spend it, your renter will be entitled to $100 at the end of the first year. On the other hand, if you put the money in the bank and only received .05% interest on that money during the year, your tenant only gets $1.

Tenant’s Remedy

If 30 days after the first year, the renter has yet to receive the interest money, they can subtract what is owed to them from their next rent check. Massachusetts is very pro-Tenant and it is incumbent upon you to be familiar with its strict requirements or to hire someone to manage your rentals. Failure to comply with all the regulations can result in very serious consequences. Please let me know if you have any other questions about the Massachusetts security deposit law. Email jim@jimsellsboston.com

https://malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter186/Section15B

Unsurprisingly, August doles out surprises to buyers and sellers.

The Covid pandemic that landed in the US this spring has understandably affected our real estate market... but not too terribly. In fact, it has been a boon to a tremendous number of sellers. Typically, market activity picks up speed in February and explodes in March and April. Depending upon areas, the activity might continue through May and June. One might expect the greatest market activity in the summer when children are out of school in July and August, but the opposite is the case. July, and especially August, see very slow sales. However, this summer, sales have continued to hum along and in many areas eclipsing the number of sales this past spring. Since September and October experience robust sales until Thanksgiving, we should expect to see a high volume of sales continue for the next couple of months provided the current limited supply of inventory doesn't increase suddenly.

Top 10 Markets for Sellers

Arlington
Ashland
Foxborough
Framingham
Malden
Mattapan
Melrose
Sudbury
West Roxbury
Weymouth

Top 8 Markets for Buyers

Back Bay
Bay Village
Beacon Hill
Chinatown/Leather District
Downtown
Fenway/Kenmore
South End
West End

You might notice that the markets which are suffering the slowest volume of sales are all neighborhoods of Boston. Although much of the city of Boston is experiencing a buyer's market, it is not unusual for Boston to recover and outpace outlying areas when the market flips again.

So, sellers, please, take this post as an early warning message. Boston is the precursor of what is to come to its neighboring towns! Get your property on the market now while you can still enjoy a seller's market and buyers competing against each other to buy.

Buyers, you might have heard of friends losing out in bidding wars in their attempts to buy a home. However, in the 8 neighborhoods of Boston highlighted above, you should expect to be able to submit offers below list and negotiate yourselves a good deal.

Call Jim to take advantage of whichever market you are in!

Here is the raw data for 60 markets - contact Jim if your market is not listed:

1. This column (Mo Sales) includes the average number of sales per month of condos, houses and multi-families year-to-date. For comparison purposes, the next column shows how many properties sold just in the last month (August).

2. This column (On Mkt) tells how many listings are being actively offered for sale as of the date this has been posted. This number changes daily, and so, if you want an accurate count and view what listings are truly available, return to the home page and scroll down to the town or neighborhood you are interested in.

3. This column (Mos Supply) is calculated by taking the amount for each town or neighborhood in column 4 and dividing it by the corresponding amount in column 3. The result is the number of months it will take if sales continue apace just like the past month with no further listings added to the inventory. However, the real estate market is dynamic and the number of listings can change not only daily, but hourly!

4. This column (Actual AR) is a more realistic look at how long you can expect your listing to stay on the market before it sells. Although it is more realistic because it is based on a long-term average (2.5 years), the real estate market is cyclical and is always in flux due to many factors. Bottom line... this is the column to keep your eyes on.

On August 28, Colorado, Delaware, Pennsylvania, and West Virginia were added to the COVID-19 lower-risk state list. View map. Travelers from COVID-19 lower-risk states are not required to fill out the Massachusetts Travel Form and do not need to quarantine.

The initial announcement of the COVID-19 travel order on July 24 stated that all persons arriving in Massachusetts, including residents and non-residents, must quarantine for 14 days unless they meet one of seven exceptions:

1. They are coming from a lower risk state (currently including CT, RI, NH, VT, ME, NJ, NY, HI, CO, DE, PA, WV and subject to change) and have not been present in any other states during the last 14 days.
2. They have received a negative test result for a COVID-19 test performed within the last 72 hours.
3. They pass through Massachusetts in the course of traveling to another place.
4. They regularly commute either into or out of Massachusetts to a fixed place of work or school. This exception applies only to their commute.
5. They are a patient or accompanying a patient receiving medical treatment in Massachusetts.
6. They are required to travel to Massachusetts by a Federal or State military authority.
7. They enter Massachusetts to perform a critical infrastructure function.

Any person required to quarantine or provide the specified negative test result must also submit a Massachusetts Travel Form acknowledging and certifying their means of compliance with the order. Failure to comply can result in fines of $500 per day. It's important to note that this quarantine requirement would extend to vacationers coming to short-term rentals and incoming college students if they do not fall into one of the above categories.

What Pandemic?!

As soon as the governor and mayors allowed the showing of homes for sale, sellers began putting their homes on the market. And what was the result? Buyers cast aside fear of the virus and turned out in droves to buy a home as if there were no pandemic.  Although home sales were generally down in July compared to sales in June, sales are typically lower in July. In fact, sales usually drop off even further in August. So, a slowing market at this time of the year has nothing to do with the Corona Virus. As ever, the following two points need to be kept in mind:

1. Sellers are best off when the Actual AR column value for their town is less than 1. However, all is not lost if the value is less than 3; but, as the number rises, there will be fewer buyers looking or making offers. Values which are less than 3 indicate that that town or neighborhood is still enjoying a seller's market. 

2. Buyers are best off when the Actual Ar value is greater than 6. Housing prices in areas of 6+ like Back Bay, Bay Village, Beacon Hill, etc., will be more negotiable than those seeing values less than 6.0. Another indicator which tells you if you can low-ball a seller is the number of days/weeks a property has been on the market. You cannot expect to steal a house that is new on the market; but you can certainly try if it has been on the market for a month or two!   

Since a table is published each month, you can scroll back to see whether the AR is rising, falling, or stable.