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.

Update as of July 3

Check back each month around this time to see which way the real estate wind is blowing in your town!

Last month I was concerned about the effect the covid virus lockdown would have on June. Would things return to normal or would people still be afraid to venture out. Survey is in and the results are mixed!

In most areas, April and May are supposed to see the greatest numbers of sales for the year; but not so this year. The Covid virus lockdown really kicked our butts this spring! In many areas of the Boston Metropolis, not only have buyers returned as if there were no virus, towns like Canton, Milton, Natick, Quincy, Wayland, West Roxbury and Weston have outpaced normal year-to-year volume! In fact, Newton was up about 30% and Wellsley 50% over past years. The winner, though, goes to Dover with a year-over-year increase of nearly 100%! Dover was in dire need of a resurgence because it is on the brink of turning into a buyer's market.

On the other hand, other areas are still struggling for air. The neighborhoods of Chinatown-Leather District and Downtown are technically in a buyer's market and might well expect to see falling prices. South End is also fast nearing becoming a buyer's market. So, for the most part, my statement from last month was pretty accurate: "Although June sales are typically lower than April and May, we actually might see an increase this year as folks who are tired of being cooped up are willing to get out and get on with their lives."

Bottom line remains the same: do NOT expect sellers to be too negotiable where the number of months supply is less than 1; whereas deals can be made with reasonable sellers where the months supply is 5 or more.

If you are interested in buying in a town not listed below, please don't hesitate to click on Contact Us and ask for its market activity. See footnotes below on how to interpret the data in the table which follows.

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 (June).

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.

As of today, the best neighborhood to have your property on the market is Mission Hill. The best town is Ashland. The most challenging neighborhood to be selling in is Downtown. The most challenging town is Dover.

Update as of June 4

Check back each month around this time to see which way the real estate wind is blowing!

Caveat... due to the shelter in place and fear of the corona virus, the market has taken somewhat of a hit and numbers might be skewed through June.

In most areas, April and May are supposed to see the greatest numbers of sales for the year; but not so this year. Although sales have remained somewhat robust in certain areas (see where Sold in May numbers are greater than the average monthly sales (January - May), sales in other areas remained down in May. Although June sales are typically lower than April and May, we actually might see an increase this year as folks who are tired of being cooped up are willing to get out and get on with their lives. Bottom line remains the same: do NOT expect pricing to be too negotiable where the number of months supply is less than 3; whereas deals can be made with reasonable sellers where the months supply is 6 or more.

If you are interested in buying in a town not listed below, please don't hesitate to click on Contact Us and ask for its market activity.

BOSTON HOUSING SALES DOWN!

Everyone wants to know what effect the corona virus/shelter-in-place lock downs have had and will have on real estate. Although some governors have labeled real estate an essential service, the media have sufficiently scared the public into cowering in their homes and not getting out and looking for their next home as much as they would normally be doing at this time of year. With very few exceptions, sales this April are less than what they should be. Since real estate markets vary from state to state, county to county, and even within cities, we shouldn't be interested in general stories you might read in the newspaper or hear on the nightly news regarding real estate sales
"nationwide" or in one state or another. What matters is what is happening in your town. Consequently, what follows below is a table showing 63 individual towns and neighborhoods in and around Boston to give you a hyper-local feel for what is going on in our "local" area.

The table has four columns next to each town. The first is the average number of sales from Jan 1, 2020 through Apr 30, 2020. Therefore, 20 total sales = 5 on average per month. The second column shows what impact the shutdown has had on April sales. You will notice that 57 of the 65 market areas saw a decrease in the rate of sales when April should have seen a significant increase. This does not bode well for May.

The third column shows the number of homes on the market and available for purchase as of May 4. Not unexpectedly, there are fewer homes on the market that what we would normally expect due to the fact that sellers, unless they are desperate to sell, do not want strangers parading through their home and possibly contaminating it. Although determining absorption rates usually utilize the average number of sales per month, for example, 5.5 for Allston, given current circumstances, I think it wiser to use the most recent month's sales to calculate how many months it will take for the current inventory to sell off. The caveat, however, is that this assumes that no other properties will come on the market until all of these sell.

Real estate markets are dynamic. They change daily. So, although absorption rates are constantly changing, they do give us an idea of whether we are in a buyer's or a seller's market.

BUYERS

You obviously want to get a good deal on your purchase, right?! Your strategy should be to find homes that have been on the market a long time. The usual reason for them not selling boils down to the property being overpriced. Being overpriced gives you the opportunity to make a low-ball offer without worrying about others bidding up the price which occurs in a seller's market. Ideally, you want to be buying in a buyer's market. A buyer's market occurs whenever there is so much inventory on hand that it will take more than 6 months for everything to be sold. If you look down the fourth column for numbers 6 or more, those are the places you should be able to negotiate a good deal.

SELLERS

We have had a long, great seller's market beginning back in 2012. Prices began rising until finally plateauing in 2018. Robust markets where sales have continued at a good pace have not seen many bidding wars, certainly not above asking price; and so, you have to be careful about how you price your property. You don't want to be too high and have it sit without showings and/or offers. The higher the number in the fourth column, the more realistic you are going to need to be about pricing. The question you now have on your mind is likely: should I put my property on the market now or wait? Since the best time to sell is March through June, you cannot afford to wait. Sales drop off precipitously in the summer time!

Interpreting absorption rate data:

0-3 months = seller's market. 3-6 months = balanced market. 6+ months = buyer's market.

BOSTON HOUSING INVENTORY DOWN!

Between late summer and the end of the year many areas in Boston have defied history. An expanding inventory has suddenly contracted and have not only slowed the inevitable change from a balanced market (3-6 months of inventory) but have reverted many areas back into a seller's market! The chart below shows over 60 towns/neighborhoods around Boston, providing you a glimpse into which towns/neighborhoods are best to buy or sell in as of today. The market is in constant flux as houses come off the market due to seller fatigue, withdrawn for the holidays, or change of mind about selling, or as other new listings come on the market. 

Typically, sales from November to January shrink in number. You will see below that every town or neighborhood has seen a drastic drop in home sales for the first 18 days in December relative to the average number of sales per month from Dec 1, 2018 through Nov 30, 2019.

BUYERS

Generally speaking, the best time to buy is now through January as competition will really start to heat up in February. If you want to know in which towns you might get the best deal, look down the column of # of months supply and see which are at 6 months or greater. Another way to look at it is to see which areas have had the fewest number of sales this month... especially if the number that have been selling on average is drastically higher.

SELLERS

The hottest time to sell is from February to April. Therefore, get your home on the market in January!!