Although we're done with winter now and the days are getting warmer, when I say things are heating up, I don't mean the weather... nice as it is to see warm, sunny days again. What I am referencing is how hot our real estate market is across Greater Boston... well, except for an area or two. Suffice to say

March. Sales. Were. Incredible!

And now the question is, what will the rest of the year be like? The quick answer depends upon supply and demand. Unfortunately, no one knows how much supply will be available from which buyers can choose. Naturally, there are always greedy sellers who overprice their properties intentionally or who are misguided by improper representation. Those will remain on the market in perpetuity until those sellers become motivated enough to lower their prices. Then there are those properties which interest only a handful of buyers because the homes are in disrepair, located on a busy street or in an undesirable area, or have a weird floor plan or lot... all items which can be compensated when the asking price is low enough. But all the desirable properties priced competitively will vanish soon after they are advertised for sale unless sufficient numbers of homeowners decide to make a move and list their homes for sale.

In many cases, potential home sellers who are wanting to move up or move down here in the Boston area are too fearful to sell until they find a place to buy. This creates a Catch-22 situation which occurs time and again but in cycles. The first cycle, which is what we are experiencing now, is when sellers are eager to sell but afraid they won't be able to find an affordable replacement home because there's a shortage of housing. The second cycle entails sellers unable to buy because there's an oversupply of housing and they are having a difficult time in finding a buyer for their homes.

Below tells the tale of the sales activity in 60+ towns and neighborhoods in and around Boston. Look up the name of the town/area in the alphabetized list on the left. Based upon the number of homes Active on 4/2/21 and the number of homes Sold in March, we can determine how many months (Inventory Supply) it would take before all the Active inventory is sold off... provided no other homes are placed on the market until then. Since homes are continually coming on and off the market, it is wiser to look at how the market absorbs its inventory over time (Historical AR). As an example, Allston had 5 homes sales in March. Although 16 homes on the market divided by 5 equals 3.2, historical sales more closely approach the 8 sales per month seen in Avg YTD. Further explanations follow the spreadsheet.

BUYERS

Your best opportunities to get a deal on your purchase or at least to avoid bidding wars is to look at areas where the AR is greater than 4.5 (ideally, greater than 6). The lower the AR amount, the more competition you will have with other buyers and the less interested sellers will be to negotiate.

SELLERS

Unlike buyers, you will find most areas of the greater Boston area favor sellers. Look, for example, at Natick or Ashland where the number of sales in March were way higher than the current number of homes on the market. Therefore, a properly-priced home should sell super fast in any of the areas where the AR is 1 or less.

Whether you are buying or selling or both, contact me if you want the best strategy for dealing with the market we are in now.

A combination of low inventory and high sales for the month of February paints a very rosy picture for Boston area home sellers. However, this should not make homeowners complacent about how long this will last. We are experiencing an unprecedented "bull market" in our real estate market and can understandably rejoice in how things have been going over the past several years; but, there will be a correction in the near future. The city of Boston is already seeing falling prices in several of its neighborhoods and other will follow. 

Normally, one might expect to see a list of the top 5 or 10 towns/neighborhoods with the most activity followed with a similar list of the slowest and worst performing; however, of the towns/neighborhoods I have been monitoring closely, over 2/3 are not just "hot" but boiling hot. There are only two neighborhoods as of March 3 that are mired in a buyer's market: 

1. Chinatown-Leather District
2. Downtown-Financial District

You will be hard-pressed to find a "deal" anywhere around the metroplex except for these two areas. With so much inventory available in Downtown and Chinatown, buyers have an opportunity to make low-ball offers. On the other hand, if you are looking to buy in Ashland, you can expect to see multiple offers when the next property hits the market.

All this said, there is an additional important point to make. All of these numbers can change in a matter of days. As spring arrives, more people will want to put their properties on the market which will contribute to cooling the market down some. So, if you have been thinking that the summer is the best time to sell, think again. NOW is the best time to have your property on the market!

1. Average sales YTD is the average of January and February sales for this year.

2. Inventory Supply indicates how long it might take for the current inventory to sell if no other new listings come on the market. Since this is unrealistic, the next column titled Historical AR, gives a more accurate number of months for the market to absorb the current inventory. 

If the AR value is under 3, this indicates a seller's market.

If the AR value is 3 - 6, this indicates a balanced market.

If the AR value is greater than 6, this indicates a buyer's market.

Boston Real Estate Market in Decline

Here are the Boston neighborhoods already experiencing a buyer's market. These neighborhoods are seeing lowering home values and longer days on market for those properties which do sell.

Top 5 best neighborhoods of dropping prices to buy a home in and also the top 5 worst neighborhoods to sell a home in:

Downtown
Chinatown
The Fenway
Beacon Hill
Back Bay

Top 5 best neighborhoods to sell a home in and also the top 5 worst neighborhoods of rising prices to buy in:

West Roxbury
Roslindale
Mattapan
Hyde Park
Bay Village

*** All the surrounding towns of Boston are enjoying a seller's market ***

Towns/neighborhoods with a historical AR of 3 or less are considered in a seller's market.
Towns/neighborhoods with a historical AR of 3-6 are considered in a balanced market.
Towns/neighborhoods with a historical AR of greater than 6 are considered in a buyer's market.

Buyers and Sellers Be Aware!

Sellers in metropolitan Boston have been enjoying a seller's market of bidding wars and rising prices for several years. In fact, it has been going on so long that buyers and sellers alike believe it will continue indefinitely. This reason why the seller's market has lasted so long is because interest rates have continued to remain low with no increase in sight. Although this has benefited many who have been able to qualify to purchase a home or refinance their mortgages, the spending binge which we can expect politicians in Washington to go on this year will likely cause a sharp market correction. Based upon the rhetoric of pre-election days, we can likely expect the economy to change within the next 18 months. This is the window of time in which homeowners who are thinking of selling should get their homes on the market. Buyers, on the other hand, can afford to put off buying as prices will come down over the next several years. Mind you, as prices fall, interest rates will rise. Although most areas of metropolitan Boston are still seeing low inventories, several neighborhoods in Boston are already in a buyer's market of dropping prices. 

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.