Highlights from the Boston Real Estate Now blog.
Home prices are rising relentlessly across Greater Boston once again while the number of listings straggle along at record low levels.
It’s a bad brew for buyers, who can feel pressured to blow past their budgets in a bid to land a house in a tight market. Crazy low interest rates — fears they may be poised to go away — only add to the temptation.
Of course, the last time buyers were under that kind of stress was back during the housing bubble. We all know how that turned out.
So if you are out house hunting, it is more important now than ever before to make long-term affordability the first item on your checklist.
And that may mean buying less home, not more.
In practical terms, what does that mean? If your household income is $100,000 or less, that means a home-buying budget that tops out at $300,000.
Don’t get taken in by blather about low interest rates and how you can afford to buy more home than you would have a few years ago. Instead, those low rates are helping inflate the prices of homes across the board, so you are effectively spending more money to buy the same house.
Too often real estate agents are the ones doling out advice and they invariably focus on the tactics of buying or selling, or whether it’s a good time to buy now.
By contrast, the wealth and investment managers quizzed by The Wall Street Journal recently weren’t playing that game — it was all about affordability and staying well within your budget.
“Look for a house that costs less than what you afford,” writes Charles Rotblut, vice president of the American Association of Individual Investors, in the Journal piece.
Got a house you want to sell?
OK, they aren’t begging for you to sell your house, but the state’s realtors group really would love it if you did. Pretty please, with sugar on top.
“While fewer homes for sale do drive up prices, it also means there are fewer homes sold,” said Massachusetts Association of Realtors president Kimberly Allard-Moccia, broker-owner of Century 21 Professionals in Braintree. “We’re at a point where we really need homeowners who have been thinking of selling to make the decision to do it.”
Massachusetts home sales dropped nearly 9 percent in November, the first decline after months of rising activity, MAR reported this morning.
Warren Group, publisher of Banker Tradesman, is reporting a more modest 2 percent decline.
Why? One obvious reason is that there aren’t nearly enough homes for buyers to look at, with the number of listings down more than 20 percent, according to MAR.
Overall inventory is down to crazy low levels — there are just 4.3 months of supply on the market when it comes to single-family homes, down from nearly 6 months last November.
Anything below six months is considered a seller’s market.
Not surprisingly, prices went up again, hitting $316,500, or 7.3 percent jump over November 2012, the real estate group reports.
Freddie, Fannie offer deal to buyers
Everyone from wealthy foreigners to small-time contractors and brokers-turned-home-flippers are snapping up homes in all-cash deals.
But in a tough market, especially for first-time buyers, there is a glimmer of hope. The two federally backed giants of the mortgage market are stepping in to provide a boost to average buyers who can’t compete with deep-pocketed investors, syndicated real estate columnist Kenneth Harney reports.
Home buyers who commit to moving in and staying put for at least a year are being given a 20-day exclusivity period to bid on new listings of foreclosed homes being sold by Fannie Mae and Freddie Mac, Harney writes.
Interested? Check out the Massachusetts homes for sale on Fannie’s HomePath and Freddie’s HomeSteps sites. You can sort by county and go from there.
Buyers can potentially tap into HomePath mortgage financing with a minimal down payment.
Safe to say, these are all fixer-uppers. But if you are an average first-time buyer living on a middle-class income in the Boston area, it’s either that, a condo, or a settling for a very long commute.