Highlights from the Boston Real Estate Now blog.
Boston and a growing number of suburbs all have one thing in common now — home values that are once again at peak levels.
At a median value of $418,300, Boston has blown past the prior pricing peak set during the bubble years. So have Cambridge ($541,800), Brookline ($591,500), Newton ($793,100), Watertown ($425,000), Wellesley ($1,012,000), Winchester ($789,000), Cohasset ($748,900), and Somerville ($435,800).
All told, 22 out of 156 communities surveyed by Zillow in Greater Boston are back at peak pricing levels. (Zillow blends assessed values with prices.)
And of course, I have forgotten to mention Belmont, Concord, Lexington, Lincoln — you get the picture.
For the most part, we are talking the usual suspects, though Weston just missed the cut, as did Hingham and Hamilton.
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Still, I was also surprised to find Natick, my hometown, on the list of communities back at peak at $435,900, and Reading ($457,000).
Another 28 suburbs are within 6 percent of their last peak, a group that includes up-and-comers like Burlington, Medford, Woburn, and Dedham.
Condo prices shatter record
Yes, condo prices are getting nutty again. The median price of a condo in Massachusetts crossed the $300,000 threshold in January.
That’s the highest condo price ever for a January since Warren Group, publisher of Banker Tradesman, began tracking condo prices in 1987.
It also represents a 24 percent increase from January 2013, when the median price for a condo was $242,000.
By comparison, the median US home price weighs in at $188,900.
Condo sales were also up by a pretty sizable 16 percent, with 1,144 units changing hands the first month of the year, Warren Group reports.
What’s even more amazing, condo prices are not all that far behind single-family home prices in Massachusetts, with the median home price in January rising to $315,000.
Condos have long been a starter home alternative in Greater Boston, but it’s not clear how much longer that’s going to last. Certainly condo prices are out of sight now in Cambridge, Boston, and the inner suburbs.
Of course, the price increases might be good news for sellers, but it’s hardly anything for buyers to cheer about. Even if you are trying to sell in order to move up into something grander, you are still going to be scrambling to keep up when prices are rising at double digits.
So what’s driving this price escalation? Low inventory is the big problem right now. The inventory of single-family homes dropped more than 20 percent in January compared with January 2013, the Massachusetts Association of Realtors reported last week. Condo inventory was down 27 percent, MAR said.
Sellers still need to be realistic
Reports of rising home prices have emboldened many sellers, who think the crazy days of the real estate bubble have returned.
But while prices are definitely going up, the easy money mortgages that drove the last bubble are gone.
In fact, when it comes to pricing your home, the margin of error is not all that big, warns Bruce Taylor, cofounder of ERA Key Realty Services in Whitinsville.
A seller might be able to get away with a little overpricing. You might even find a buyer if you list at 5 percent above comparable properties in your neighborhood. But once you hit 10 percent, you are going to run into some serious problems, Taylor contends. In his market, that’s roughly pricing your house at $330,000 instead of $300,000.
But if a seller comes into his office insisting on $390,000 or even $420,000 when the real price is $300,000, Taylor doesn’t mess around.
“If they come in at a number 30 to 40 percent over and we can’t get you to come down, we just pass,” Taylor says.
So why not play along with the seller’s fantasies?
Because it too often is the start of a downward spiral, where the property doesn’t sell and then becomes perceived as damaged goods.
In the end, the seller might wind up netting less than the market price of his home
to move it after it has sat on the market for months, Taylor says.