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Boston Globe Real Estate Writer spills the beans on Real Estate. Our Podcast today talks about high rents, need for affordable homes, transfer taxes, rent control the middle class families have difficulty in the Boston area finding homes that are a good fit for them. Tim Logan, real estate writer, from The Boston Globe shares what he has covered in the past months on all these issues. Transfer tax is in front of the legislature this week. The idea is to charge a 1% transfer tax to both Buyers and Sellers. There are some towns in the Commonwealth looking at this for homes beginning at $400,000. This is a slippery slope. Once towns are reaping income from people who own homes and live in these towns they will, of course, jump from taxing some sales to taxing all sales.
To me this is unfair to home owners. Why tax approximately 60% of our citizens (those who own homes) and not all citizens. In this show we never answered what will be taxed or where new income will come from to help with this issue. We do need to consider fair options for all. It has been proven since the 70’s that rent control does not work. When landlords, or builders have their ability to make a living by setting upward limits, they will choose other places to use their money.
The town of Brookline, MA has passed a directive. By an overwhelming vote of 207 to 3, members approved a bylaw that prohibits the installation of oil and gas heating systems in new construction beginning in 2021. The desire is to control the use of fossil fuels to assist with global environmental issues. This initiative is already being tested by the courts for it’s legality. Should this pass the cost of building will be increased and it will work directly against the affordable home issue. Tim does a good job of explaining these issues to his readers. Take a listen to our conversation by clicking here. If you like the show, please subscribe. Boston Globe Real Estate Writer spills the beans on Real Estate
The real estate market is expected to do very well this year as mortgage rates remain at historic lows. One challenge to the housing industry is the lack of homes available for sale. Last week, move.com released a report showing that 2020 is beginning with the lowest available housing inventory in two years. The report explains:
“Last month saw the largest year-over-year decline of housing inventory in almost three years with a dramatic 12 percent decline, pushing the number of homes for sale in the U.S. to the lowest level since January 2018.”
The report also revealed that the decline in inventory stretches across all price points, as shown in the following graph:
George Ratiu, Senior Economist at realtor.com, explains how this drop in available homes for sale comes at a time when more buyers are expected to enter the market:
“The market is struggling with a large housing undersupply just as 4.8 million millennials are reaching 30-years of age in 2020, a prime age for many to purchase their first home. The significant inventory drop…is a harbinger of the continuing imbalance expected to plague this year’s markets, as the number of homes for sale are poised to reach historically low levels.”
The question is: What does this mean to you?
Be patient during your home search. It may take time to find a home you love. Once you do, however, be ready to move forward quickly. Get pre-approved for a mortgage, be ready to make a competitive offer from the start, and understand that a shortage in inventory could lead to the resurgence of bidding wars. Calculate just how far you’re willing to go to secure a home, if you truly love it.
Realize that, in some ways, you’re in the driver’s seat. When there is a shortage of an item at the same time there is a strong demand for that item, the seller of that item is in a good position to negotiate. Whether it is price, moving date, possible repairs, or anything else, you’ll be able to demand more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Don’t be unreasonable, but understand you probably have the upper hand.
The housing market will remain strong throughout 2020. Understand what that means to you, whether you’re buying, selling, or doing both.
There’s a current narrative that owning a home today is less affordable than it has been in the past. The reason some are making this claim is because house prices have substantially increased over the last several years.
It’s not, however, just the price of a home that matters.
Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by approximately 3% over the last year.
The National Association of Realtors (NAR) releases a monthly Housing Affordability Index. The latest index shows that home affordability is better today than at almost any point over the last 30 years. The index determines how affordable homes are based on the following:
“A Home Affordability Index value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).”
The higher the index, therefore, the more affordable homes are. Here is a graph showing the index since 1990:
Obviously, affordability was better during the housing crash when distressed properties – foreclosures and short sales – sold at major discounts (2009-2015). Outside of that period, however, homes are more affordable today than any other year since 1990, except for 2016.
The report on the index also includes a section that calculates the mortgage payment on a median priced home as a percentage of the median national income. Historically, that percentage is just above 21%. Here are the percentages since June of 2018:
Again, we can see that affordability is much better today than the historical average and has been getting better over the last year and a half.
Whether you’re thinking about buying your first home or moving up to the home of your dreams, don’t let the false narrative about affordability prevent you from moving forward. From an affordability standpoint, this is one of the best times to buy in the last 30 years.
By the end of last year, many homeowners found themselves with more equity than they realized, and at the same time their wages were increasing. When those two factors unite, it can spark homeowners to think about making a move to a larger or more expensive home in the luxury space. That said, now is a perfect opportunity to take a look at the forecast for the 2020 luxury market.
1. Prices
The U.S. economy is strong today, with buying opportunities throughout the luxury end of the market. Thomas Veraguth, Strategist at UBS Global Wealth Management, says in Barrons.com,
“There’s a good link between luxury real estate prices and [economic] growth.”
Available inventory is a key element that can impact home prices. At the upper range, the inventory is greater in comparison to the entry-level market, making moving up to a luxury home a growing reality for many buyers right now.
2. Activity in the Market
With more buying opportunities at the higher end, we should start to see an increase in activity. The same article states,
“Affluent homebuyers will start to come out of the woodwork as they find rising luxury rents less appealing and sellers get even more negotiable on price.”
Buyers looking in the luxury market are taking the opportunity to negotiate on price in a segment where there are more choices, too. According to the Luxury Market Report, homes sold for an average of 96.94% of the list price in December.
Buyers are also getting more for their money with greater purchasing power due to the current low interest rates.
3. Buyers Are Coming Back
Keep in mind, buyers are often sellers too, especially those looking to move up. Homeowners with an entry-level home can take advantage of the inventory shortage at the lower end of the market, thus driving higher sales prices for their current homes. Combined with growing equity in the homes they’re listing, it’s a great time for those who are ready to make a luxury move.
The extra equity and greater purchasing power are bringing many buyers back to the market. The same article mentioned that,
“We’ve already seen buyers who’ve been on the sidelines for two years tread back into the market.”
If you’re considering entering the luxury market, 2020 is shaping up to be a great year for those who are ready to make that move. Let’s get together to set your real estate plan for the year.
Cannabis Operator shares the secrets on Broker-Talk.com. Today’s show is interesting and a look behind the curtain on how a licensed operator can open a dispensary in MA. Realtors® are constantly leading the way in the establishment of property values and watching for changes in the local markets. There are 11 states that have already legalized cannabis for sale. (Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington), the District of Columbia, the Northern Mariana Islands, and Guam. Another 15 states and the U.S. Virgin Islands have decriminalized.
Andrew Kaskoff, CEO of Fathom is a licensed Cannabis operator in the Sate of Massachusetts. Andrew has 6 years experience operating in the Maine medical cannabis market giving Fathom access to the experienced growers and extractors. Andres advises lenders, real estate professionals, family offices and multi-state operators helping them to enter and understand the east coast market. If you think about this change and then think about the number of liquor stores everywhere you can imagine how big this could be once it is federally legal and all the states are also have ratified the federal laws.
We are looking forward to understanding the process beginning with finding the property, getting the property neighborhood to agree to the usage of the commercial property and then getting the town to accept the neighborhood acceptance. This is not for those who do not have a plan and time to spend getting through the entire process. Community outreach, meetings, town meetings, and committee meetings will fill your days for a while to get this set up correctly. Broker-Talk.com is a weekly podcast that covers all types of real estate issues for our audience of agents and consumers. If you have a question about any real estate issue let us know. We would be happy to have a show to discuss your questions. Cannabis Operator shares the secrets on Broker-Talk.com
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