Cambridge Area Real Estate Newsletter
Dear Friends and Neighbors,
Alan Greenspan said it so it must be true-:) The former Federal Reserve Chairman said the U.S. economy was pulling away from the shoals of a sharp housing-sector downturn and that the outlook for growth was "reasonably good." "Most of the negatives in housing are probably behind us," Greenspan said. "The fourth quarter should be reasonably good, certainly better than the third quarter." *
This followed by a few days a report in the Wall Street Journal about a Moody’s investment survey which predicted the Boston market would bottom out in the third quarter.
Boston “is very close to the bottom,” said Mark Zandi, chief economist for Moody’s Economy.com. “If the price declines aren’t over, they’re pretty close to being over.” Moody’s cited Mass. job growth, an improving economy and low mortgage rates as major factors. “What he’s saying is that the adjustment in Boston is going to be quite mild compared to other cities,” said Nicholas Perna, an economic consultant in Ridgefield, CT, agreeing that “the odds of it spanning a couple of years are low. **
Would this send a message to the many buyers sitting on the fence, putting off buying until they feel the market has stabilized? And, how does Boston relate to Cambridge? Do economists really know anything about real estate? Or do the media call the shots? All good questions.
Then three weeks later, a report by the New England Economic Partnership, referring to Massachusetts as a whole, predicted “Housing prices will slide by as much as 10 percent from the 2005 peak before hitting bottom in early 2008....they should stay flat through 2009, before beginning to climb gradually.” ** Many would say that Cambridge area prices have already adjusted by 5-10% since spring of 2005.
Meanwhile, Lawrence Yun, senior economist at the National Association of Realtors predicted prices here should begin “perking up” in the spring. “It’s very hard for me to see prices continuing to fall in a job-creating environment,” he said. ***
And CNNmoney.com called Boston, San Francisco, New York, Los Angeles and Seattle, “Bubble-proof markets,” where “ short term price drops are possible, but healthy economies and rising incomes will support these ‘superstar-cities’ over the long run.”
There are a lot of experts out there with a lot of opinions. But when you look at what they’re saying, they’re not that different. The good news is that no one is predicting a ‘bubble’ or even significant price declines for the Cambridge/Boston area and a turn around may not be that far off.
Nevertheless, we are still in a price sensitive market in the Cambridge area, characterized by over supply, and there’s a lot of new construction on the books. It will take ‘awhile’ for this market to ‘shake itself out’ and absorb the excess supply. With ‘volume,’ or the number of sales per year down 15-20% from the peak, properties in general do take longer to sell and need to be priced realistically according to the market. Two of my listings just sold in a week, however, as they were priced strategically. The sellers were happy.
It’s important to remember that the experts are making generalized predictions, and that pricing in real estate is property specific. Every town, neighborhood, street, block, house or condo is different. Some segments of the ‘high end’ are hot right now—I just sold a house (as a buyer’s rep) asking $1.25 million which had 6 offers—but it was priced very realistically!
There are three factors that affect the sale of a house: location, condition and price. And the more of these you have working in your favor the quicker a house will sell.
In any case, spring is perennial, and next spring is likely to be busy. If you’re a buyer, you may want to pick up a deal now, or learn the market so you’re ready to make a move in the spring. Interest rates have come down. One lender (on Nov. 20 th) offered 6% for a 30 year fixed mortgage and 6.25% for a jumbo, both with NO points! Call me to register for WebHunter, which emails you daily updates of new listings. If you’re a seller, call me to see where your home fits in today’s market, and to strategize market timing and pricing.
This year’s benefit concert for the Cambridge Housing Assistance Fund (CHAF), which I volunteer direct, was a huge success. We raised $163,000 to help 175 families to avoid or pull themselves out of homelessness. That’s over $1 million raised since 1999 by CHAF’s community coalition and more than 1,000 households helped. To see how you can help, visit www.CHAFund.org.
I'm celebrating my 20 th year in Cambridge area real estate sales , and with 15 years before that as a designer/builder/woodworker, that's 35 years experience working with Cambridge area housing! Most of my business now is word of mouth! Thank you for your many referrals and for contributing to my success!
I look forward to hearing from you, whether to simply catch up, or to assist you with real estate.
Email Address: David.Pap@NEMoves.com
* Reuters, October 26, 2006
** “Housing prices put at or near low,” page 1, Boston Globe, 10/23/06
*** “Housing slide may deepen,” page C1, Boston Globe, 11/15/06