Thank you for contributing to my best year ever in real estate. I was honored to receive so many personal referrals last year and to have worked with such fascinating people.
The Cambridge market continues to be strong, with sellers benefiting from recent price appreciation and buyers from historically low interest rates. The real estate climate in Cambridge has changed drastically since the end of rent control. Demand has increased with a continuing shortage of homes for sale. The robust local economy, especially in the financial and computer sector, has reduced the office building vacancy rate in the Greater Boston area from approx. 30% a few years ago to about 4% today. Well, all those new employees are buying homes or trading up and the demand, along with increased purchasing power, has pushed prices higher--approx. 10% per year for the past three years. Judging by a recent Sunday Globe, which had the largest Help Wanted section ever, and a very thin Real Estate section, this trend may continue.
There’s no doubt developers have taken advantage of the market, creating a mini building boom. New construction in the works varies from lofts in Somerville, Porter Square and on the Charles River to Townhouses in North Cambridge to Luxury Condos in Harvard Square. Large projects in the works include the Polaroid site on the river in Cambridgeport, continued development of the area between Brookline Avenue and MIT and several hundred rental units being built in East Cambridge and the North Point area. The $3,000,000 renovation of Central Square and the proposed improvements to Porter Square have contributed to the general climate.
Neighborhood ‘watchdog’ groups remain a viable force in the city and have acted to monitor and encourage ‘responsible’ development. An ambitious citywide rezoning petition was initiated by a coalition of neighborhood groups who want to see new development regulated in a way that enhances the quality of life in the city. Issues addressed included traffic and parking, height limits, buffer zones between commercial and residential zones and density. Considered too restrictive by many (including several affected major property owners), only a few parts of the petition were passed by the City Council. This is sure to remain a hot topic in the years to come, and residents are encouraged to voice their opinions through their neighborhood group or to their city councilor.
Affordable housing remains a priority for the City Council, who budgeted close to $11 million in Fiscal Years 96, 97 and 98. With $3.5 million growth in tax revenue as a result of the end of Rent Control, and $3.8 million savings from the Rent Control budget, the $11 million budgeted represents an increased expenditure of close to $3.7 million over the last 3 years. 100 affordable housing units were purchased from Harvard University for $2.4 million.
A transfer tax for affordable housing was also enacted by the City Council. Controversial, this tax has yet to be tested by the state legislature. If passed, every home sale in Cambridge would be taxed 1%, with the first $300,000 excluded. The proceeds would go to the Affordable Housing Trust (this measure was later defeated at the state level).
Many sellers will benefit from the new federal tax law. The capital gains rate for properties held more than 1.5 years has been lowered from 28% to 20%. For a principle residence owner occupied two out of the last five years before selling, the first $250,000 of capital gain is excluded for a single filer, and the first $500,000 is excluded if filing jointly. A two-year roll over is no longer required. (The above should be verified by an accountant. Massachusetts’ rules are different.)
The Cambridge Council of Realtors was very successful in their year-end fund raising efforts for Our Place, a day care center for homeless children run by The Salvation Army. This year we raised a record $23,000. My own personal charitable efforts included donating 1% of my commissions to the Cambridge Food Pantry Network (which provides meals for the homeless) and to the Cambridge Scholarship Fund (which helps high school students go to College). Additionally, our office sold 300 Thanksgiving pies (thanks for your purchases). Each pie sold provided five Thanksgiving dinners to Aids patients for a total of 1,500 dinners.
I always enjoy hearing from past friends, customers and clients, whether to simply ‘catch up’, or if you have a real estate question or ‘need’. As always, if you, or a friend, are considering renovating, selling or buying a home, I would be glad to help.
I look forward to hearing from you,
David A. Pap
PS You can call me at 617-864-8566, ext. 244, 800-255-7545, x244 or email me at: David.Pap@NEmoves.com