How's The Market?
“How’s the market, Bill?”
This is the question that I hear most when I tell people I’m a broker. And the answer is, well, it all depends on where you live. I’m not talking about Phoenix versus Boston. I’m not even talking about distinctions between a gritty city like Lawrence or Chelsea versus the leafy suburbs of Wellesley or Weston. I am talking about your very specific town.
There are huge differences between how the market is doing across short periods of time and relatively short distances of space along Route 128. So, you’ll have towns often grouped together in, say, Boston‘s annual rankings of public school districts or on a list of median incomes in communities. (Here in the Boston area, we know that schools districts and median incomes almost always mirror one another). Case in point: the Lexington area compared to Dover.
I am based in Lexington and mostly work that area. But I also work with a builder who just built a great house in Dover, the least expensive newly constructed house there by far (not counting a tight, cluster development). In Lexington, this would have been sold in a month or two. It has been on the market in Dover for 200 days. But that is just how the two markets are. Lexington inventory moves fast, if priced below $1.5 million. We brought three listings on in the past couple of weeks — two in Lexington and one in Arlington. All were under agreement within the week with multiple offers. In Dover: zzzzz. It will sell, but the imagined buyers (in the minds of sellers) in Dover want many acres and humongous houses for multi millions of dollars. Looking at the available inventory of Dover homes, there are 82 total listed for sale, 29 of which (35%) are priced above $1.5 million. 22% are priced $2 million and above. We felt building a reasonably sized well-built house on two acres abutting woods priced below $1.2 million would be a slam dunk, a great-value Dover “starter home,” if you like. But we have had two- and three-person families coming through, many sick of the long commutes from the exurban hinterlands along Route 495, who tell me without apparent irony that a 3000 square-foot (not counting an additional 1000 s.f. in a finished basement), five-bedroom, four-bath house is “too small.” Not “too small for the price.” Just “too small for us.” This idea of what constitutes a reasonably sized home will be the subject of a future post.
Looking at median prices — which clearly do not form the whole picture — of single family houses in Lexington for the past 12 months, there are currently 146 listings on with a median asking price of $898,000. There are 79 under agreement, pending closing, with a median asking price of $769,000. And in the past 12 months, there have been 310 closed sales with a median sold price of $725,250.
In Dover, there are currently 83 listings on the market, with a median asking price of $1,195,000. There are 10 pending at a median of $912,450. And there have been 44 sales with a median sold price of $849,400.
Dover is a small and wealthy town. We knew that. But the high end everywhere is struggling. And high end means $1.4 million and above in towns like Lexington. You can still find decent houses in the $400,000-600,000 range. In Dover, the high end means $2 million and above. And there are just fewer multi-millionaires walking around buying houses than there were in 2003-2004. Plus, we all have read how those super-sized mortgages are no longer as available as they once were for the more, um, aspirational multi-millionaires. Lexington sellers seem to have adjusted to this new reality. There are still some builders tearing down $500k+/- houses and trying to sell new $1.5 – $2 million houses. But they are fewer in number than the free-wheeling “bubble” times for sure.
So, the grittier lower-end towns are struggling with short sales while markets in the tony suburbs have slowed to a snail’s pace. But if you are in a great town with excellent schools in a reasonable distance to Boston and Cambridge, with a decent amount of median-priced inventory you’re in the sweet spot. There is no monolithic market akin to the stock market.
All real estate is local. Really local.