Last Monday, a first-ever joint meeting between the Bellevue Hill Improvement and Higland Civic Associations moderated a lively discussion between residents, developers and local politicians over some recent zoning controversies stemming from two newly constructed properties and a proposed future development in West Roxbury.  Specifcally, two completed development projects on Grayfield Ave and a proposed development on Ruskin Street have spurred concerned residents, many of whom feel they have been left out of important decisions making processes and that their voices are not being heard, into action.  

The meeting drew a large crowd of West Roxbury residents as well as several At-Large City councilors and neighborhood councilors.  Present were At-Large Councilors John Connolly, Mike Flaherty and Steve Murphy as well as West Roxbury City Councilor John Tobin.

In addition, representatives from two other neighborhood groups were in attendance: Olivia Waishek, president of the West Roxbury Civic & Improvement Association, and Stephen Smith, president of the Charles River/Spring Valley Neighborhood Association.

Both the West Roxbury Bulletin and West Roxbury Transcript newspapers reported on the meeting.  The artciles can be found here:  http://tinyurl.com/6ctpxl and here http://blogs.townonline.com/parkwayBlog/?p=7241

Also, to learn all about Boston Zoning, go here: http://www.cityofboston.gov/bra/zoning/zoning.asp

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Apparently, the above scenario strikes fear in the hearts and minds of some of the newer entrants–the so-called web 2.0 companies–that are all the rave now.  And, by golly,  it should. 

Let it be known that I have no axe to grind against Mr. Kelman or his company.  On the contrary, I found him to be quite affable, knowledgeable and certainly presentable enough, and I wish him and his firm much success.  Anything that offers consumers more choice is O.K. with me. 

But let’s be honest.  There are many traditional Realtor’s who are not as eager for Redfin’s success–and perhaps some who may secretly wish for Redfin’s demise.  There are also some traditional agents who are perhaps fearful of some of the emerging business models and web 2.0 companies (e.g. Zillow, Trulia, Redfin, etc.).  But here’s something they may not know….

They fear us, too.

I’m not sure if fear is a good motivator for either side, but if you happen to be on the traditional side of things take note of Mr. Kelman’s nightmarish revelation.  The fact is that many of the tools available to these hi-tech firms are also available to the old school players who only need learn how to pick them up and use them.  According to Dale Stinton, there are currently 1.4 million Realtors members of NAR.  Could you imagine if even half that number started blogging in earnest about real estate in their respective communities, or even if one-third of them started engaging consumers on social networking sites such as Facebook or Myspace?

Forgetaboutit! 

My point is this: Mr. Kelman and the current cadre of Web 2.o firms are indeed onto something BIG (IMHO).  But instead of being fearful of this new breed of real estate technologists, traditional agents should learn from them, and embrace some of the same tools they use and the social media strategies they employ in order to level the playing field.  And then let’s compete head to head on things that matter to consumers: local knowledge, service, negotiating expertise and follow up. 

For more on hyper-local blogging, check out:
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=864 
http://www.buzzmachine.com
 

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This blog post is designed to bring it all home, so-to-speak, in terms of what’s happening overall in the Roslindale real estate market as of July 2007.  But first, a quick review:

Single Family Market Conditions–In a word, the single family market in Rolsindale has been consistent over the past 24 months in terms of median sales price, supply and demand by # of units, and the sales rate measured as monthly supply of inventory (MSI).  For a more detailed accounting of this market segment click here.

Condominium Market Conditions–A bit of a mixed bag.  The perception of this market segment as demonstrated by the median sales price is not in line with the reality of the market when taking into consideration such key market indicators as supply and demand by # of units and the sales rate MSI.  There appears to be somewhat of a stalemate between perceived value on the buyer’s side versus seller’s perceived value.  It may be that adjustments need to be made on both sides.  For a mored detailed accounting of this market segment click here.

Multi-Family Market Conditions–Presently, the multi-family market in Rolsindale is stagnant and values are declining.  Unfortunately, all the key market indicators are pointing to the same difficult reality for multis in Roslindale.  For a full account of this market segment click here…and to understand why the multi-family market in general has been experiencing tough days click here.

Overall, the real estate market in Rolsindale is struggling a bit.  Although there is strength in the single family market segment, the condo market is lackluster and the multi-family market has its share of problems to overcome before that segment can fully recover.  For sellers, the key to selling is having the proper motivation, perspective, and expectation and then, after being armed with the facts, determining a realistic sell price.  For buyers, there are many opportunities in all segments of the Rozzie market, but be prepared to act when the right one comes your way.

 NEXT UP:  A CLOSER LOOK AT THE JAMAICA PLAIN REAL ESTATE MARKET

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For those of you interested in understanding why the multi-family market in Roslindale is a flat as it is, I can point to a confluence of contributing factors.  The antics of the sub-prime lending market over the past few years, a lackluster rental market, the condo conversion craze which spewed forth an oversupply of inventory, unsustainable appreciation rates, and ultimately the inability of multi-family properties owners to see a reasonable return on their investments no matter if they decide to rent or convert to condos–all of these factors have contributed to a weakening market segment.

A solution to the present condition of the multi-family market segment can only be found after a cold examination of the facts, some of which include:

Median Sales Price for Multi-Family Properties in Roslindale Over the Past 24 Months

Of all the key market indicators used in evaluating the condition of a market segment, the median sales prices over time is perhaps not the best measurement of the present state of the market, but it is still relevant when used in conjunction with other key indicators in terms of understanding where the market is as a whole.  The graph above illustrates a consistently downward sloping trend-line over time in terms of median sales prices.  By the numbers it shows that in June ‘05 the median sales price for multi-family properties in Roslindale was just over $600,000, however in June 0f ‘07 the median price is at $450,000 representing a 23% decline in value.  It also reveals that the average days on market (DOM) has nearly doubled. 

Supply and Demand by # of units for Multi-Family Properties in Roslindale Over Past 24 Months

Supply and demand by # of units is another key market indicator that speaks to the fluidity of a market segment.  Specifically to the number of properties for sale versus the number of properties that have gone under contract on a month-by-month basis.  Here, again, the news for multis in Rozzie is not great.  Over the past 2 years the amount of multi-family inventory has steadily increased while the number of properties going under contract has remained flat or has shown a slight decrease in number.  For example, in June of ‘05 there were 42 properties listed for sale with 8 going under contract.  In June of ‘07 there were 57 for sale with only 3 going under contract. 

Sales Rate by Monthly Supply of Inventory for Multi-Family Properties in Roslindale for Past 24 Months

The term “sales rate” is used to describe the relationship between inventory for sale and inventory sold in the from of a mathematical equation.  It is often expressed in terms of the current monthly supply of inventory (MSI) which basically means that in any given month, if no additional inventory were added to existing levels, how many months out would the current supply last.   Presently, in Roslindale existing levels of inventory for multi-family dwellings are projected to last 8.5 months based on June ‘07 figures.  In June ‘05 the MSI was at 3.5 months.

As I mentioned earlier, and as the evidence suggests, the real estate market for multi-families in Roslindale is indeed tough.  The best professional advice I can offer property owners in this market segment is to consider the facts as illustrated above and to come to grips with the market realities as best they can, and then adjust their expectations accordingly.  Basically, motivation is key to selling in this market, and if the motivation is there then the next step is to price the property aggressively.  There are plenty of buyers circulating in the market but they are only going to act if the price is right. 

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Well, to be honest it’s a bit of a mixed bag.  Although I have faith in the long term health of this market segment, right now it resembles something like the proverbial struggle between style vs. substance (perception vs. reality), and in this instance style seems to be trumping substance.  I know this sounds somewhat cryptic, so allow me to explain:

The reason why it’s important to use more than one analytic tool–defined as a key market indicators–when attempting to analyze the condition of any given market or market segment is that each tool reveals a unique perspective on the market, and when these key indicators, each of which performs a specific analytic function, are employed, they should provide for a more substantial glimpse into said market’s overall condition.  More tools = more dimensional depth and weight = more complete picture.  Fair enough?

Using a single tool, however, does not a story make.

For example, if we look at the Roslindale condo market through the lens of the key market indicator of ‘median sales prices over time,’ things ‘appear’ to be doing just fine relative to state of this market over the preceding 24 month period.

June 2007 figures notwithstanding, the graph depicts a market trending upward in terms of median sales price.  In fact, this upward trend for the last quarter shows a higher median sales price than at any other time in the past 2 years.  However, this good news is tempered by a rather precipitous June dip in median sales prices (and let’s hope that’s all it is–a dip). So, there it is– this upwardly trending ”style” of the Roslindale condo market–but, again, things are not always what they seem.  The fact is, however, that evaluating the market as a whole by looking only at median sales prices, is not a best practice approach. 

The next analytic tools we’ll employ–supply and demand by units and sales rate MSI–reveal a more complete picture by adding dimension, substance and weight to the analysis.  Unfortunately, the news depicted here for the Roslindale condo market is not as uplifting as the first graph might suggest.  Here is the ’substance:’

This graphs illustrates that the amount of inventory on the Roslindale condo market, although not at its highest, is well in excess of demand.  The demand itself is flat and even trending down slightly.  By the numbers, the were 87 condos for sale in June of 2007 with only 9 going under contract, compared to June 2005 where there were 81 condos for sale with 28 under contracts.  There is reason for concern here.  It appears as if sellers and buyers are not nearly aligned when it comes to opinions of condo values in Roslindale.  Either sellers need to adjust their expectations down or buyer must adjust theirs up, but somethings gotta give.  Right now it seems there’s a bit of a stalemate between the two sides.  The only condos that are selling it seems are the one that are priced aggressively.  There seems to be little motivation, based of the number of sales, on the buying or selling sides to adjust their respective postures.

Finally, lets look at what’s happening with the sales rate based on the monthly supply of inventory (MSI) for Condos in Roslindale

The term “sales rate” is used to describe the relationship between inventory for sale and inventory sold in the form of a mathematical equation.  It is often expressed in terms of the current monthly supply of inventory (MSI) which basically means that in any given month, if no additional inventory were added to existing levels, how many months out would the current supply last.   Presently, in Roslindale existing levels of inventory are projected to last 6.5 months out.  By comparison, in June ‘06 the MSI was at 5.5 months itself up from June ‘07 when the MSI was at 2.5 months.  It should also be noted that the average days on the market (DOM) for condos in Roslindale is hovering around 75 days.

Taking into consideration all three (3) of these key market indicators when applied to the condo market in Roslindale what I see is a market that looks good from the outside, but a closer look reveals some cracks in the armor.  It seems to me to be an issue of expectations:  Sellers perhaps being too high and buyers maybe overeaching a bit as well.  As such, we have stalemate.  Best advice to sellers is to act competitvely and realistically when pricing their condo units.  For buyers, there’s a deal wating for you in this market so don’t be afraid to pull the trigger.  It’s a great time to buy!

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Thus, the first installment of our examination of the residential real estate market for the Boston neighborhood of Roslindale will target the condition of the single family market.  Here, we will use as our tools the three (3) key indicators of median sales price, supply and demand and sales rate in order to dissect this market segment.  First, let’s take a look at what’s happening to median sales prices in Roslindale over the past 24 months.

Overall, the single family market in Roslindale has been surprisingly consistent over the past 24 months in terms of median sales values.  Surprising in the sense that many of the other neighborhoods of Boston in this category have seen more dramatic shifts in median prices than found here.  The above graph shows us that in the past 24 months the median sales prices have fallen only slightly.  By the numbers, in June of 2005 the median sales price was $386,000 while today the median price is $376,000, a difference of only 2.5%.  The good news here is that Roslindale is showing some stability in terms of single family property values.  There is, however, more to this story as the following graph illustrates:

In this chart we see at play a couple of trends impacting the Roslindale market such as increasing inventory (no real surprise) and an increase in the number of average days on market (DOM).  In June 2005 there were 65 single family homes available for sale with an average 48 days on the market.  In June, 2007, however, there are 89 listings for sale with an average DOM of 102 days.  The good news is that in the most recent quarter of 2007, the ratio of the number properties under contract versus those offered by sale is higher than it’s been in the past 12 months.  In summary, the market for single family homes in Roslindale is holding its’ own–and while it may be taking longer to sell a home and while there’s more competition now than has been the case, there is still significant sales activity occurring in this market segment.

Now, our final graph

What this graph illustrates is the rate of sales for single families in Roslindale which calculates the exact relationship between properties for sale and properties that have sold or have otherwise been taken off the market.  It is expressed in terms of the Monthly Supply of Inventory (MSI).  This indicator speaks to a tightening market in that it addresses how many months out the current supply of inventory will last.  Presently, it’s at 2.8 months which is fairly short, in fact the shortest it has been since June of 2005.  However, it’s important to note the seasonal adjustment here in the sense that during the summer months the amount of new inventory coming into a market typically slows down.

Considering these three (3) indicators of median sales price, supply and demand, and sales rate (MSI), the single family market in Roslindale is in fair shape.  Opportunities on the buy side remain strong, but sellers who are realistic with pricing should have no problem selling their property–it just may take a bit longer to do so.

NEXT UP:  ROSLINDALE’S CONDO MARKET

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What are some of the things buyers look for in a new home?  Often times, they look for things they do not presently have–such as a showcase bedroom.  What is a “showcase” bedroom.  It’s not what you may think only in that ANYONE can have a beautifully staged bedroom–and it doesn’t even have to be limited to the master bedroom–it just takes a little bedroom inspiration!

When a buyer comes looking, a bedroom should look like something right out of a brochure from a major department store–such as Ikea or Bed, Bath and Beyond.  The bureau tops need to be clean enough to pass the “white glove” test, the mirror and windows should be spot free, the closets de-cluttered, (take out everything + keep what you need for one month).  Put away any 3 seasons clothing, leaving only a few pairs of pants, tops, belts, shoes, etc.(there should be 1/4 empty space in the closet).  The bed linens should be fresh and plump and luxurious to the eye.  A new duvet cover in a plain stripe a couple of matching pillow shams propped up, a contrasting smaller pillow in the center. The linens folded back (1/2 way down the bed) and plumped up to add to the sense of “sinking into an oasis” of cool and calm. The color choices should pick up a color from the trim paint in the room, or a picture on the wall, or even a small rug on the floor.  Tie these colors together to form a cohesive, soothing palette.  Take away any exercise equipment and things that do not belong in a bedroom.  If the curtains are on the windows, in the summer they should be light weight sheers in a light color.  

Where do you put all the items you took from the closet…try using the plastic storage containers that will slide under the bed!  They will be at your finger tips and no one will look under your bed as they usually look inside closets for space.  If there is left over space in your closets they will think that all their clothes and other items will fit!

Bottom line: your home will sell quicker if you spend a little time and energy sprucing up the bedrooms.

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In this post, I will attempt to bring it all together in an effort to provide readers with a sense of what is occurring across the entire market.

A quick review:

• Single-Family Market–by far is in the best shape when compared to condos and multis.  The most significant aspect of this market segment as illustrated by its trend-line is that the ratio of single family homes under contract versus the total number of homes for sale is higher than at any other time in the past two (2) years.
• Condo Market–Although struggling over the past 18 months there are definite signs over the last quarter of a strengthening market.  While inventory is still a bit on the high side, the number of under contracts has been increasing in recent months.  Opportunities on the buy side remain strong.
• Multi-Family Market–Of the three (3) market segments, the multi-family market in West Roxbury has taken the hardest hit.  After investments in multi-families hit a fever pitch in 2003-2004, fueled in large part by the city-wide condo craze which spread like wildfire through Boston from 1999-2004, this market segment has experienced a significant downward shift in median sales prices and number of units sold. 

An interpretation of the real estate market data suggests that after an extended, but not necessarily dramatic (e.g. soft landing), adjustment period (some would say necessary market correction after an historic seven (7) run that saw in astonishing rate of appreciation year over year and subsequent rise in values), the market has returned to normalcy where there is a healthy balance of supply and demand overall.  While some segments have been slow to recover (i.e. multi-family), the market as a whole is, once again stable, and even beginning to tighten in some segments as some indicators suggest.

Next up:  The Roslindale Real Estate Market…

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Not so much anymore.

Why the change?  Well, the short answer is that the return on investment (ROI) for multi-family properties has been marginalized.  So as not to short-change the dedicated readers of rehubbub.com, however, allow me to give you the long answer (opinion) to the question of ‘what happened to the multi-family market in Boston.’ 

First, let me attempt to explain why this market segment was so hot for so long.  In my estimation, there were two 2) primary reasons:

1. For many years, right up until the mid-1990’s really, rental income on multi-family properties was more than sufficient to cover the cost of most owner’s monthly mortgage payment, including PMI (if applicable) and taxes.  In fact, it was often the case that this rental income, not only paid for the mortgage, insurance and taxes, but also provided the owner with residual income that was theirs to keep and do with what they wished.  Even if the owner of a multi-family dwelling was merely “breaking-even” in the sense that the rental income was only enough to carry the mortgage and related expenses, it was still a win-win for the owner.  Why?  Because the owner was not only building up equity in the property by paying down the mortgage note, but also because appreciation was adding to their property’s value.  Thus–by applying the logical equations of the time value of money–most landlords in Boston did quite well by investing in multi-families.   

However, the above mentioned conditions were no tightly kept secret–and it wasn’t long before many more people appeared on the scene who also wanted to invest in multi-family properties and realize some of the same benefits of those who came before them.  Soon, as the population of ready, willing and able investors grew, demand began to exceed supply–thus forcing values up, up, up.  So high, in fact, that the cost to finance a multi-family in Boston was no longer necessarily offset by the amount of rental income one could expect to get, even when factoring in the double-digit appreciation occurring year after year.  Thus, in this sense, ROI on multi-family investments was marginalized and it continues to be as such.

2.  Then, in the nick of time and before the multi-family market might well have gone flat, the condo-conversion craze hit the Boston real estate market, like a tsunami.  Now investors did not care so much about whether income received from rentals was enough to cover the mortgage payment, as they had no intention of keeping the property in their possession long enough to be affected by tenancy or rental income issues.  Instead, a brand new way to make money from investing in multi-family properties hit the scene–which was to convert the individual units to condominiums.  So, between the mid-1990’s, when the rental approach to profit from multi-families was hitting a financial wall, so-to-speak, through to around late 2004, investors were buying these multi-family properties in droves, quickly converting them to condos, and selling them just as quickly.  These were heady days and many investors made a lot of money through condo conversions.

But, market dynamics being what they are, with every action causing an equal and negative re-action, things changed once again.  This time, here’s what happened to the multi-family market:  Demand for multi-families exceeded supply (similar to what happened in above mentioned rental scenario #1); however, this was coupled with a new phenomenon–an oversupply, or glut, of new condos being introduced to the market, thereby creating more supply than demand forcing condo values to, at best, stabilize.  Essentially what had happened is that the multi-family/condo conversion market ended up cannibalizing itself. 

While there were other economic factors at work, those mentioned here certainly had a primary impact on the market dynamics.

So, where does this leave us?  What does the multi-family market look like today?  Suffice to say the landscape looks quite different. 

In keeping with our current theme of analyzing the Boston real estate market one neighborhood at a time, let’s turn our attention to the neighborhood of West Roxbury and look at the current state of the multi-family market contained therein.  As in previous posts on the West Roxbury market–the first of which addressed the single family market which was followed immediately by a post on the condo market –we will use as our tools the three (3) leading indicators of median sale prices, supply and demand by units, and the monthly supply of inventory (MSI) to dissect the multi-family market in order to give a sense of current condition of this market segment.

First, let’s look at the following graph which illustrates the median sales price trend-line of multi-family properties in West Roxbury over the past two (2) years:

This trend-line is not for the feint of heart, but keep in mind the size of the multi-family market in West Roxbury represents only about 10% of the overall market at any given point in time.  With numbers this small, it is not unusual to see significant swings month over month as a single sale or two can, at times, skew the numbers.  With that caveat, this trend analysis reveals a relatively static market when compared the hay days of the late 90’s through 2004.  By the numbers, the median sales price for multi-family dwellings in May 2005 was $635,000, but in May ‘06 it fell to $497,500–a 22% drop year to year.  The good news is that there has been an 11% rebound over the past 12 months with May ‘07 median sales price at $530,000.  Similar to the single-family and condo markets in West Roxbury reported on in earlier posts, the multi-family market segment had also experienced a market correction, albeit more dramatic, the single-family and condo segments.

Now, let’s analyze this next indicator which addresses basic supply and demand over the past 24 months.

Again, the news is not good for the multi-family market segment in terms of overall values and number of units sold.  This indicator measures the relationship between properties for sale versus properties that have gone under contract.  The first thing that stands out here is that this has not been a very good Spring market for multi-family dwellings in West Roxbury–especially when you consider there’s only been three (3) sales in the past three (3) months.  And though the amount of inventory for has remained relatively constant over the past two (2) years, the number of properties going under contract for the last 12 months has been cut nearly in half when compared with the first 12 months between May ‘05 and May ‘06

Our last indicator, the monthly supply of inventory (MSI), corroborates the previous two (2) trend-lines.  That is to say, typically, when median sales prices are down and the number of properties going under contract is also down, then is many cases the amount of time it takes to move inventory off the market increases.  And this is exactly what this indicator shows.  Since May 0f 2005, the monthly supply of inventory has increased steadily increased from 2.3 months to 3.8 months in 2006, and finally to it’s current rate of 6.8 months for May 2007.

So, what’s this all mean?  Obviously, the multi-family market in West Roxbury has gone through a significant downward shift over the past two (2) years when compared with the previous eight (8) years.  Is this surprising?  Well, when you consider that, at its height, the multi-family market surpassed both the single-family and the condominium market in terms of values and appreciation rates, is it really that surprising that when the market finally corrected itself that those property values that were once at the peak of the market are now getting a taste on the other end of things?  I think not.  What will happen to the multi-family market in Boston?  Not sure–but stay tuned as we will take another look at this market segment at year’s end.

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As I reported on in my last post, my newest clients, the Robins of Ruskin Street, had found their dream home and began settling in.  Well, much to my delight I received some wonderful news last Friday morning: The Robins had given birth to triplets!  Can you believe it!  I was so excited I wanted to share the experience with all my friends and colleagues, so here’s sneak peek at the beaks (so-to-speak):

Real Estate Video by - Real Estate Blogger

In case you missed it as I do not have a loud stage voice, I have decided to run a naming contest for the newborns.  The winner(s) get the personal satisfaction of knowing they have given a name to these beautiful creatures–one that will be with them for the duration.  Also up for grabs is the honorary position of being the hatch-lings Godparents.  How exciting is this!  Let the games begin!
West Roxbury, Roslindale, Jamaica Plain

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