The Real Estate Sales Market's Paradox of Choice

I recently watched an episode of TED Talks featuring psychologist Barry Schwartz discussing the Paradox of Choice (also the name of his book). According to Barry Schwartz, the American mantra of more choices equaling more freedom, which in turn results in more welfare is not only wrong, it is harmful. Too many choices affect a person”s ability to choose by causing decision paralysis, unable to make any choice at all. If the person does make a choice, she often becomes dissatisfied with the choice made, because, she believes a least one perfect option will be present among the multitude of options. If the one chosen turns out to fall short of perfection, buyer”s remorse can set in and the blame often falls on her own ability to make a correct decision. A fear of this buyer”s remorse can also prevent a person from taking action at all because we are aware of our heightened expectations resulting from living in a time of limitless choice.

http://youtu.be/VO6XEQIsCoM

After watching Barry Schwartz’s lecture I started thinking how it relates to the online casino current Boston real estate sales market. I hear complaints from buyers and fellow real estate agents regarding the low inventory and how new listings to the real estate sales market are selling within days of being listed. When the sales market was saturated with inventory, property sat and sat. It’s hard not to make the connection between buyers having fewer options and their increased ability to make a decision.

According to MLS data, from March 15th-April 15th of this year (2012) 289 single family homes and condos were listed for sale in the downtown Boston neighborhoods, 225 properties went under-agreement, and they averaged 31 days on the real estate sales market. The same time period last year (2011) there were 377 single family home and condos listed for sale in the downtown Boston neighborhoods, 184 went under-agreement, and spent an average of 120 days on the sales market.

Barry Schwartz said “the secret to happiness is low expectations.” It is because when expectations are low, the opportunity to be pleasantly surprised is present! Many agents and sellers feel the current real estate sales market is a pleasant and welcome change after the mortgage crisis a few years ago. And buyers, knowing there are few options, are less likely to talk themselves out making a decision on their new home. The result is less stagnation in the market, which is good news for both buyers and sellers of property.

If you are interested in searching property for sale or speaking with a Realtor, contact the Realtors of Matthew and Alisa Group Real Estate.

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Buying a Home: How Do You Know If You Are Ready?

If you have been searching for rentals in Boston in the last couple years, you may have noticed that it is tough. Inventory is limited and prices keep rising. There are three things renters can do. One: pay the rising rates. Two: look farther outside the city than originally planned. Three: stop renting and purchase. Many people today feel that investing in real estate is safer than investing in stocks and with good reason. Real estate in Boston has not been hurt as much as the rest of the country and rentals in the city are consistently in high demand. If you are on the fence on buying real estate, here are a couple signs you may be ready.

Buying real estate in Boston may be a better option than rentingOne: you know what you want. If you have a realistic idea of the size you need and the location where you want to live for the next few years and you  haven’t found it on the rental market, take a look at what is on the sales market. The rental market in Boston favors landlords. The inventory is limited and owners can get not only their asking price but also first month’s rent, last month’s rent, and security deposit (each equal to one month) and not have to pay a broker’s fee.

Two: you have the finances. The upfront costs of renting an apartment in Boston are higher than most cities around the nation. Many people looking for quality rentals in Boston  are surprised how little they get for the money. With many banks loosening restrictions on who can get mortgages, it is worth your time to speak with a mortgage broker about types of loans and available rates.

If you are weary of buying because you do not want to be locked into a mortgage on the chance your career moves you to another city, keep in mind that you could hold onto your home as an investment property. With a tenant paying rent, you can build equity while someone pays your mortgage for you.

Contact the Realtors of Matthew and Alisa Group Real Estate if you are interested in learning more about purchasing a home.

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Posted in Boston Property, Buy Property, First Home, Real Estate Sales Market, Real Estate Tips, Rent vs Buy, Rental Property | Tagged , , , , , , , , , , , , , , | Leave a comment

Cash Buyers Make Up Over 50% of Boston Property Sales

A couple weeks ago, I ran across the stat that 38% of recent real estate transactions nationally were paid in cash compared to the 18-20% of residential real estate transactions usually paid in cash. I posted the stat to my social media channels and this led to a dialogue with a couple of people about what we could take from the stat.

One commenter”s opinion was the increase was the result of foreclosures. His logic revolved around prices having fallen to a level within reach of larger number of peoples’ savings. I said I’d see if I could find some additional statistics breaking down the numbers by location and purchase price.

The rise in real estate transactions paid in cash can be attributed to investors buying distressed property (short sales and foreclosures) in some parts of the country, but it is not the only factor.

The downtown neighborhoods of Boston, which made it through the housing crisis relatively unscathed, have seen cash transactions make up over 50% of all real estate transactions so far this year. The increase in home buyers paying cash has increased each year since the housing crash, from 28% of all real estate transactions in 2008, to 29% in 2009, 31% in 2010, up to 48% in 2011.

In Boston, cash buyers are not uncommon at higher prices. The percentages vary, but cash transactions make up a large percentage of the city’s high-end sales. Boston’s most expensive real estate transaction in the last year, a penthouse at the Mandarin Oriental, was bought in June for $13.2 million in cash.

Wealthy investors looking for a place to invest excess cash gravitate toward real estate as the stock market remains volatile. Property in Boston appears safe in comparison, especially since it is a market that has remained steady during the economic turmoil.

The view of Boston property as a safe investment has also attracted international investors. A recent study found 50 percent of real estate investment is concentrated in 30 cities and Boston ranked 18th on the list; considering Boston’s geographic size, this is オンライン カジノ a significant statistic. Canada, China, Brazil, Russia, and Europe are all sources of buyers because they view property in the United States as a safe investment. These foreign investors are cash buyers out of necessity because they do not qualify for financing without credit history established within the States.

Real estate transactions paid in cash are on the riseForeign buyers have been buying investment property at all price points and these overseas investors are one reason we are seeing cash transactions across the purchase price spectrum. The mid-price and lower-price real estate transactions in Boston have not been cash purchases historically. This unusual activity is the main reason cash transactions have made up over 50% of all real estate sales this year.

Tightened lending regulations have also contributed to the historically high percentage of cash buyers in Boston. More buyers are having difficulty obtaining financing, but even if a homebuyer has no problem getting financing, the property may present challenges because lenders deem it non-warrantable. Some common reasons for lenders to refuse financing are low owner occupancy (under 50%) in a building, too large of a commercial interest (over 20%) in a condo association, ongoing litigation, low pre-sale in a development, a home owners” association with budgeted reserve allocation less than 10% of operating revenues, and an appraisal price being too far below the proposed purchase price of a property. A cash purchase is often the only option if a property meets one of these criteria.

Buyers capable of making a cash offer are aware of the current lending environment. These buyers know they can often secure a favorable deal because sellers who have seen transactions fall apart because of financing might take a lower price rather than try their luck with a buyer seeking financing.

Two other factors contributing to the rise in cash transactions are empty-nesters and “kiddie condos.” Baby boomers who have been downsizing and looking for a more walk-centric lifestyle are buying Boston condos with profits from selling their suburban homes. Another demographic of cash buyer is affluent parents buying “kiddie condos” for their children who are attending one of Boston’s universities since the current market is shifting toward buying being more affordable than renting for the same period.

The market continues to improve and not only for those who can afford to pay cash. For a more detailed explanation of current real estate market trends in Boston, to discuss the ramifications of cash versus lender financing, or to explore if investment property is right for you, contact the Realtors of Matthew and Alisa Group Real Estate.

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Renting Your Home that has Not Sold

If your property has been sitting on the sales market for a while and you have already moved, you may want to consider renting your home. A tenant’s rent payment can pay for the mortgage, which can take off the pressure that might cause you to make rash financial decisions. You may decide in the end to keep the home as an investment property or you could wait until the market improves to sell your property.

The housing market has been on a roller coaster to say the least and Boston has not been immune. Rental property in Boston continues to be in high demand. But before you decide on renting your home consider a few things.

When to start the lease is an important factor to consider. September 1st has the most turnover of any date for rentals in Boston and any time between the spring and September 1 is considered to be “in season.” Winter is the worst time for renting your home because less people are looking for housing at that time of year.

South End Brownstone that can be Rented Out while on Sales MarketBecause Boston’s rental market has such dramatic seasons, you need to factor this into your decision of how long of a lease you want. If you want to keep your home on the sales market, a short-term lease gives you the most flexibility but there is the risk of gaps in occupancy. Also know that most short-term tenants want their rental to be furnished. Fortunately there are many companies throughout Boston that will furnish a home for a monthly rate, but furnishing a condo or a house is not cheap.

To secure a long-term tenant, it would be best to commit to taking your property off the sales market once a lease in in place since tenants are unlikely to commit to the possibility of showing the property for sale and then having to move if a sale does occur. With a long-term lease you would be less likely to have gaps in occupancy and you can structure the lease length to work to your advantage. For instance, if you want to put your home back up for sale in a year, have the lease run until the end of January or February of the following year, so you can have it ready for the spring sales market.

You will also need to figure out a fair price to ask for renting your home. Like pricing your home for sale, the right price for renting your home can have it rented quickly. For the best insight into the current market, get the opinion of knowledgeable Realtors.

Renting your home can be a great option if isn’t selling, but it is important that you know what options are available and what will work best for you. For more information, contact the Realtors of Matthew and Alisa Group Real Estate.

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