Kim Cannon of the Back Bay Sun recently interviewed me to obtain my thoughts on the current real estate market in Boston’s Back Bay.
Real estate bubble not burst in the Back Bay by Kim Cannon published September 21, 2007
Last Friday, USAToday threatened with its front-page headline that “Foreclosure Proceedings Set Record —Mortgage Mess Could Set Off Chain Reaction.” For weeks, the near-apocalyptic stories about real estate woes have dominated the news and caused many homeowners stress and anxiety.
But in the Back Bay, there is good news, as real estate agents say the bubble has not burst here.
“The sub-prime market hasn’t really hit the Back Bay,” Geoffrey Reynolds of Copley Real Estate on Newbury St. said. “It really is more about people … who had been just looking to get into a mortgage and got into an adjustable rate mortgage they couldn’t afford.”
Which isn’t to say that the market in the Back Bay is as red hot as it was three years ago. Real estate agents agree that the market has leveled a bit but not dipped nearly as much as in the rest of the state, where median single home prices are down 4.6 percent compared to July 2006.
“There are still a lot of buyers waiting for the inventory, so the market hasn’t flattened too much,” Art Rawding of Newbury Street’s Otis and Ahearn Real Estate said. “Fundamentally, the market is very different in the Back Bay. It can’t be lumped in with the rest of Massachusetts.”
Rawding said that these days, he advises his home sellers to be as knowledgeable as possible when entering the market – because the buyers sure are. His listings are still selling, but he’s seeing fewer transactions taking place. A property priced too high will not move, and in fact he is seeing many properties selling at two percent below the listing price.
“The main thing I’m telling my sellers is to be very realistic about the current state of the market,” Rawding said. “It’s not the same as six months ago.”
Reynolds said he’s seeing properties sit on the market for an average length of two to three months, which is a little longer than the average from 2002 to 2005 in what he describes as an “abnormal” market. He also said the key is pricing the property correctly from the outset.
“If it sits on the market too long, it will start to get a stigma,” Reynolds said.
One trend in the Back Bay market that has become more and more widespread of the past few years is the concept of “staging” a property. Rawding says hiring a consultant to prep a property by rearranging and renting new furniture and reorganizing home accessories is a way to make a property stand out. In the Back Bay, updated kitchens and baths are also de rigueur.
“The ‘turnkey’ concept is very important in today’s market,” Rawding said. “A lot of people don’t have the time or the energy for extensive renovations.”
Rawding has been in the industry for two decades, and Reynolds has 12 years under his belt. Both have been through the highs and the lows in the Boston real estate market and remain optimistic about the future.
“The Boston market, compared to nationwide, is still relatively healthy,” Reynolds said. “Things should be back to normal in the spring.”
