Real Estate Later

Wherever I go, here I am

Welcome to my business blog. I hope some of you who know me from Boston.com will find me here and stay. I intend to continue doing what I have been doing at Boston.com for the past five years. 

What will be different here is that I will be more unabashed about discussing issues that affect house buyers and house owners. There are dangers out there regarding the process of buying and selling real estate, I will be writing about them here. There are tricks to negotiating, tricks to finding good properties, tricks to keeping your head when the market is shifting. I will be writing about them here. There is a lot to know about keeping a house going in our old housing stock and temperate climate. I will be writing about them here. 

 I will continue to focus on these major areas:

• Local market conditions and advice on handling them.
• Lending and changes in lending.
• Laws that affect house buyers and sellers.
• Pluses and minuses of different types of living arrangements. This will include condominium living, two-family house living, single family house living, life in the city, life in the suburbs, renting, and being a landlord.
• What to expect when you are house hunting.
• News about communities.
• Information about repairing and remodeling houses and condos.

I will continue to answer your questions. So ask away by email  Is there anything you want to hear about that I didn’t get to on Boston.com? Is there something you want to know more about?

The Boston real estate market and why we live here

We certainly don’t live here for the weather, the well-built transit or roadway system, or the comfortable cost of living! Are there other reasons that you are here, facing this housing market? Are you here for the natural beauty? Cultural options? The availability of jobs in your field?

During the real estate meltdown of the past five years, I have followed articles that attempt to explain why the market here is like it is. In 2008, The Atlantic gave this theory. (If you want to read it yourself, the discussion of how talent-attracting regions are economically robust begins on page two, paragraph two.)

In short, Boston and other places like it are “brain Meccas.” For Boston, the reason cited is the colleges. We have a lot of middle class, wealthy, and/or smart young people who come here for their college education. They think fondly of this place and many try to stay. Some come back. Some college educated people from elsewhere come here based on the buzz of their friends who went to school here or for a job.

Because there is a highly educated work force, there are jobs for that work force here. Those jobs pay well. It is a bit of a cycle. Skilled workers encourage the formation of specialized jobs with good salaries, this leads to housing and services for the workers to spend on. That well-paid work force drives the economy in areas like ours. It also drives up the cost of living.

Does this theory hold water in your experience? If not, why are we all here paying much more for our homes than people in Cincinnati, Nashville or anywhere in Texas?

The Atlantic article predicted that these robust economic centers would suffer less in the bubble-burst, which is what has happened, more or less in the Boston area. Don’t get me wrong; prices fell and I am not pretending they didn’t. Comfortable housing near the economic centers saw pockets of demand through the bubble burst. This softened the landing of falling prices. Areas that were second-choice locations fell harder. Overall, the Boston metro area had a better go of it during the crash than a lot of other places in the country (and Europe.)

I look around at the FNC site, to see how other urban areas have fared. I am content to be working here, near Boston.  I am also content to be living here.

Are you content with the real estate economy around Boston? Is there a market you think is doing better, living through the post-bubble years?

Starting a house search

I started working in real estate in the Stone Age, well actually, it was the Paper Age. In 1991, I was the only agent I knew who read the Multiple Listing Service (MLS) data at home from my computer. Now, everyone has MLS on their home computer, agents and the public. The access to listings has changed my job. I no longer provide the house listings. I provide advice on how to handle the house search on the computer.

The most common mistake that consumers make when setting up an MLS search is to limit their search too much or too little. The ideal search yields properties that are closer and closer to the goal. Bad searches yield either too few options or properties that don’t work, in the same way, over and over.

Setting up your search takes some thought.  Most buyers have heard the old saw: “three things matter in real estate: location, location, location...” But location isn’t everything; it is just the thing that is unchangeable.  To develop a good search, buyers need to balance the three variables: 

location + size + condition (with some variation for charm/style) = price. 

Location is there forever! Size is expensive to change -- and may be impossible. Condition will change -- whether you want it to or not. 

A smart buyer chooses location or locations first: check your commute, your walking routes, your regular shopping routine, night safety and quiet. If you have flexibility in your locations, you will have more choices. I am not saying that you must move far away or into a bad neighborhood; rather, I'm encouraging you to find neighborhoods that work for you by trying them out. This may be a town or a group of towns. It may also be within a certain distance from work, or from a T stop, or from you church, or from someplace else you regularly go.
Once you know the area or areas you like, then you can more comfortably balance the questions of size and condition. A home in the “best” location may be too small or too run down for you. Sometimes another good -- but not great -- location will afford you more space or a better condition. 

Next decide on your absolute smallest property you would consider. Since square footage on listing sheets are inconsistent, subtract about 100 SF from what you think you need, for starters. Change it once you establish that they are consistently too small at the bottom of the scale.

You can’t search for “good condition,” but you can search for age of the property or key words that would yield renovated houses. Hint: keyword “kitchen” will find renovated kitchens. Listing agents do not advertise “old kitchen” in the remarks.

Your search does not need to be consistent. It is not unreasonable to have several searches running to pick up several locations that might work, with different top prices, based on desirability. Some house-hunters search for condos in one town, but houses in another.
The joy of computer searching is that it costs nothing but time and concentration to set up a search that yields good options for you. Work with your agent to set up an intelligent search. "Let your fingers do the walking," as they said in the Paper Age.

Do you have other hints for using the on-line data to your best advantage while house hunting?

Repair costs

When I am looking at properties in the metro-Boston area, it is impossible to judge their value without considering the cost of repairing and maintaining them. It is way too easy to be wrong, when getting specific about repair costs. When a problem begins, it is much cheaper to repair than the same problem left for years to get worse. Deferred maintenance costs roughly five times more to repair than if a problem is solved when it begins.

The general rules:
The most expensive things to repair are on house features which must stand up to the elements. The exterior of the house -- from the roof to the foundation -- have the hardest job and need to be tended most. Expect that replacing a roof, re-siding, replacing windows, rebuilding foundations and waterproofing basements are your biggest ticket items. Expect that most of your 5-figure repairs will be to exterior features of a house.

After that, any repair or change in design which takes more than one type of worker will cost more, per labor hour, than something a single type of worker can do. For example, kitchens and bathrooms need electricians, plumbers and carpenters. They need to coordinate their schedules and share space and responsibility. Because of this, the cost goes up astronomically. Whereas, one or more carpenters can come in to change every interior door for less than the cost of a new bathroom.
After the multiple-worker kinds of tasks, specialized workers cost more than general workers. Plumbers and electricians get paid more than carpenters. Finish carpenters -- the ones who do custom cabinets, fine wood trims and such -- get paid more than the ones who build decks.
If you think in terms of labor costs, plus materials, you can get a rough idea of repair costs. Get time estimates from repair workers. To get material costs, you can visit any large hardware outlet or kitchen and bathroom retailer.

Then there is maintenance.
Houses age. Exterior paint needs regular touch-ups at least every five years. Roof shingles wear out every twenty or so years. Boilers last twenty years or more. Hot water heaters last a decade or less. Appliances in the kitchen fail in ten to fifteen years or so, depending on their initial quality and use.
As a home buyer, you are making a mistake if you aren’t prepared to spend an extra ten percent over your monthly mortgage payment to keep your property in good order. There will be projects cropping up every year.

Readers, what goes on the list of repairs any home needs in a given ten-year period?