Housing Market Showing Progress, Still Uneven

The traditionally busy spring real estate market has brought some good news to Wellesley, with sales brisk for homes under $2 million, according to local realtors.

But, they caution, prices are still off and many buyers are looking for bargains.

"The market here experienced a substantial drop in home pricing. And while itʼs coming back, buyers need to feel secure before they buy in what is still a pretty uneven market," said realtor Judy Barclay of Century 21 Commonweatlh, a 36-year veteran of the Wellesley real estate scene.

Unlike the real estate boom of the mid-2000s, sellers can no longer ask for a sky-high price and expect to get it.

Statewide home sales have gone up for 10 consecutive months, according to statistics from the Massachusetts Association of Realtors. This past April, according to the latest monthly figures available, 3,520 homes were sold across the state, 1,072 more than what was sold a year ago April.

In addition, the median price of the homes sold statewide this April was up 7.3 percent to $295,000, up $20,000 from last April.

The news is more mixed in Wellesley, according to the associationʼs figures.

Here, 25 homes sold this April, compared with just 10 in April 2009. But the median price fell from $1,240,000 to $908,000 and there were no homes sold in the price ranges above $2 million.

Those statistics mirror what is being seen anecdotally.

For example, three homes on Linden Street, all priced under $1.5 million, sold within a month recently.

But a home at 11 White Oak that went on the market last July for $4,795,000 is still on the market, now at a lowered price. The home, listed by Barclay, is new construction and is located in a desirable, Wellesley Farms neighborhood.

"At the height of the market three years ago it would have been fine. It would have had strong activity at this price," Barclay said.

The price was recently dropped again. Now, at an asking price of $3,690,000, Barclay said there is a lot of interest.

The story is similar for another listing of Barclayʼs at 10 Cranmore Road. 

This is another new home in a prestigious Pierce Estates neighborhood that went on the market last summer for $4,379,000. Again, Barclay said  the builder chose to price it more aggressively, recently dropping it to a list price of $3,275,000.   And like the home on White Oak, interest picked up dramatically on this home at the new price.

"Sellers who are willing and able to drop their prices are making sales," she said.

That is especially true for builders who have their money invested in a home that is complete and unsold. If they can afford to sell, it may be better to lose the expected profit and move on to a next project than continue to wait for a price that may no longer be realistic, according to Barclay.

"There is good news here," she said. "We werenʼt sure the buyers would be there even if the high-end prices were dropped, but what weʼre seeing is that the buyers are out there."

Those buyers, according to local realtors, are now "better qualified and more secure".  During the peak, buyers were reaching to get into the biggest home they could manage, maximizing their mortgage potential and putting down as little as possible.

 "Iʼm not seeing those marginal buyers anymore," Barclay said.

Now, buyers are coming into the process with mortgages already secured, prepared to put as much as 30 to 50 percent down, according to Barclay.

"Often buyers are paying cash for homes over $3 million," Barclay said. "They feel a cash transaction will reassure a seller that they will not encounter a jumbo loan financing problem prior to closing. Buyers believe a cash transaction will strengthen their offer and perhaps secure an even lower price."   

Sheʼs also not seeing as much movement within Wellesley, with local homeowners trading up to larger homes. 

"With many jobs less secure today, personal portfolios that have shrunk, and current home values that have dropped, many homeowners are waiting for more stability."

Another change in Wellesley that impacts sales and values, according to Barclay, is the new zoning regulation that went on the books a couple of years ago restricting the size of new homes. Before the zoning changes, people could sell their older, out-dated home in need of renovation to a builder who would tear it down. The builder would pay a premium for the lot, build a larger home and turn a profit.

With the new changes, builders can no longer put a 4,000+ square foot home in a 10,000-square-foot zoned district no matter how much square footage the lot contains. This was popular in Hardy, Sprague, Bates and Fiske School neighborhoods like College Heights, the Woodlands and the Sheridan Estates.  Today, a lengthy and expensive process has to be initiated with no guarantees at the other end, Barclay said, adding that the process also impacts new buyers wishing to make major additions to these small, outdated homes. 

 "It changed things, and it really deflated the value of homes in the $700,000 price range," Barclay said.

By forcing builders to concentrate on lots a half acre and bigger, more expensive homes were built just when the national economy plummeted. Fewer families were being relocated into jobs here, meaning the market for these larger homes  shrunk, according to Barclay.

But things are starting to stir at the upper end as the market continues to  strengthen from the bottom up and the corporate relocation business is slowly gaining momentum again.  Real estate investors are also jumping in. 

"Everyone is more cautious, but weʼre seeing that buyers are out there. When they see a list price, a quality product and a strong location that speaks to them, they move on it,"  she said.