THE BEST PLACES TO LIVE
HOW TO BEAT THE SOARING COST OF REAL ESTATE:
Make the most of your local frontiers, from suburban standbys like Wellesley to urban pastures like Fort Hill.
THERE IS NO DELICATE WAY TO PUT THIS: Shopping for real estate these days is hell. There is a special chamber in Hades reserved for those too young, too poor, or too stupid to purchase a home during the early nineties.
Or at least it feels that way if you have been looking to buy a home recently. The market is tighter than it's been since 1987, and it gets more brutal with each passing month, as prices continue to rise and inventory continues to fall. Even renting in Boston these days is no picnic. While rents across the entire city have risen only 2 percent in the past year, they have increased dramatically in places that used to be considered affordable standbys: by a staggering 23 percent in Dorchester, 21 percent in East Boston, and a whopping 41 percent in Roxbury. In the Back Bay, a typical two-bedroom apartment rents for $2,500, and in the South End, if you find a nice two bedroom for less than $2,200, you've found yourself a deal. A mortgage must be better than this, or so the logic goes.
The good news is, it actually can be. Particularly if you begin your home search armed with some little known insight into Boston's current real estate boom - such as which neighborhoods still contain bargains and which bargains will hold their value and prove to be smart investments over the long haul. The other invaluable resource: an honest, no-holds-barred self analysis of what you're really looking for in a home and what you're willing to trade off to get it. Because the one thing you can count on is that there will be trade offs when you're buying in a market this hot.
You don't need to describe that heat to anyone looking to buy or sell in the past year or so. What is surprising is that a predicted downturn has yet to materialize, and the demand for homes continues to outstrip supply, which drives prices higher still. Not only have prices on single-family homes exceeded their prerecession prices, but in many areas, they are now increasing by 10 percent to 30 percent annually.
Three primary factors are driving the current boom, according to Julie Krasker of Hammond Residential Real Estate in Chestnut Hill: low inventories, stock market - created wealth, and a change in the living patterns of empty nesters and young couples. While prices have risen substantially, the actual number of units sold cooled considerably in 1999, thanks in large part to a lack of available inventory.
Across Massachusetts, sales of non-condominium residencies increased just 0.8 percent last year, and condo sales rose by only 6.8 percent. Not much, considering the skyrocketing demand. Taken together, total residential sales in the state increased just 1.9 percent from 123,463 units sold in 1998 to 125,773 in 1999 - leaving a lot of buyers left standing in this game of residential musical chairs.
The low inventories are partly a result of interest rates steadily rising over the past year. As the theory goes, homeowners who bought in the past few years - when average 30-year mortgage rates bottomed out at less than 7 percent - are loathe to unload their homes now and pay more than 8.5 percent on a new mortgage. Yet these rate hikes do not yet appear to have dampened the determination of new homebuyers. The existing inventory is being snapped up as rapidly as it comes on the market, and at plum prices - at least to the sellers' view of things.
"Everything is booming," says Steven Cohen, senior broker at Prudential Gibson Real Estate in the South End. "We see prices in Everett going up, prices in Medford going up. It's happening everywhere."
The figures tell a bleak tale for those searching in the traditional and newly desirable markets. According to Warren Information Services, a sister company to Banker & Tradesman magazine, real estate costs in central Boston (including Beacon Hill, Back Bay, and the South End) are up 19 percent from a year ago, achieving a median sale price of $525,000. Wellesley sales are averaging up to $490,000 from $443,500 a year ago, and Brookline is up 31 percent from 1997 to a staggering $520,500.
Traditional working-class neighborhoods are now following the lead of these high-end homesteads. In Brighton, where median sale prices of residencies were below $200,000 as recently as 1996, last year's price tags rose to almost $300,000. Driving these prices is the lack of available homes. Out of an inventory of some 1,700 single-family residencies in Brighton, only one was on the market at press time. Median sale prices-which were at their previous zenith in 1988-matched those levels in 1997, and by the end of last year, had blown by them with rises of an addidonal 26 percent. "rhe best description of the available market is that there is next to nil," says Kate Brasco of Century 21 Shawmut Properties in Brighton.
Likewise, Charlestown has been experiencing trernendous growth in its own right. Previously considered an affordable enclave for working families and young singles, it is on the way to losing its label, at least for new buyers. In 1997, median sale prices of homes surpassed the previous high of $207,777, set in 1988. Since then, Townies have seen piices rise by an additional 33 percent, with the median price of a home now a whopping $315,000 and condos selling at a median cost of $240,000.
The stellar rise is enough to make current buyers feel like they missed the boat. "It's like riding the wave of Yahoo! stock," says Mike Casey, 32, a former renter in Charlestown, who with his wife, Neilie, had been looking to buy there but opted for the suburbs instead. "Ifwe had bought three years ago it would have been awesome. We missed the opportunity."
It is not just centrally located Boston communities that are experiencing sticker shock and market fever. The popularity of Hingham, located on the South Shore and 16 miles from downtown Boston, seems unaffected by a lack of mass transit and hour long morning commutes via the Southeast Expressway. After hovering in the low to mid $200,000s for most of the nineties, prices have spiked upward of 34 percent since 1997. Last year alone, prices rose another 12 percent. You can now expect to pay the median of $330,000 for a single-family home in Hingham. And that's likely to increase even further once the MBTA begins restoration of the controversial Greenbush commuter rail line, which will make the quiet South Shore suburb that much more accessible to city commuters.
So where can cost-conscious buyers find the amenities and convenience of city and near-city living without paying the budgetbusting prices? The solution, real estate insiders say, is finding the next big thing. Which is often right under buyers' eycsor,just in their peripheral vision.
As prices in central Boston began to heat up in the mid-nineties, nearby neighborhoods became the direct beneficiaries of the spillover. Rents and sale prices began their steady climb to the $400- to $500-per-square-foot plateau in the Back Bay and tonier sections of the redeveloped South End, and it was only natural that some prospective buyers would be priced out of the neighborhood. Many turned to burgeoning "altematives, "nearby up-and comers that held promise. While these altemative markets did not yet offer the comforts or degree of luxury seen in the South End or Back Bay, they did provide good housing stocks at lower prices.
"Buyers are slow to turn to altemative markets," says Cohen, though he has noted a definite trend in that direction among those priced out of their first-choice areas. "In varying degrees, Jamaica Plain and South Boston have been hot as alternative markets." Both neighborh thrived from an influx of yo sionals, artists, and residents p the chic centralBoston market. J.P. and Southie offer city living and convenience to downtown, and, Cohen adds, "in the most expensive areas of these alternative markets you can see a 20 percent to 30 percent savings over the South End or Back Bay, maybe even more."
But as Jamaica Plain and Southie have thrived, they have also become pricey; median sale prices in J.P. have jumped 33 percent since 1997 to $250,000, while South Boston median sale prices have increased a staggering 56 percent in the same period. The median sale price of single-family homes in Southie is now $230,000-and climbing. As such, there is now growth of an alternative to the alternatives. "You now have spillover sections of J.P. and South Boston seeing attention," says Cohen "We are starting to see Lower Roxbury, Mission Hill, and Fort Hill follow this lead."
While this may be a surprise to those who originally sought housing in places like the South End, it's an open secret to those who have lived there for years. "Everyone who lives here always knew that [Roxbury and Dorchester] were valuable; now the word is out," says Clayton Turnbull, president of the Dudley Square MerchantsAssociation and a lifelong resident of the neighborhood. "We have 100-year old houses with porches and lawns, and just outside our door is a thriving neighborhood, while downtown is just a short ride away."
Proximity to downtown is a major selling point of these new altemative markets. Tumbull points out that from his home in North Dorchester, he is no more than 10 minutes away from downtown, Logan Airport, South Boston, or the South End. It is this convenience that many say drives the current interest in Roxbury-one that's easily quantified. In the past year, the neighborhood has seen a 23 percent increase in median sale prices; rents have jumped 41 percent during the same time. Some of these rises can be attributed to speculators looking to cash in on the low prices of Roxbury real estate; however, folks like Cohen who is beginning to field interest from his former South End clientele believe something else is going on. Cohen thinks buyers are now placing a premium on being close to an urban center while holding on to varied cultural and professional opportunities in a homey, suburban feel. More important, he finds that the bulk of the interest in the area is from prospective purchasers who are looking into moving in-not just from investors turning around and renting out the space at a profit.
"Buyers are calling these neighborhoods home," he says. "they are in it for the long haul." The motivation is partly in the price tag. It makes it easier to call Roxbury home when the median selling price is $157,000.
And the growth and development of the communities make buyers want to stay. Within Roxbury, neighborhood commercial districts like Dudley Square are being transformed by a combination of 30 yearlow crime rates and increased public and private investment. Case in point: The Massachusetts Department of Public Health is building its new headquarters in a renovated building in Dudley Square, bringing 1,300 employees and job opportunities to the area. Now the residential market is reaping the benefits. Drive through Fort Hill, a stone's throw from Dudley Square, and one sees renovated Victorians and South End-quality brownstones at half the cost. Along Dudley Street, new condos and single-family homes are sprouting up like fresh spring perennials.
What kind oflong-term investment can new buyers expect to find here and in other newly burgeoning communities? Or, in the language ofbuyers, How can I be sure my house will be worth as much or more in 10 years? Look at the significant infrastructure improvements, suggests Mike Foley, regional vice president of Jack Conway & Co., a 35-office real estate company that serves Boston and the suburbs. "I always invite buyers to drive and walk around the neighborhoods, look at the investments that have already been made." For instance, as part of the Main Streets program, the City of Boston has teamed up with local merchants to improve sidewalks and storefronts and beautify commercial districts like Fields Comer, Dudley Square, and Roslindale Village.
Foley also suggests that to get to know one of the new "alternative" neighborhoods, a little detective work is in order. "Look at the nature of the institutions in the area, the schools, the churches, the access to downtown, and other infrastructure needs. If you have any concerns about crime, check with the local police station. " In short, get to know the arca before you buy, and know what your money gets you. One way to do that is to surf the Web. Several Internet sites, including Warren Information Services (www.thewarrengroup.com) and Home Price Check (www.homepricecheck.com), provide consumers with sale prices of homes in selected towns and neighborhoods.
And part of the key to sustaining the revitalization of these neighborhoods lies with the residents themselves-namely, to what extent they maintain the charm that makes their area different from, say, the Back Bay. 'The people who own now have to understand the value of what they have. The vast difference bctween a three-bedroom condo in the South End and what you can get here is just too large to describe," says Clayton Turnbull.
Just as Roxbury and Dorchester are being transformed by the development pressures of adjacent neighborhoods, other neighborhoods in town are experiencing the boom. Roslindale is one example. Nestled among Mattapan, Hyde Park, West Roxbury, and Jamaica Plain, Roslindale is a community of "old hippies, working-class people, and a lot of new yuppies who have been priced out of other neighborhoods, " says Jeanne DuBois, a longtime community organizer in Roslindale, Hyde Park, and Dorchester. "It's truly a multiethnic, multicultural, and multigenerational community that works."
Just how well it works is becoming clear even to those outside of Roslindale. Residents point to the opening of the Village Market as the catalyst to revitalization of the main commercial district, Roslindale Square; the rest of Boston recognizes it as a truly great grocery store, great enough to clinch 'Best of Boston' best neighborhood grocer in 1999. Since opening in 1998, 12 other new businesses have opened in the Square, including a new coffee house and boutique shops. Now, says DuBois, "Birch Street is our own little Newbury Street."
Oh, and you can still buy a single-farnily house with a driveway and a yard for $200,000. But not for long. Over the last two years, median sales prices have already risen by 43 percent. Dubois also cites Savin Hill, Uphams Corner, Bowdoin-Geneva, and Jones Hillin Dorchester, among others, as places to find good bargains in neighborhoods currently rising in value. As is the case with Roslindale, she points to four main criteria that homebuyers can use when doing their homework on a community. "A key to finding an upand-coming neighborhood seems to be in places where there is a sense of community already instilled in the residents, strong religious and community groups, good or improving schools, and crime-watch programs or community policing," she says.
Outside of the Boston area, DuBois' criteria fit places like Chelsea, Wakefield, and Norwell, among others. Chelsea, perennially known as The Town Under the Tobin Bridge, is no larger than a good-sized Boston neighborhood. For years, all anyone knew of the city was that Boston University was running its schools and that the commonwealth was running its government (the city had been placed in receivership by the state in 1991 because of financial mismanagement), Today, Chelsea tells a different story, with improving MCAS scores, enough new schools built to house every student, and a vibrant artists' community taking hold in renovated industrial buildings. It certainly doesn't hurt that one can get from downtown Chelsea to North Station in 11 minutes. Even more appealing is the fact that single-family homes sell for half what one would pay in Charlestown.
Conversely, Wakefield is best described as sleepy. From 1988 to 1996, median prices on homes held firm under $185,000. Today, the median selling price hasjumped to $240,000, still only a 12 percent rise since 1998. Wakefield is situated close to the commuter rail and 1-93, has ample green space, and boasts avibrant commercial center-plus its MCAS scores are on the rise. All in all it's a bargain for a family looking for a nice bedroom comrnunity to raise their 1.9 kids and garage their minivan.
The real estate boom is not just confined to Boston and its nearby
'burbs. It comes as a surpiise to no one that prices in places like Wellesley and Newton are reaching new heights every day. What is a surprise is that, with a bit of homework and a lot of luck, there are still deals to be found in these traditionally bargain deprived towns.
Mike and Neilie Casey, formerly of Charlestown, spent seven months looking for a deal in their neighborhood but were continually depressed by how little they'd get for a significant chunk of change. They found their deal in Wellesley, of all places. "I look at buying this house in much the same way the Red Sox signed Pedro [Martinez]," says Mike Casey, referring to both their new home and the Cy Young Award winner. "At the time, everyone said the Sox were crazy for paying him that much. A few years from now, people will see it as a smart investment."
While they paid "way over what we had anticipated" they recognized after six months of traipsing through Charlestown open houses that finding what they wanted at the price they could afford was not going to happen. This redirected their search reluctantly to the suburbs. Both commute to work, so proximity to mass transit was important. They also placed a high value on public schools, a strong sense of community, and an inviting town center. Their search brought them to Wellesley, where they found a community that they had dismissed as unaffordable but, in the end, satisfied their highest priorities in a realistic price range.
"Do we really need an acre of land and a big yard for the dog? Do we really need a two-car garage?" Neilie asked rhetorically, "I'll go smaller in the square footage of the lot and the house-we were more interested in finding a good community."
It's exactly the kind of trading off, an examining of true priorities, that real estate professionals suggest is necessary for every homebuyer today. "One of the most common misperceptions is that all of the things [homebuyers] list on their wish list they are going to get," says Julie Krasker of Hammond Residential Real Estate. "They think they will have to compromise on only one or two things, and they end up compromising on a lot of them."
So how does an eager homebuyer set priorities in this market? "Do your homework, no matter how boring it can be to spend all Saturday and Sunday going to open houses, and get to know the inventory," advises Krasker. "A lot of people think that they can get the colonial with the driveway and the yard and the air conditioning-and they just aren't going to get it."
Many real estate professionals agree that because this is a seller's market, buyers must be sawy and do their homework before venturing into the purchasing abyss. Some are waiting on the sidelines, hoping for that sure-to-come fall in the market. "Big mistake, " says Mike Foley of Jack Conway & Co. 'We are not going to see a bottom-out for a long time," he cautions. "This boom is different from the boom in the 1980s. That was based a lot on speculation and investment; this one is homebuyer driven."
Almost every realtor agrees that the first step every buyer has to undertake is to get approved for a mortgage before starting your search. This effectively makes one a cash buyer and thus able to close on a deal faster than someone who is without a mortgage commitment. In these times, the ability to negotiate a deal is directly tied to your ability to close on the house faster than the next person.
Beyond the finances of buying a house, househunters need to have a clear sense of which things they really want, and which they are willing to forgo for the right price. Everyone has a dream home but if location and convenience to downtown are tops among your needs, then you mightwant to rethink the necessity of amenities like shiny new appliances and outdoor space (yard size in the suburbs, roof decks in the city). Setting priorities and deciding which can be jettisoned can be the most difficult part.
"I see the agonizing looks on people's faces when they recognize what they actually get for their money," says Foley.
Among the priorities realtors cite as most important to buyers these days is location. This is especially true of the new class of Boston's working professionals in the finance and Internet-related fields. "All of these new folks moving to Boston want to be in the city. The city is cool, and the suburbs signify isolation and boredom," Foley says, echoing the opinions of many of his clients. Second to consider is the size of space you are buying, which in this market can dictate if you are going to be buying, say, a one bedroom condo in the South End for $300,000 or a four-bedroom Victorian in Fort Hill.
After considering where you want to live, how much you can spend, and how much room you must have, most buyers concentrate on priorities such as the condition of the house and amenities such as air conditioning, a washer/ dryer, and outside space. These are the tradeoffs, though Julie Krasker sounds a cautionary alarm: "A lot of buyers don't have the cash to make the changes they want to the house because they have maxed out on the purchase price, "meaning that those, counted upon changes won't happen for much longer than they expected. Because of this, she says a lot of younger buyers are searching., for homes that are in "move-in " condition, both as a function of their finances and time constraints. "They just don't have the time to make the changes-they don't want the hassle," says Krasker.
Realtors advise buyers to consider the upside of buying a house: that gets you the location and space, you want at a price you can pay (without maxing out), but one that will need a little TLC - ideally, what you, can do on your own for minimal cost. Says Krasker, "If you can invest a little time and energy into the: house, you can save some money in, up-front costs."
For Todd Adelman and his wife Sarah Wilcox-Adelman, both in their early thirties, there was no question': some tough compromises would have to be made, and they were. The low point of their year-and-ahalf-long search for the "typical suburban dream" house,' was when they were shown a home where the bathroom was in the basement - and it didn't have any walls.: The epiphany: It was time for a frank reassessment.
"It's really about self-realization," : says Sarah, "You're looking for something that doesn't exist." To be able to buy what they wanted, "we have, moderated our lifestyles to fit our capabilities." That means a three~ bedroom condo instead of a single family house, a parking spot but no garage, and conservation land behind their building but no private yard. While Todd and Sarah felt that they compromised on several important matters, they believe they ultimately found what they were looking for at the price they wanted to spend.
The location of their "compromise?" Newton.