Massachusetts short sales

Bright And Sunny Early, With A Chance Of Severe Job Cuts Later: The 2013 Massachusetts Real Estate Market Forecast

by Rich Vetstein on January 9, 2013

in Fannie Mae, Massachusetts Property Values, Realtors, Short Sales

IMG_1490Yesterday my firm sponsored a very informative breakfast seminar with veteran real estate journalist Scott Van Voorhis of Banker & Tradesman and Boston.com who offered his predictions on the 2013 Massachusetts real estate market. The presentation included a lively question and answer session with the 40+ Realtors attending from all over the Greater Boston area. Here are some take-aways from the seminar (in no particular order):

  • “Bright and sunny early, but with a chance of severe job cuts later.” According to Mr. Van Voorhis, the Fiscal Cliff and upcoming Debt Reduction negotiations may be the biggest obstacle remaining in the path of a sustained real estate recovery. At stake are anywhere from 50,000 – 70,000 jobs in Massachusetts if the current slate of proposed budget cuts pass — to defense (i.e., Raytheon), health care, hospitals, and medical research, and tech sectors. If Massachusetts sees severe spending cuts by the federal government, the Route 128 corridor will be most impacted. The current impact is of “wait and see” with defense contractors and tech companies waiting to see how the federal budget battle with be resolved. They are putting new hires on hold and bracing for possible cuts. The fact that Congress will likely wait until the last minute to resolve these important issues doesn’t help the market any!
  • We’re back…. Median sale prices in many suburbs are now back to 2005 levels. Natick’s median price is $418,500, just off from its ’05 high. Needham has surpassed its ’05 record with a median price of $670,000. Burlington has broken its ’05 record at $407,000 median price. A major driver of the real estate recovery is the tech-sector, with Route 128 lab space expanding by 50%, or 3.5 million square feet of space, since 2007, enough to fill three Prudential Towers of space. Shire in Lexington and Genzyme in Framingham have led with way.
  • Tear-Downs On The Rise. Builders are doing tear-downs instead of large scale subdivisions, where financial risk is minimal. Early data indicates increasing market activity in tear-downs in Lexington, Newton and Needham, for example.
  • Low Inventory of Move-In-Ready Homes. The attending Realtors lamented about the dearth of move-in-ready homes in the sought after towns. As we know, there is hardly any buildable land in Massachusetts, and builders have not been doing subdivisions for several years. The agents say bidding wars are back in a big way for these properties, which creates problems with potentially low bank appraisals as the “comps” must catch up with new sales data. The low inventory also affects potential home sellers, especially the empty nesters who are “paralyzed” as one agent described, waiting on the best time to sell.
  • Buyers’ Lack of Vision. We discussed that the current generation of buyers would rather pay a premium for a move-in-ready home with the requisite gourmet kitchen with granite and stainless steel appliances, rather than pay less for a fixer-upper. Some Realtors have enlisted trusted contractors to scope out fixer-uppers along with buyers, so they can envision the potential of a lower priced home.
  • Condos Remain Strong Sector. Condominiums remain the new starter home for many buyers, especially singles. Inventory is strong and pricing remains affordable in many communities. With interest rates still at historic lows and the mortgage interest tax deduction still in place, purchasing a condo is much cheaper than renting. The consensus is that condos will remain a strong sector through 2013.
  • Short Sales Strong & Less Time Consuming. As noted by veteran short sale negotiator Andrew Coppo of Greater Boston Short Sales LLC, short sales are now becoming far less time consuming with the new Fannie Mae short sale guidelines in place since the summer. Mr. Coppo reports that short sales are taking merely 60 days to get approval, and Bank of America finally “getting it” by implementing its computerized Equator streamlined short sale system. Also, the Mortgage Debt Relief Act was extended through 2013, giving short sale sellers tax forgiveness for discharged debt. There are still lots of underwater and struggling homeowners, so 2013 will remain another strong year for short sales.

What are your predictions and thoughts for the 2013 Massachusetts real estate market? We would love to hear from you!

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RDV-profile-picture-larger-150x150.jpgRichard D. Vetstein, Esq. is a Massachusetts real estate attorney who writes frequently about new legislation concerning the real estate industry. He can be reached at [email protected].

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Short Sales Get Boost From New Obama Treasury Guidelines

by Rich Vetstein on December 1, 2009

in Foreclosure, Massachusetts Real Estate Law, Mortgage Crisis, Short Sales

The Obama administration on Monday set long-awaited guidance on a plan for mortgage companies to speed up short sales of homes and other loan modification alternatives to stem the rising tide of foreclosures. The Home Affordable Foreclosure Alternatives Program (HAFA) provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed. The announcement can be found here.obama_hope A complete set of the guidelines can be found here.

The new federal guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders. New financial incentives for completing short sales or similar “deed-in-lieu” transactions — in which the deed is simply transferred to the lender — include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would also receive $1,500 in relocation expenses.

While a short sale may be preferable to a foreclosure, they have been frustrating for borrowers, buyers and realtors, because they are often hung up by lengthy negotiations with multiple lien holders and mortgage insurance companies. Realtors have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.

Under the new rules, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt. The rules also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.

This may help, but by how much remains to be seen.

Click here for our most recent post, Will Short Sales Get A Boost From Obama’s HAFA Program?

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