bostonbubble.com

[john p]

Now you listen to my video:

http://www.youtube.com/watch?v=Q05p-5TWcj8&feature=related

[jad79]

[Kaidran]

It looks like the sellers did a really nice job with this. They dropped prices rapidly and even lower in the end. It was listed off market on the 2nd May so I'm curious if they got the credit or not. I'd guess they did.

Based on the houses I see in my current searches the Arlington houses seem to be dropping quite a lot right now. I'd guess the seller saved themselves a 30-50k loss by pricing more aggressively earlier and taking advantage of the tax credit.

[CL]

Even with the price drop, the seller still managed to sell 100K above tax accessment, with a price that is 97% of original listing. Amazing.

[jad79]

[Kaidran]

Well the majority of those solds will be from when the market was completely nuts.

Also the assessed price is just not usually a good indicator of price. Often it is just an assessment of the details of the house listed in the city records. I think you can see trends across towns, some are around the assessed, some are consistently 10-20% higher.

I'm very curious to see the July numbers.

[CL]

On the contrary, I found tax accessment to be fairly good valuation tool since it only relies on fundamental of the house and thus strip out short term demand and supply fluctuation, and you have long data history and perfect data coverage. When I track the market, it's not unusual to see people pay higher or lower than tax accessment, but you can see trend if you pay close attention.

I in general think it's not too good an idea to pay way over tax accessment (given the source of the value is from government who has every incentive to maximize that number), unless there are obvious recent improvement in the house that is not accessed.

[john p]

From what I know, Tax assessments typically work like this:

In an "Evaluation Year", typically every three years or so, they take the prior year's sales data and use those homes as benchmarks to tie together a string of values i.e. if one home is in value somewhere between the sales of two homes, their tax assessment should be somewhere thereabout.

Next, they take the total value of the real estate and use that to adjust the Property Tax Rate. So say one year the real estate values really go up, the Property Tax Rate might go down.

The Town's primary interest is getting the tax rate set so that they get their tax revenue and they are not obsessed about a certain degree of a few misplaced evaluations. Mostly, they have a Tax Abatement process if someone wants to contest their value versus another.

Towns do have some flexibility as to how they apply the data of comperable sales. Some Tax Assessors might group all the Capes or Ranches or Colonials. I was told by a Tax Assessor that you might see drift in the evaluation of these different types or in different neighborhoods, if certain neighborhoods are different than the typical for that type of house i.e. a Cape on the ocean might be different than away... Often times when people do work on their house they need a Building Permit, so the Tax Assessor knows some information about the quality of the home, but they don't really monitor painting, roof, and general fatigue or other taste or curb appeal factors. They typically do drive-bys on January 1st or somewhere thereabouts to assess the new additions to homes or percentage completion of new construction etc.

Beyond that, you'll find that certain towns might have current market prices well above, well below or pretty close to tax assessment, so you have to make sure that you're not comparing one town's percentage above or below assessed value to another towns. What these percentages do sometimes tell you is that the current market trends might be hurting certain towns or price points within towns more than others.

So it depends on when was their last "Evaluation Year". It also depends on if they had enough comperable sales data at your price point to capture the value, and then keep in mind that they don't tweak the numbers for general condition of the place unless they've had a chance to get in it i.e. if there was a recent sale on the property where they could get up close and look at the condition. Also, how on the ball (or corrupt) the Tax Assessor is matters. If you have a "spread the wealth" Tax Assessor, you might see a slant in evaluation to over evaluate a house on the higher end of the spectrum and under evaluate one on the lower end.

In my instance, I bought a house that was two weeks apart in sales closing from another house. The house prices were like $30k difference, yet the next Evaluation Year had my house more expensive by like $90k. The Tax Assessor pretty much gave me the impression that either I got a great deal which was out of the normal distribution of home prices so they didn't use it so much as a benchmark or that if a sale wasn't "Arm's Length" or there was some type of atypical issue like the owner was the realtor or the sale was within the family, they wouldn't weigh into it as much. I didn't know the specifics of the other house...

I certainly look at the tax assessment, but try to elevate my understanding of how it was derived and when and what I think it really is saying... in some instances it is more valuable than other....

[Kaidran not logged]

I think it deends on the town. There is usually a corelation between the assessed value and the actual sale price. In some towns it is 1:1 but in others it might be 1:1.2. Whichever town you are looking at I'm sure you know well and see the right correlations. I am looking at about 10 towns and cannot remember how each one relates so I tend to just ignore it. If I see something I like a lot I'll look more deeply into it and comps but reight now I've stopped looking seriously until next year.

[john p]

I am really happy to hear that you're open to ten towns. I think that is totally the way to go. I never understood why people only looked at one town. I think that many natives to this area are kind of locked into a specific area because they have to get to Sunday dinners with the mother in law, or they have some in the family day care arrangement...

What are you seeing when you do open houses? Do you see more crowds in certain towns versus others?

Another thing I have a theory on is the general style people look for. About five years ago, many buyers were looking for the "Pottery Barn" look. Then I saw a lot of French Country looking places. In Duxbury in the 80's the homes looked like old taverns with white stucco and fake wood beams and in some instances the diagonal window panes you might have seen in the English Country Cottages, because a lot of the landscaping was a bit rustic and tasteful... If you go into a Crate and Barrel you can see this sort of blend of modern chic and raw historical rustic. I saw a lot of this blend when I was staying in SoHo. A lot of the modern lofts in older buildings have that blend of the raw bricks juxtaposed to the slick stainless steel cabinets and concrete countertops. You can sometimes tell if a buyer is a good match for a house. If someone is all LL Beaned out, they might not like an "Atomic" Ranch. Sometimes the overall trends and styles you see in magazines influence people in their vision of how they want to live and what type of environment they want to live in. Because of this, sometimes the colonials might be selling more than the Capes, and then a movie might come out about a family vacationing in the Cape and the Cape might be hot for a few years. There was a period when people thought the raised ranch was the cat's meow. People were wearing bell bottoms and had lamb chop sideburns and the colors were pretty tacky, but that was the thing.... I wonder if the echo boom actually finds that sort of stuff cool again?

These places are so fun. A little too cool for me though...

http://www.atomic-ranch.com/

[john p]

Here is a beach house style Cape Cod, Nantucket deal...

http://www.housebeautiful.com/decorating/beach-house-cottage-style-decorating-0610

Now certain house designs look better in certain natural environments. If you live near the scrub pines in Plymouth.

Pay attention to the people in the photographs in this picture. Look at the clothes, the ages, the dog, the cello.... You can see what market they are targetting. Look at the words that flash up and notice that you don't see the home at first, it is a blank slate, just people and furniture...

http://pinehills.com/#/homes/

http://activerain.com/blogsview/1366990/pinehills-plymouth-ma-november-2009-sales-results

I see this stuff as trying to capture the refinements you might get with urban design i.e. what you'd expect at a cool new hotel or hip restaurant in the city, yet you have the traditional somewhat blended in. Kind of a place where you could invite your city friends and not feel like a hick. Or, a private community where you are among other sophisticated people so you can get you can live in the country and still get your decent cabernet, breads, meats, etc. (they have their own wine store and market).

Sometimes people wade into a lifestyle in that they're fully not ready to jump in two feet into rural living or city living so they choose some sort of hybrid, but then after a few years after living the lifestyle they want to go further into it i.e. someone might want to live in a residential neighborhood in a leafy suburb, but then after really enjoying the peace and quiet they might want something more private and get a place in the woods. Other times, someone might want to live in say the Ritz Carlton complex near the Common, and then they say later, hell, I want to be on Charles Street or the South End. I think if your house move is somewhat of an environmental change, maybe renting to spend some time and getting a feel of that lifestyle is a good idea...

When you're looking at ten towns, I'd imagine that you really see a range of environments and styles, and I wonder if in all of them you have that feeling "Gee, I could live here", or if some on the list are more geograpically desireable or more affordable, etc.

[Kaidran]

I try to weigh up everything and not go in prejudiced. I try to juggle everything, schools, commute, quality of town center, sidewalks, potential acreage etc. Mostly my wife and I have very different tastes. I like older colonials, she likes smaller and more modern. In the past this has resulted in us not acting very fast. When we both agree then we usually have found something that is really good. Right now the biggest limiter is my company. It is set to relocate and I dont want to buy in Lynnfield and find out it is moving to Quincy.

I cannot tell you about OHs though. The post I did a month or so back about the OH in Newton was the last one I went to. TBH if the number of SF rentals increases next year then I may well just rent in a different town. The only real motivator is my oldest starts school next year and Watertown schools are not great. I'm not sure what difference it makes to a 5 year old but I'm not really ready to take the risk.

[john p]

Kadrian:

Here's a trick I used, whenever I went to a house where the wife is psyched and I didn't like it, I told her that there were most likely snakes in the basement. The thought of it freaked her out and it worked like a charm every time.

I grew up in Lynnfield. It was great. Many of the old farms have been filled in with subdivisions. The marsh between the town and route 128 really preserved it as a nice Norman Rockwell little town. It is more built up than when I was there.

If you like Lynnfield, the up and coming South Shore version is Hanover.

If you don't mind going a bit futher North, the Masconomet School District is also very good.

[Kaidran]

Thanks John, right now I'm just at the mercy of the relocation but I'll check out the towns you suggest.

As for differing tastes it actually is a positive thing. We are slow to rush into anything and we cover each others blind spots. She stops me taking on too much and I make sure we will have something we will be happy in 10 years from now. If we can both agree the decisions have worked out well in the past.

[whezmyhome]

I am not comfortable with the current home prices......we can afford some of the bigger houses with our DISK (double income, single kid) status, but we want to make sure there is leg room too. We mostly check out near 495/90 area, and just think its insane to take big loans.....interest rates are more likely to rise than home prices at this point.......dont want to keep renting, but there is nothing we like on the listings end...kid goes to school in 2012, will have to move apts if we cant buy something by then.........waltham schools are horrible