Getting Caught in the Frenzy of the Boston Real Estate MarketApril 13, 2013
The Wild West is the term someone recently used to describe the Boston real estate market. There are multiple bids for most listings, mobbed open houses and buyers fighting to outbid each other. In certain price ranges and highly desirable neighborhoods, the market is absolutely on fire. It's not necessarily a healthy market, since there are too many buyers chasing too few properties.
Luxury Boston Condos Are Pricier Than Last Year
List prices up to $2.M are up considerably compared to last year's spring market, not to mention the volume of luxury homes. The sad thing is that some buyers are in a competitive position buying a home. They are so desperate to buy Boston real estate, they make offers way over the asking price, without considering whether or not they are overpaying. The desire to buy the property outweighs any lengthy decision-making process.
In some cases, offers have been made 10-15% over asking prices. That's okay if you’re planning to stay in the home more than 8 to 10 years, and one can argue that it is a pretty solid investment. However, if for any reason you need to sell the property more short term due to relocation, job change or financial difficulties, then you’re in real trouble.
The market is crazy now, but it will eventually stabilize - the bubble cannot last forever. Although everyone may get caught in this frenzy, it's the first time home buyers who are especially at a disadvantage thinking bidding wars are the status quo. They should get some sound advice and guidance before making an offer to outbid the competition.
There have been instances where 80 buyers appear at an open house, and buyers feel pressured to make offers without looking into more details about the unit, the building or the neighborhood. After their offer gets accepted (in most cases, over the asking price), they then find out details in layout, storage, condition etc. First time buyers often get cold feet and walk away. Don’t put yourself though this unnecessary exercise. Have sound advice before jumping into the real estate fire frenzy.