My Annual 10 Predictions For The Real Estate Market

Last year, I began this annual article by saying that “A simple answer to any questions about the real estate market in 2012 is: If you want to know what the housing market will be like next year, ask the government.”

As I sit down to write and offer my predictions for 2013, the part about “ask the government” seems even more succinct because today is New Year’s Eve and the “fiscal cliff” negotiations remain at an impasse.

Nonetheless, I offer the following 10 predictions for the real estate market in 2013:

1.  Home prices will rise, but moderately.  We have already seen rising prices in many market areas, but I expect the rises to be slight, in the 2% - 4% range.

2.  Builder confidence will move upward. Signs of a rebound are appearing locally and nationally and new home building permits are on the rise.

3. Demand will rise, resulting in higher home prices (See #1).  We are already experiencing a shortage of inventory on the North Shore, resulting in slightly higher prices.  And as prices rise, so will the demand as buyers fear missed opportunity.

4.  Low interest rates will remain in effect, with moderate increases foreseeable, possibly inching up to around 4%.

5.  Lending will remain tight.  The “defensive” posturing by the banks will remain in effect.

6. The “shadow inventory” (foreclosures and short sales) will shrink…cautiously.  The housing market is still fragile and the banks and the government will continue to responsibly address the issue.

7.  More first time buyers will enter the market.  With the rental market remaining constant, many first time buyers, tired of waiting for the chance to own, will finally jump into the market and take advantage of low interest rates and the belief that home prices have nowhere to go but up.

8.  The 2^nd home market will re-emerge in 2013.  Investors and vacation homebuyers, slightly behind the primary home market, will follow the trend.

9.  This may be the year of modification of the home interest deduction.  There was talk of it in 2012 and anything seems possible as the government looks for ways to balance the budget.  Perhaps a cap on the amount allowed will be considered.

10.  The real estate industry will see a rise in the number of agents returning to the business.  Agents who dropped out during tough times will begin filtering back in as they perceive a better market.  Perhaps now would be a good time to raise the bar for qualifying to obtain a real estate license.

(10-A...  Just a note about how one aspect of real estate has changed in the past 10 years:

The days of the sales agent as depicted in Glengarry Glenn Ross have passed.  Long gone are the days of the seller knowing far more about a property than the buyer, which prompted the advice “caveat emptor”… buyer beware.

Today buyers often know as much, or in some cases even more than the seller, due to the enormous and comprehensive amount of information available online, at the buyer’s fingertips.

Equally good advice today, therefore, may be “caveat venditor”… seller beware.)

I wish you all a great new year and hope you will remember this...2013 may be the BEST year ever to buy a home, with incredibly low interest rates and property prices just beginning to rise.  Don't be one of those that in 2014 or 2015 say: "I remember when I could have bought that home for $X" or "I missed the opportunity of a lifetime in 2013."

 Best regards,

 Jay 

Jay Burnham, VP
Coldwell Banker Residential Brokerage

North Shore, Massachusetts

Value Range Marketing For Home Sales

Coldwell Banker Residential Brokerage has recently embraced a concept known as Value Range Marketing.

What is Value Range Marketing?

It is an alternative way of marketing a property in this challenging real estate market.

Here's how it works:

The seller decides upon a range in which he/she would consider an offer.  In doing so, they are inviting any interested buyer(s) to make them an offer and they will in turn either accept it or respond to it (counter).

It sets up parameters for negotiation.

The theory around this strategy is that no one knows for certain what a true price for a home is until the buyer and the seller agree.  If the seller gives a range, it allows an interested buyer to know from the beginning the parameters of the seller's expectation of value.

Value Range Marketing, therefore, has the potential to attract a wider pool of buyers and invites more offers than a "fixed price".  It also has the potential to significantly reduce the number of Days on the Market (DOM).

Some real estate agents do not yet comprehend the concept or are unwilling to embrace change.  Their misunderstanding may be compounded by the fact that the Multiple Listing Service (MLS) only allows a single price posting, not a range as we are discussing here.  For that reason, any property listed using Value Range Marketing will have the following disclosure prominently posted in the first line of REMARKS:

"Sellers are willing to entertain offers between $________ and $________."

...and the price posted in the MLS will be the first amount, or the lower dollar figure.

EXAMPLE: Recently a home was listed in my area using Value Range Marketing ($325,000 - $375,000) and an agent submitted an offer at the lower dollar amount, claiming the offer was "full price".  But since the pricing was a range, any offer less than $375,000 could not be considered "full price".

The agent went on to say, "My buyers felt that, regardless of the system you are using, that the property was listed at $325,000."

That broker simply does not understand the Value Range Marketing... or she had failed to read, or chosen to ignore, the first line in the remarks section of the listing data.

Unfortunately for that agent's buyers, they were not properly informed/educated and they ended up losing the home to another buyer whose broker understood the concept and its value for her clients.  The second buyers negotiated within the range posted in the listing data and came to a quick and fair agreement with the sellers.  Win-Win.

Oh yes...and the Days on Market?... 6.

Value Range Marketing works.

Hamilton Deserves Better

The following STATEMENT was delivered and read at the 

Hamilton Board of Selectman's meeting on July 2, 2012:

Trust, Respect and Confidence of a community are essential elements a town employee or school administrator must possess.

You will recall that the Hamilton-Wenham School Committee announced last year that the employment of School Superintendent Dr. Raleigh Buchanan was being terminated...less than one year into a three-year contract.

The principal reason?...Loss of Confidence.

LOSS OF CONFIDENCE is a term often used as grounds for termination of an employee.  Loss of confidence arising from fraud or willful breach of trust by an employee is generally seen as a just cause for termination.

Ordinary breach should not suffice.  It should be willful and without justifiable excuse and should be supported by substantial evidence, not merely by the whims or caprice of the employer.

Which brings us to the position of Hamilton Town Counsel, currently held by Attorney Donna Brewer.  Ms. Brewer was so involved with the Hamilton Police Department conflict and resulting Marchand lawsuit as to be deemed one of the central figures in that controversy.

As a result, two independent investigatory reports were commissioned by the town: the Hayes Report and the Pomeroy Report. Both reports clearly indicated Ms. Brewer's central role in the Police Department affair.

A third report, the Urbelis Report, was commissioned to review the two previous reports and to specifically evaluate Ms. Brewer's actions.  Thomas Urbelis is a respected Boston attorney who serves as Town Counsel for Andover and North Andover.  The Urbelis investigation uncovered such wrongful acts that the report was held secret, as attorney-client privilege, for three years until AFTER the Marchand case was settled.

Upon its release to the public, the Urbelis Report was posted on The Hamilton-Wenham Patch and residents weighed in with spirited commenting on the contents of the report and Ms. Brewer's actions.

Why? Because the Urbelis Report, in support of both the Hayes and Pomeroy reports, determined that Ms. Brewer did in fact willfully and without justifiable excuse act in an inappropriate and culpable manner.  Citizens are understandably outraged.

As a result of her actions, Attorney Brewer has forfeited the trust, respect and confidence of the community and appropriately, she should be terminated as Town Counsel.

Many concerned citizens have already contacted the Board of Selectmen and Town Manager, but so far no progress has been made regarding Ms. Brewer's replacement.  Town Manager Michael Lombardo has chosen to support Ms. Brewer's continued employment and has suggested that her "reasonable" fees and "pro bono" work are a chief consideration for keeping her on payroll.  He has, it seems, chosen to ignore her poor and questionable performance prior to his becoming Town Manager and how much that performance has actually cost Hamilton and the taxpayers…in lost and settled court cases (culminating in the Marchand lawsuit settlement of $1,285,000.00), poor or improper legal advice, loss of income now that we no longer have a town-owned ambulance service, and of course, loss of community reputation for our town.

Ms. Brewer's actions merit condemnation and dismissal, not support and employment.

We respectfully insist that this issue be formally reviewed and reconsidered and that the position of Town Counsel be put out to bid for a new attorney to represent our town.

Hamilton deserves better.

Thank you.

Submitted by the following Hamilton residents, and supported by considerably more...

Jay Burnham           

Bob Gray

Shirley Gray

Leon Purington

Bruce Wadleigh

Dale Wadleigh

Leigh Keyser           

Betty Dunbar

Margo Killoram

David Southwick

Bea Britton

Jim Kent

Julianna Kallas

Ed Howard

Laura Howard

George LaMontagne

Linda Morey

Dan Ellison
Robert Sica  

To read The Hamilton-Wenham Patch's article published the following day after this statement was delivered: [Click Here]    


July 8th Update: To read another blogger's opinion (The Informed Hamilton Blog) regarding this same issue: [Click Here]                    

Look For the 2012 Hamilton-Wenham Free Press

The 2012 Hamilton-Wenham Free Press will be delivered shortly to all residences in both towns. The Free Press is a complimentary newspaper provided by Citizens For Fiscal Responsibility, aka Enough Is Enough.  The paper includes timely information regarding upcoming issues for the Annual Town Meetings, political commentary, local community projects, property tax charts and data for the North Shore and more.  There's even a tasty chili recipe!

This year the paper has expanded from eight pages to twelve as more and more citizens have written articles of interest about the goings on and important issues in our towns.

Contributors this year include:

Terrill Jennings, Julianna Kallas, William Dery, Edwin Howard, Jack Lawrence, Kerry Mackin, Bruce Wadleigh, Robert Sica, Leigh Keyser, James Kent, Betty Gray, Lee Fremont, David Thompson, Joseph Palermino, Bob Gray, Rick Mitchell, Jay Burnham and Ron Powell.

Be sure to look for this year's Free Press in your mailbox and read what your friends and neighbors and thoughtful citizens have to say about the two great towns we are so very fortunate to live in.

Enjoy!

School Audits Demand Immediate Attention & Action

This week, the Boston Globe ran an article in the NORTH section about how $1.6 million in the Hamilton-Wenham Regional School District (HWRSD) financial accounts was "found" by a newly hired financial accounting firm.

The findings came as little or no surprise to many town officials, taxpayers, parents and especially to Enough Is Enough (EiE), the fiscal watchdog group that was formed three years ago in Hamilton and Wenham to stave off the school district's process of "budgeting by overrides" which resulted in burdening residents of Hamilton and Wenham with two of the highest property tax rates on the North Shore.

According to the article this was the third time in the past year that the HWRSD was found to have significantly more money that had been indicated.

One of the other two cases involved funding that the HWRSD allegedly needed in order to pay for a new boiler for the Cutler School.  Faced with the urgency and need as expressed by the School Committee (SC) that no funds were available, voters, along with support from EiE, overwhelming approved bonding at both Town Meetings to help pay for the project.  Now we are told that the funding was unnecessary and that the district paid $794,000 for the heating system out of existing funds.  The question now is whether the SC will continue to seek the bond approved by the voters FOR THE BOILER and attempt to divert those funds to other projects…such as work on the High School auditorium…a project that was previously rejected by the voters.

According to the Globe article, SC chairman Alexa McGloughan praised the work of the new financial accounting firm, stating "I think we have finally cracked the code on how to demystify school accounting" and that she felt that new accounting practices would lead to better efficiency.

Enough Is Enough has responded by saying it wishes that Ms. McGloughan felt the same way about the thorough and lengthy (400 pages) and complete OPERATIONAL AUDIT REPORT that was completed last year after having been overwhelmingly approved by voters in both towns.  That report clearly supported a previous report (The Blue Ribbon Report) that found that the HWRSD costs nearly $2 million more per year than comparable school districts.

The difference with the OPERATIONAL AUDIT is that it clearly paved the way for correction of the school cost discrepancies with specific recommendations.  Unfortunately, the SC and district have failed to implement the audit's numerous COST-SAVING recommendations and initiatives, choosing instead to implement the few COST ENHANCING initiatives from the report.

This failure to improve the efficiency of our school district, after being handed a $90k Operational Audit roadmap, is unacceptable.  Combine that unwillingness to act on the Operational Audit with the recent financial audit which uncovered $1.6 million, and according to EiE, "that suggests better efficiency is not, as suggested within the article, a primary concern of the School Committee".

"You're going to create a better budget going forward if you know where you're coming from," McGloughan stated.

I believe that should be a naturally true statement and hope that the SC will not continue to ignore the cost reducing recommendations of the Operational Audit when preparing their budget.  It's been more than a year since the Operational Audit was unveiled.  It's time to implement many of the recommendations that until now have been ignored... ignored similarly to the financial accounting that  recently uncovered the $1.6 million.

QUESTION: Does anyone else wonder much we paid to have the new accounting firm straighten out the books and in so doing find the $1.6 million?  Talk around town is that the firm spent more than 200 hours on the project.

What the Internet Can and Cannot Do

It is often said that “the only thing new in the world is the history that you don't know". This saying kept going through my brain when a home valuation web site named Zillow was launched to a lot of buzz a couple of years ago.  The press, as usual, carted out the same tired (and wrong) prediction that it has made for fifteen years: that home valuation sites like these will put Realtors® out of business or at least greatly reduce our fees.

Actually, over the last fifteen years, the opposite has transpired: it doesn’t matter whether you are talking about law, medicine, accounting, mortgage or real estate; the more that the public uses the Internet to gather information, the more they turn to professionals before they make major decisions. That’s because there is a huge difference between gathering information and interpreting it.

Over ten years ago, a friend of mine penned a Real Estate Internet Warning that seems even more relevant today than it did then:

REAL ESTATE INTERNET WARNING©

“Despite advertising claims to the contrary, the Internet is NOT an experienced Real Estate Professional. It cannot consult, counsel, advise, have knowledge of local laws and market conditions, make judgments, "own" the result, or most importantly, understand your individual goals and needs and care about you as a Client. Furthermore, while the Internet can provide information, it cannot interpret it.”
                                                                               . . .Mollie Wasserman

The reason that the press keeps getting it wrong is that they do not make the distinction between information and knowledge. As John Tucillo states in his book The Eight New Rules of Real Estate, “Information is a collection of facts or observations about reality. Knowledge is actionable”.  In today’s information age, consumers can increasingly get all the information that they want or need, but it’s useless unless someone with expertise in the field can provide the knowledge to allow them to correctly act upon it.  Information, without the context of a pro who can share the day-to-day knowledge of the industry, is just data.  If a consumer were to act on it without context, they could very well reach incorrect conclusions and achieve undesirable results.

As my colleague (and fellow CyberStar™) Margaret Rome so eloquently stated on her blog regarding Zillow: “This site depends on public records for its data. But public records will not show factors, like recent additions and improvements or the condition of the interior, that affect price. Public records can also be wrong; a friend of mine checked her house and said she wants that fireplace she’s supposed to have, but will not give up the second bathroom they didn’t count.  If the information about a house is wrong, how valid is the price estimate?  Besides, price is only one factor in buying or selling your home, and getting to the settlement table means avoiding traps and overcoming obstacles.”

A top agent will be experienced at:

• negotiating the terms of your contract,
• making sure only qualified buyers troop through your home,
• meeting and dealing with appraisers, and
• working with home inspectors and lenders to be sure you are protected from start to finish.

In other words, technology is a fabulous way to gather data and can do functionary tasks better, faster, and cheaper than any human being ever could. But the danger does not lie in understanding that technology. The danger is that by itself, the Internet can never provide the fiduciary counsel required in areas such as medicine, mortgage lending, law, and real estate.

Please remember that while the Internet can provide information, it can never interpret it.  And here's the straight scoop: A Realtor's® true value is not in helping you find a home, or getting you numbers regarding comparable sales, though we certainly have the tools to do so.  Our TRUE value is in using our experience and expertise to get you the best value once you find your home or the most money in your pocket when it comes time to sell.

To obtain an accurate assessment of any data you're receiving online, please contact me direct at: (978) 233-2828.


Thank You!