Are Boston Area Homeowners Anxious To Sell And "Trade Up" Their Homes?

There's one common concern we’re hearing over and over from prospective and current Boston-area clients. Given the economic situation over the past year, customers are asking “Should I go ahead with this project?" They are understandably nervous about investing money into their home.

From speaking with remodelers across the country and looking at economic statistics, we’ve learned a few things. Compared to many regions of the U.S., the Boston metropolitan area is doing very well in terms of housing prices. One reason we're holding onto market value is because we didn’t see the same explosion in new housing that happened in California, Florida, Nevada and Arizona over the past several years.

The New York Times recently published an article entitled “Home Sales in November Fell at Faster Pace Than Expected." It painted a very grim picture of the current housing market. To get a better picture about what’s happening in our area, I downloaded the detailed data from the Nationals Association of Realtors. This data shows that from November 2007 to November 2008, the median price of a home sold in the Northeast dropped from $257,900 to $257,700. This is a decrease of 0.1%. It is in sharp contrast to some other areas of the country. In the West the average price drop was 25.5%.

The good news for homeowners in the Boston area is that this information indicates that while the sky maybe falling for housing in some parts of the country, overall prices are being maintained in this area. The reason for this is relatively simple – in most of those markets it was pretty easy to clear 1,000 acres and build 2,500 new homes during the late 1990s and into 2007. This drastically increased the number of houses and when prices were going up, builders made a lot of money.

In the Boston area, that didn’t happen. Given our geographical limitations (i.e., we border the ocean) and overall age of the area, there aren’t large tracts of land where you can build new houses. The typical new development in Massachusetts is 10 or 20 houses, not 2,000.

As a result, we don’t have a huge inventory of houses that need to be sold. So compared to other areas, most of the towns in Massachusetts have seen single digit percentage drops in value. In California, the typical drop in price has been more than 20 percent, with more to come.

However, we’re seeing that most people aren’t anxious to sell their house and “trade up." Instead, we’re seeing many clients deciding to renovate. These are homeowners who don't want to leave their neighborhood, schools or charm of their house. They are deciding that the costs and hassles of moving don't make sense for them. Five years ago they might have sold their house and traded up, but today, they are staying put and investing in their current house. A common comment I’ve heard is “If I’m going to be in this house for another 5 years, I need to upgrade the bathroom, kitchen or basement”.

This fits perfectly with Red Apple’s overall approach. We’re focused on helping people create the home of their dreams starting with the home they have instead of trying to find a new house that might be a better fit.

Focusing on projects in your existing home instead of moving can also add value to your home and your way of life. Many of the projects we’re seeing include small additions, basement finishing as well as kitchen and bath remodeling. These are also the areas that tend to offer the best return on investment over time.