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Home Melissa Ostrom & Melville Capps Newton MA - The Mel and Mel Team

Melissa Ostrom & Melville Capps Newton MA - The Mel and Mel Team

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The internet will not doom Real estate agents to extinction

11-02-11
Melissa Ostrom & Melville Capps Newton MA - The Mel and Mel Team

The internet will not doom Real estate agents to extinction like travel agents* because there are fundamental differences between the two businesses.

Travel agents

Real estate agents
Sell a product that is produced by a few different suppliers (airlines) who are in competition. Sell a product that is “produced” by many different suppliers, who are not in direct competition. Every homeowner is a supplier.
The airlines can create, change, set prices, or eliminate the product (an airline flight) at will. Real estate cannot be created, changed, have its price set by the supplier, or eliminated at will.
Airline flights are, for the most part, fungible – that is uniform enough to be freely substituted. Real estate is unique.
The customer pays for the product with his or her own money. The real estate buyer rarely pays with his or her own money, the vast majority of buyers need a loan. Lenders are additional stakeholders in transactions.
Travel transactions are discretionary. Not all real estate transactions are voluntary.
Airline flights are purchased without prior inspection. Real estate is almost never purchased without prior inspection.
The price, terms, timing, and conditions of sale of airline flights is not negotiable. The price, terms, timing, and conditions of sale of real estate is fully negotiable.
Travel agents utilize a database of products (flights) created by the suppliers (airlines) as the foundation of their services. Real estate agents utilize a database of products (houses) created by themselves (through broker member multiple listing services).


Both the travel agent’s and real estate agent’s databases are now available to the public. Consumers in both markets can search for the product they want. The primary, and essential, difference is that travel customers searching the online databases can actually click to purchase the airline flights online.

There are too many areas where a buyer needs skilled assistance, such as viewing and inspecting homes, negotiating the price and terms of sale, and most importantly coordinating the transaction with lenders, appraisers, inspectors, and others for online real estate buyers to simply click to buy a house. But, if it were ever possible for an online real estate buyer to simply click to purchase a house, then real estate agent might become extinct too.

*Actually, travel agents are not extinct, but their business has been greatly diminished. The ability of travelers to directly purchase flights online, and airlines stopping paying commissions on flights eliminated the vast majority of travel agents. There are still travel agents, but they provide niche services, such as putting together tour packages and otherwise add value beyond just connecting a traveler to an airline flight, hotel or rental car.
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"Oh my God, an honest real estate agent."

11-02-11
Melissa Ostrom & Melville Capps Newton MA - The Mel and Mel Team

Recently Melissa was working an open house, and was talking with people who stopped by. One couple was going over the listing brochure and they were asking questions about it. Melissa was explaining what the various items on it meant. She explained that there were two numbers on it that they needed to look at as they looked at homes to buy.


The first was the listing price, and the second was the assessed value. She explained that the assessed value was set by the city last December. She told them that they had to ask themselves, and the sellers, why the listing price was so much higher than the assessed value.


She explained there often are real reasons why the listing price may be much higher than the assessed value, such as increasing market prices (not really the case here), or the seller may have made improvements that were not reflected in the assessment. Their response was, "oh my God, an honest real estate agent." It is a sad commentary on our industry that their expectation was that real estate agents were going to lie to them.



Melville CappsMelville Capps

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Newton, MA multi-family residence market report October 2011 – Absorption Rate

10-31-11
Melissa Ostrom & Melville Capps Newton MA - The Mel and Mel Team
Newton, MA multi-family residence market report
October 2011 – Absorption Rate


On October 31st there were 34 multi-family residences listed for sale in Newton, MA according to the multiple listing service data (MLSPIN).

Absorption rate is a calculation of how many months of housing inventory are on the market based on historical rates of sale per month and the current housing inventory. What this tells us is how long it would take to sell all of the houses currently on the market if no new houses came on the market. This is useful as an indicator of the state of the market, and it constantly changes as new homes are listed and existing inventory is sold.

A Seller’s market is considered to be 1 to 4 months supply of housing
A Neutral market is considered to be 5 to 6 months supply of housing
A Buyer’s market is considered to be 7 or more months supply of housing
Let's look at the chart.

Newton, MA multi-family residence market report October 2011 – Absorption Rate

There has been very little change in the market during October. Six units entered the market. There have been three sales, and two units are under agreement - pending sale, so the market is essentially the same as it was in September.

From the chart we can see that the majority of multi-family residences in Newton MA are priced from the $400,000s through the $700,000s. The absorption rate shows that the market is slightly towards a buyer's market for the mid-range properties.

Some of these mid-range multi-family residences are greatly overpriced, and will not sell, and will likely get few, if any, offers. A few of them are in the right price range, but not for the condition they are in. These will sell if the sellers are willing to adjust their price to meet offers.

In summary, although multi-family residences are about a quarter of the total housing in Newton MA, they are less than ten percent of the current real estate market. They are mostly owned by investors, and do not reach the market as often as single-family residences or condos, so buy them when they are available.

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Newton, MA multi-family residence market report September 2011 – Absorption Rate

10-08-11
Melissa Ostrom & Melville Capps Newton MA - The Mel and Mel Team
Newton, MA multi-family residence market report September 2011 – Absorption Rate

On October 3rd there were 34 multi-family residences listed for sale in Newton, MA according to the multiple listing service data (MLSPIN).

Absorption rate is a calculation of how many months of housing inventory are on the market based on historical rates of sale per month and the current housing inventory. What this tells us is how long it would take to sell all of the houses currently on the market if no new houses came on the market. This is useful as an indicator of the state of the market, and it constantly changes as new homes are listed and existing inventory is sold.

A Seller’s market is considered to be 1 to 4 months supply of housing
A Neutral market is considered to be 5 to 6 months supply of housing
A Buyer’s market is considered to be 7 or more months supply of housing
Let's look at the chart.

Newton, MA multi-family residence market report September 2011 – Absorption Rate
From the chart we can see that the majority of multi-family residences in Newton MA are priced from the $400,000s through the $700,000s. The absorption rate shows that the market is slightly towards a buyer's market for the mid-range properties.

Some of these mid-range multi-family residences are greatly overpriced, and will not sell, and will likely get few, if any, offers. A few of them are in the right price range, but not for the condition they are in. These will sell if the sellers are willing to adjust their price to meet offers.

Of the five multi-family residences on the market, there are 2 with two-units, and 1 each with three, four, and five units. There are so few units in the price range of the $800,000s and above that the absorption rate is 12 months or more. For units over $1,000,000 there has not even been a sale in the last 12 months, so there is no absorption rate calculated. These multi-families will be bought by investors, if the rising rents in the area justify the prices.

In summary, although multi-family residences are about a quarter of the total housing in Newton MA, they are less than ten percent of the current real estate market. They are mostly owned by investors, and do not reach the market as often as single-family residences or condos, so buy them when they are available.

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Newton, MA condo market report September 2011 – Absorption Rate

10-06-11
Melissa Ostrom & Melville Capps Newton MA - The Mel and Mel Team
Newton, MA condo market report September 2011 – Absorption Rate

On October 3rd there were 135 condos listed for sale in Newton, MA according to the multiple listing service data (MLSPIN).

To review, the absorption rate is a calculation of how many months of housing inventory are on the market based on historical rates of sale per month and the current housing inventory. What this tells us is how long it would take to sell all of the houses currently on the market if no new houses came on the market. This is useful as an indicator of the state of the market.

A Seller’s market is considered to be 1 to 4 months supply of housing
A Neutral market is considered to be 5 to 6 months supply of housing
A Buyer’s market is considered to be 7 or more months supply of housing
Let's look at the chart.


From the chart we can see that the type of market we are in depends a lot on the price range of the condo. The chart breaks down sales and inventory by $100,000 price range. For September Newton is in a balanced market for condos priced under $600,000.

September sees a big increase in the number of new listings comming to market. This is a part of the normal cycle.

For condos in the $600,000s even though there are six more units on the market in September than in August, the absorption rate has dropped to make condos in this price range a seller's market.

For the higher range of condo prices between $700,000 and $1,000,000 the absorption rate has shifted even more towards a buyer's market.

For condos over $1,000,000 the absorption rate shows a slight shift towards a seller's market, but there are so few units on the market (5), and so few buyers at that price range, because of competition for single family homes, that it really is more of a balanced market.

In summary, there are new units on the market, and the well-maintained, properly priced condos will quickly sell. The others will hold over until the spring market. There is enough inventory for buyer’s to have many choices. The real estate market for Newton MA condos is good.




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