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Richard C. Lee's Blog

By Rich Lee | Agent in Boston, MA
  • Investment Analysis of Somerville, MA Multifamily Income Properties

    Posted Under: Market Conditions in Somerville, Home Buying in Somerville, Home Selling in Somerville  |  August 8, 2011 4:12 PM  |  1,878 views  |  No comments
  • Somerville, MA 3 Unit Multifamily Gross Rent Multiplier Up

    Posted Under: Market Conditions in Somerville, Home Buying in Somerville, Home Selling in Somerville  |  May 30, 2011 5:58 PM  |  836 views  |  No comments

    Somerville, MA 3 unit multifamily income property gross rent multipliers have been on the decline since the boom until this year when they look like they are on the rise.

    Somerville, MA 3 Family House Gross Rent MultiplierSomerville, MA 3 Family House Gross Rent Multiplier

    Investors need to know cap rates and gross rent multipliers (GRM) in addition to the pricing levels I presented in a post last week. Accurate cap rates are difficult to come by for 3 unit multifamily houses, typically triple deckers, but I can get GRM's. Somerville triple decker GRM's have been declining from a high of 14.9 back in 2006 to a recent low of 10.4 in 2010. The average GRM have seen a spike back up to 12.2 so far during 2011.

    Somerville, MA 3 Family House Average RentSomerville, MA 3 Family House Average Rent

    That's partly driven by a dip in average rents falling to $1,219 during 2011 through April from $1,389 during 2010. Investor have also drive average sale prices up a bit. However, MLSPIN has only provided 18 data points so far and I suspect that the average rent figure will rise as I get more data.

    Data in this post is based on information provided to and compiled by MLS Property Information Network, Inc.

  • Somerville, MA 3 Unit Multifamily Sales Up

    Posted Under: Market Conditions in Somerville, Home Buying in Somerville, Home Selling in Somerville  |  May 21, 2011 7:01 PM  |  726 views  |  No comments

    Somerville, MA 3 unit multifamily income property sales are up for the first third of 2011 compared to last year.

    Somerville, MA 3 Family House Sales & Average Sale Price YTD Through AprilSomerville, MA 3 Family House Sales & Average Sale Price YTD Through April

    Sales levels for 3 unit multifamily houses, typically triple deckers, have risen to 14 sales through April 2011 from 10 sales a year ago.  The average sale price through April 2011 is $537,429.   The average sale price is higher than last year but down significantly from 2005 when it was $664,267.  The sale price to list price ratio is at 0.96.

    Investors should stay tuned for my next post about gross rent multipliers and average rents for Somerville triple deckers.

    Data in this post is based on information provided to and compiled by MLS Property Information Network, Inc.

  • Top 5 MA Cities with Largest Increase in Triple Decker Prices

    Posted Under: Market Conditions in Somerville, Home Buying in Somerville, Home Selling in Somerville  |  January 25, 2011 5:42 AM  |  547 views  |  No comments

    Triple Deckers

    The full year 2010 numbers for multifamily sales figures reveal the top 5 Massachusetts Cities with the largest 10 year percentage increase in triple decker prices.  Data in this post is based on information provided to and compiled by MLS Property Information Network, Inc.

    CityAverage Sale Price Increase - 10 YearAverage Sale Price Increase - 5 YearAverage Sale Price Increase - 1 Year
    Somerville, MA141.6%81.9%112.2%
    Quincy, MA141.3%83.1%111.8%
    Boston, MA140.0%66.6%122.3%
    Medford, MA134.2%83.9%104.1%
    Lowell, MA129.9%55.8%102.0%

    The average sale price for a Somerville triple decker, aka 3 unit multifamily house, was $404,035 in 2000.  That figure rose to an average of $571,945 in 2010, which was an increase of 141.6%.  Over that time, the owner of the triple decker would have also collected rent and possibly paid off some of the principal if he had a mortgage.  Are you thinking "decent investment?"

    However, note that the average buyer would have lost equity in their triple decker if they purchased one in 2005 and still held it in 2010.  Multifamily income property investment is a long term investment.

    The figures above only include cities and towns in Massachusetts that had at least 10 3 unit multifamily sales in each year that I examined, which were 2010, 2005, and 2000.

  • When Is the Best Season To Buy A Home?

    Posted Under: Market Conditions in Somerville, Home Buying in Somerville  |  December 3, 2010 10:02 AM  |  566 views  |  No comments

    In Somerville, MA, the best season to buy a single family home, based on price, is Winter.  Keep reading to see the numbers.  All data in this post is based on information provided to and compiled by MLS Property Information Network, Inc. (MLSPIN) and extracted on November 28, 2010.  All 2010 numbers are year-to-date.

    Somerville, MA Single Family House Average Price by SeasonSomerville, MA Single Family House Average Price by Season

    The chart above shows the aggregated average price of a single family house in Somerville by season.  Each year has its own color.  The season with the lowest aggregate is the one with the historically lowest price.  We can see that Winter is typically the season with the lowest prices.  However, the issue with this chart is that we are not measuring in inflation adjusted prices so that the more recent data has greater weight in this chart than it should.  The chart below addresses this issue.

    Somerville, MA Single Family House Average Price by Season (Inflation Adjusted to 2010 Dollars)Somerville, MA Single Family House Average Price by Season (Inflation Adjusted to 2010 Dollars)

    I retrieved annual inflation data from http://www.inflationdata.com/inflation/ and adjusted the data so that all years have average prices in 2010 dollars.  This chart has an even greater difference between average Winter prices and average Summer and Fall prices for single family houses in Somerville.

    What does this information mean for you?  The best time for you to buy a single family house in Somerville is to search during the Fall and close during the Winter with all other things equal.  The best time to sell a single family house in Somerville is to list during the Spring or Summer and sell by Summer or Fall with all other things equal.  The reason I state that all other things are equal is because other factors also affect prices.  These days, one big factor affecting prices is the number of foreclosures taking place.  If your local market has a lot of foreclosures this Spring, it might be a good time to buy and bad time to sell.

    When is the best time to sell in your local market?  What other factors do you want to consider?  Ask Rich today.

  • Multi-Family Market Comparison Between Lynn & Somerville

    Posted Under: Market Conditions in Somerville  |  October 30, 2010 7:28 PM  |  497 views  |  No comments

    Today, I'll show you the multi-family market in two cities!  I'll compare Somerville toLynn.  These two cities are among Massachusett's denser areas and have lots of multi-family dwellings.  The economy and demographics of these two cities, however, cannot be more dissimilar.  Let's see how each has fared over the last 10 years.  All data in this post, unless other specified, is based on information provided to and compiled by MLS Property Information Network, Inc. (MLSPIN) covering the period Jan. 2001 through Sept. 2010.

    First, let's look at the average sales price and number of sales.

    Lynn, MA Multi-Family Sales from Jan. to Sept.Lynn, MA Multi-Family Sales from Jan. to Sept.
    Somerville, MA Multi-Family Sales from Jan. to Sept.Somerville, MA Multi-Family Sales from Jan. to Sept.

    Both Lynn's & Somerville's average sales price and number of sales peaked in 2005.  At the peak, Lynn's average sales price was 170% higher than the average sales price of 2001.  At the peak, Somerville's average sales price was 136% higher than the average sales price of 2001.  Somerville's prices did not spike as high but they also didn't fall as far either.  Somerville's average 2010 sales price is 83% of the peak average sales price.  Lynn's average 2010 sales price is a painful 47% of the peak average sales price.

    On the flip side, since Lynn had such a drastic fall in average sales price from the peak, the sales volume in Lynn picked up from a recent low of 103 sales in 2007.  Somerville did not see a similar spike in sales.  From what I'm seeing in Lynn, investors have flocked to Lynn to snap up multi-families since they can get good returns on their investments there.

    Next, let's look at how long properties are sitting on the market.

    Lynn, MA Days on Market from Jan. to Sept.Lynn, MA Days on Market from Jan. to Sept.
    Somerville, MA Days on Market from Jan. to Sept.Somerville, MA Days on Market from Jan. to Sept.

    Interestingly, the average days on market are not all that different between Lynn & Somerville.  Lynn did see a larger increase in average days on market after the peak but the average has fallen back in line with Somerville's average days on market.

    Finally, let's take a look at foreclosures.  Foreclosures affect home prices and can be multi-family or single family.  The following data is from RealtyTrac.com.  1 in every 384 housing units in Lynn received a foreclosure filing in Sept. 2010.  In comparison, Somerville only had 1 in every 1,610 housing units received a foreclosure filing in Sept. 2010.  This factor likely contributed to Lynn's crash in multi-family housing prices.

    Are you an investor?  Where would you invest?

 
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