“Opportunity” seems like a sales pitch and I would argue that it is overused.
But. This looks like an actual opportunity for someone, and I am excited to share it.* By opportunity, I mean that this is an actual opportunity for someone to buy a home in Arlington when they feel like they may not be able to afford Arlington. So this is an opportunity for that client to live in Arlington instead being forced to choose a home in a location that they do not want, or that might not provide the overall lifestyle, commute, and financial benefit that they hope to achieve with their move.
How does my thinking get to here?
We use a market analysis tool that gives a visual guideline to pricing.
So this chart shows the sale price of each Arlington single family home over 2019-2020. There have been few closings so far this year, so using the beginning of 2019 gives us a clearer picture of a full market cycle.
When someone is on a budget of say…less than $600k, or less than $550k. It isn’t just that the quantity of homes in that price are limited. Homes that fall on the very bottom of a market in price raise concerns about why that is so. Are these homes simply “less expensive” than other homes because they are smaller or need new kitchens? Or is there something more undesirable about these homes that should cause concern. We actually call many of the homes in this lower market “tragically flawed”…and not an opportunity to improve a home and make money on a fixer upper.
What does the market look like switching to condominiums in Arlington? This is often the next step when the housing prices are a bit intimidating.
Arguably, this is not a complete picture for a buyer, but it does give a signal that $550k-600k could be a more reasonable price range.
For many of our clients, the condominium that they hope to buy is a two bedroom unit with two parking and some outdoor space. This is often the first floor unit of a two family house. Often in East Arlington with easy transportation to Cambridge.
What would the prices for that type of unit be? This is where we can turn the general market context toward the expectation and pricing of a particular property.
Would this information help a client is their home search and help them make an informed decision about pricing?
What can we get from this chart? While that two bedroom East Arlington unit is very popular, this says there were 14 of them sold from the beginning of 2019 through the first week of June 2020. Wow. That isn’t very many. No wonder people bid fiercely for them. (And they do. An average of 6% above asking price for these properties and as high as 17% above the asking price.)
How do we use this with clients? Looking across this data set we would first say, there aren’t very many of these. On the high end, there are three properties past that upper inflection point. Are those units special enough to warrant that price? Sometimes they are. Sometimes, perhaps, someone overpaid. It is worth paying attention to sale prices that are a bit of outliers.
Arguably, more important, is to look at the outliers on the lower end. There are two properties with prices substantially below the others. Why was that? Is there something to be concerned about with buying these properties?
In this case, one of them had a substantial amount of its living area in the basement. Not just an “additional family room or office”, but the two bedrooms of the unit were in the basement. This is not the norm in Arlington, and the price should (and does) reflect that.
The other unit that sold for less than $500k was not a traditional “five room unit” like the others. These units follow a pretty standard floor plan in many cases with a living room, dining room, and kitchen down one side of the unit and the bedrooms and bathroom on the otherside. There are many renovations and variations that contribute to living style and pricing…but those are the basics and those two units are clearly substandard compared to the others.
Why do we emphasize the context of pricing? The value of a piece of real estate is determined by “the market for that property”. As a single buyer, you will establish the sale price for your property. You have the chance to establish the sale price, at higher than the market value. That sounds like something that you would best avoid doing.
Buy doing all that you can to understand the market for this specific property. The one that you are hoping to own. The one that you are tying what might be your life savings to. The one that you will be looking to sell someday to move on to the next step in your life. We argue that it is crucial to understand how that future market will perceive the value of your property.
So when a unit in a location that is relatively “East” Arlington came on the market this week for $489k, I noticed immediately.
After checking for any obvious issues…is there really two parking? Not tandem with your neighbor? Is it in a flood zone? On a busy street? Next to something unpleasant….industrial or commercial space?
This unit seems completely fine, but in need of updating compared to other units.
The unit might not represent the lifestyle that you envision in your new home, but you aren’t buying this look. You are buying the location and utility (two bedrooms and parking). That provides your lifestyle. Your paint and furnishings will make it feel like your home.
So. $489k? This is an outright opportunity for someone. There is nothing wrong with this unit. There is no reason for the price to be in this range.
Could it be had for less than $550k? Or $600k?
Bidding is fierce in Arlington. But there seems to be every indication that this unit might represent a true opportunity for someone to live in Arlington who believes that they cannot.
This unit could mean the difference between continuing to rent or to be in the “wrong location” for you….and starting your Arlington lifestyle in your own home.
These opportunities excite me.
If you or someone you know is looking for this opportunity, reach out right away. These things fly off the shelf. And this one looks like the best opportunity in over a year.
Does the idea of using data to understand a market and pricing appeal you?
We believe the work that we do with clients provides tens and hundreds of thousands of dollars in value and experience for our clients and their real estate decisions. How may we help you?
*Listing presented through MLS by Bowes Real Living