July 20, 2008
Part II: Million Dollar Markdowns coming to a neighborhood near you?
Follow-up to Part I: Housing slump hits Cambridge: 1 in 3 single family homes selling below assessed value
As graphed in the blog post above, homes selling below assessed value are increasingly common, but what was newsworthy about the Boston Globe's story last week is the magnitude of how far below. During the first six months of 2008, two homes in Cambridge sold for approximately $2 million below their original asking price. More significantly, both sold for more than $1 million below their assessed value based on our analysis of MLS data shown below.
Can you guess the address of these two properties in Cambridge?
Original asking price: $5,300,000
List price before offer accepted: $3,700,000
Price reduction Original vs list price: $1,600,000
Final sales price: $3,100,000
Price reduction below last asking price: $600,000
$2,200,000 Savings vs original asking price
% Savings vs original asking price: 42%
Assessed value: $4,122,100 (2007)
Saved vs assessed value: $1,022,100
Sales price / town assessment: 75%
% below assessed value: 25%
Guess how many days on market?
Are you seeing Million Dollar Markdowns in your local housing, elsewhere in Massachusetts, the US (or world)?
Original asking price: $5,500,000
List price before offer accepted: $3,995,000
Price reduction Original vs list price: $1,505,000
Final sales price: $3,650,000
Price reduction below last asking price: $345,000
Savings vs original asking price: $1,850,000
% Savings vs original asking price: 34%
Assessed value: $4,917,400 (2008)
Saved vs assessed value: $1,267,400
Sales price / town assessment: 74%
% below assessed value: 26%
Guess how many days on market?
As reported by the Boston Globe, The Real Estate Cafe has monitored "Million Dollar Markdowns" -- luxury homes which have sold at least $1 million below their original asking price -- on and offer during the past. See links in blog posts from 2007: Sweetest Deals of 2006 and MIT Professor: Housing prices could decline another 20%.
As McMansions become less desirable and the housing market drags the economy in recession, do you think "Million Dollar Markdowns" will become more common in your local housing market? Are owners already putting them on the market now to minimize their losses? Will the expiration of estate tax cuts enacted in 2001 cause the luxury housing market to collapse, or will Congress and the new president extend the tax cuts permanently?
July 15, 2008
Part I: Housing slump hits Cambridge: 1 in 3 single family homes selling below assessed value
Part I: On Sunday, July 13, 2008, the Boston Globe published a lead story in City Weekly entitled, In real estate sales, not all cities are equal.
A blog post earlier today by Redfin stated that "several single-family houses sold for less than the assessed value" in Cambridge, but the magnitude of the price correction underway is far more substantial. As shown in the graph above, approximately one in three single family homes sold below their assessed value in Cambridge during the first six months of the past two years. (The Real Estate Cafe's analysis was limited to the first two quarters of each year because we assume that a higher percentage of homes sell below assessed value during the second half of each year.)
The Real Estate Cafe first began tracking sales below assessed value during the first quarter of 2006; and by September 7, 2006, our research was featured in a Boston Globe story entitled, "Priced below assessment." Contrary to Redfin's assertion that "a house would have to be ravaged by fire" to sell below assessed value, a map in the Globe story revealed that 37% of the single family homes sold in Brookline were below assessed value, compared to 22% of the single family homes sold in Cambridge at the time. (Click for sample of the homes selling below assessed value in Brookline in the past.)
Two years ago today, our first user added their own examples of falling house prices to our interactive real estate bubble map. Inman News also featured our map in a mini-series on Real Estate 2.0 innovations, and we need your financial support to attend their real estate technology conference next week to continue our 15 year tradition of helping real estate consumers save money.
Preview of Part II: Homes selling below assessed value has clearly become more commonplace, but what was newsworthy about the Globe's recent story is the magnitude of how far below assessed value: During the first six months of 2008, two homes in Cambridge sold for approximately $2 million below their original asking price; and more significantly, more than $1 million below their assessed value (based on our analysis of MLS data. Watch for more details this week.