Mixed signals: Million dollar teardowns back but luxury listings up?

Luxury Towers rising in Boston

Trying to make sense of the luxury housing market in Massachusetts?  So are we.  Luxury condo towers are being reborn in downtown Boston, and million dollar teardowns — not seen since the Dot.com bubble created millions in paper wealth — are back in some communities.  But in others, the inventory of luxury single-family homes is up.  In Hingham, for example, the Boston Globe reported 14 homes priced between $1.5 and $2 million today, or more than double the six listings this time last year.  Seems out of line with yet another headline, proclaiming “High demand, low supply driving up housing prices;” but it’s consistent with our earlier snapshot of “What’s really happening with luxury single-family homes across Massachusetts?

So, has the housing market overall reached a “Tipping Point,” as the president of the Massachusetts Association of Realtor said this week?  Here’s our comment on one of the 40+ responses to that question yesterday on Boston.com:

BOSTON.COM READER:

Long time listener, first time caller. We bought in a “W” town last fall. Nice neighborhood, full of nice houses. We paid 1.3ish for a house that was listed at 1.5ish and sat from April till our purchase in November. I think we paid a reasonable price and may or may not have gotten a “deal”. I think the seller had the place listed too high initially and was stubborn on price through the Spring and Summer last year. However, I am certain that it would have sold at full ask this Spring. It has been very busy in the neighborhhod. Houses are selling very quickly. The most frightening thing is that 2 places similar to ours went under agreement before open house only to be torn down. I’d like to think I do okay for myself, and I’m certainly not overextended, but I’m not in the league that buys 1MM plus houses to tear them down. I’m just one guy, but from where I’m sitting you don’t even need a nice house to get a quick sale, you just need a nice lot in a nice town.

OUR RESPONSE:  @DearReader Generally, we prefer hard data over anecdotes, but your observations are important and disturbing as they point to the go-go Dot.com days about 12-14 years ago, when paper wealth not only generated the kind of million dollar teardowns you describe, but in places like Lincoln and Cambridge, people bought abutting lots and tore down the existing home to enhance the “privacy value” of their new McMansions.

If your neighbors have the wealth to enjoy their new homes as and end in themselves, good for them; but they should be cautious of resale value at some point in the future. Our snap shot of MLS listings early this Spring showed an oversupply of the luxury housing:

http://bit.ly/LuxLies Please share this tiny URL

Thankfully, one of the two real estate stories published in local editions of the Boston Globe makes a similar observation:

“There were no houses priced at $2.5 to $3 million in Hingham, compared with three a year ago, …However, there are more homes priced between $1.5 and $2 million — 14 now compared with six a year ago…”

http://bit.ly/LuxGlut Please share this tiny URL

Wonder if the Globe will to do their fourth real estate story on page one since March 1, asking “Why are some luxury suburban homes being left behind in the current surge of demand?”

Posted in Bidding wars, Bubble Hour, Buyer agent, Housing bubble, Luxury buyer agent, Luxury homes, Million Dollar Markdowns, Real Estate Bubble, Timing the market

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