TARIN PATRICK
‘Sticker shock’ common
In the wake of mergers and acquisitions that have altered the home bases of once-local companies like Gillette, FleetBoston Financial Corp. and John Hancock Financial Services, much attention has focused recently on the anticipated job losses and exodus of high-level executive positions from Massachusetts, the only state to lose population in 2004, according to the U.S. Census Bureau.
But major real estate companies that help corporations relocate employees into the Bay State report that the traffic is not all flowing in one direction. Companies like Coldwell Banker Residential Brokerage and Jack Conway & Co. are reporting an increase in the volume of corporate employees who are moving to Massachusetts by as much as 20 percent. A significant portion of those transferees are corporate executives and leaders who are purchasing high-end homes.
“I can tell you we’re busier than we were last year,” said Tarin Patrick, who as vice president of client service for Coldwell Banker Residential Brokerage works directly with the firm’s corporate clients to design and implement their relocation programs.
Coldwell Banker’s incoming relocation transactions increased more than 20 percent in 2004 compared to the prior year. And relocation represented 20 percent of all of the company’s $1 million-plus transactions in 2004, when a total of 1,518 luxury properties priced at $1 million or more were closed in Coldwell Banker’s New England footprint.
Specialists who work in corporate relocation say many of the higher-end buyers are coming to the Greater Boston area from states like New York, Connecticut, New Jersey and California. The banking, financial services, insurance, pharmaceutical, biotechnology and life sciences industries are fueling relocation activity in Massachusetts.
The Boston area has been among the top 10 most active metropolitan areas in the country in terms of people moving into and out of the area. According to the American Moving and Storage Association, Boston ranked seventh – behind metro areas like San Diego and Dallas – with a total of 18,246 inbound and outbound moves in 2003, the latest year for which statistics are available. Nearly 41 percent of those moves involved people moving into the area.
Affluent communities like Brookline, Newton, Wellesley, Weston, Concord, Lexington and Dover are popular destinations for higher-end buyers moving to Massachusetts, while buyers without children often seek homes in Cambridge and Boston’s Back Bay and Beacon Hill neighborhoods, according to real estate agents.
Yet, even though they’re considered luxury buyers, many business executives are still surprised by the high prices once they start searching for a home in the region, particularly if they’re coming from the Midwest and South where home costs are generally lower.
Unless buyers are coming from northern or southern California or Connecticut’s Fairfield County, where homes prices mirror or exceed those in Greater Boston, many house-hunters quickly discover that they need to spend a lot more to duplicate the 6,000-square-foot house that they’re leaving behind.
“They do experience a certain degree of sticker shock,” Patrick said.
As a result, some buyers end up modifying their search criteria and purchase a smaller home in a desired town, while others expand their search into surrounding towns like Wayland, Sudbury or suburbs in the MetroWest or south of Boston, according to real estate agents.
Considerations and Compromise
Susan Haigh, a certified relocation professional with Conway Relocation Co., the corporate services division for Jack Conway & Co., said most luxury-home buyers have done research online or have talked to colleagues and have specific communities in mind before they begin house hunting.
About 10 percent to 15 percent of the relocation activity that Jack Conway handles falls into the high-end category, according to Maureen McCaffrey, president of Conway Relocation Co.
The company experienced a 35 percent increase in dollar volume from incoming relocation last year compared to 2003, said McCaffrey, which translates into about a 20 percent jump in the total number of sales transactions.
“Last year was the best year we’ve had in relocation,” said McCaffrey.
So far, Jack Conway’s relocation activity in the first quarter of 2005 is about the same as last year’s first quarter.
“We’re still as busy as we were last year,” said Haigh.
Haigh has noticed that for buyers who enjoy the ocean, particularly those from the West Coast, Duxbury, Hingham and Cohasset are common relocation choices, while single homebuyers and those without children prefer Boston’s Back Bay, Beacon Hill and Charlestown neighborhoods.
Despite doing initial research on the housing market, out-of-state buyers often find that the properties and amenities they desire cost between 10 percent and 30 percent more than they thought, said Haigh.
“They think they know what they’re going to face and think that their dollars will buy them a certain amount of space,” she said. Even so, buyers still can run into surprises as a result of Greater Boston’s high housing prices.
Haigh has noticed that luxury-home buyers will often bump up their initial maximum price range in order to purchase the home they really want. However, some who are priced out of certain communities choose to expand their searches to towns like Westwood and Canton. Those communities feature larger newly built homes at more affordable rates.
Still, Haigh said that high-end buyers represent only one segment of the relocation market.
Those searching for homes in the $500,000 price range are driving relocation, according to Haigh, and for those buyers there are plenty of available properties in the southern region of the state.
“That’s what keeps our market churning,” she said.
Schools, commute times to work and proximity to cities like Boston and Cambridge, where many major employers are located, are of primary concern to most homebuyers relocating to Massachusetts.
Patrick, of Coldwell Banker, said buyers who have to move often because of their work want to make sure they’re moving into a community where home values will appreciate, so many of them select towns with well-regarded school systems even if they don’t have children.
“The school systems play a large role” in whether a community retains its home values, he said.
Nora Lynch, an agent at Carlson GMAC Real Estate in Natick who says half of her business comes from relocation activity, has worked with clients from Minnesota, Illinois and even international buyers from Europe and Australia.
Recently she worked with an American couple with two elementary school-aged sons who were relocating from Europe to Massachusetts because the husband had a new job at a medical devices company. The wife had done a lot of research on school systems and Lynch helped them search in a wide variety of communities. But since schools were such a critical factor to the family, the couple ended up purchasing a home in Sudbury that was priced at more than $1 million.
“The schools were really important to her,” she said.
Lynch has noticed that Hopkinton is becoming a more sought-after community because the town’s school facilities and neighborhoods are attractive. The town also features newly constructed homes with more living space.
“[Some buyers] are willing to sacrifice on the commute time to have more of a house,” she said.
Aglaia Pikounis may be reached at apikounis@thewarrengroup.com.
