A ghost has arisen on the empty lots of the Massachusetts suburbs. The phantom: The spec home, a visitor whose presence has not been sighted on the Massachusetts housing market scene for almost five years.
“I’m going say, this year compared to last year, I’ve sold over twice as much new construction,” said Nelson Matos, president of RE/MAX Welcome Home in Taunton. “I’ve done one or two custom homes, but most everything else is spec. This year, I sold about half of them before they were even finished. Once the frame is up, people want to tie it up.”
It’s hard to precisely track new home sales in Massachusetts, since many new homes go up on land that once held older properties. But according to the latest Census figures, building permits for single-family homes are up 19.4 percent over last year through September, to 3,895 new single family units.
And realtors are feeling the difference. Lenny Harris, an agent with Keller Williams, said he’s seeing it pop up all over the MetroWest market he serves.
“I’ve been seeing builders and investors coming back and crossing our path since the end of last year. It’s been very steady,” he explained. “I’ve got builders right now – four or five of them – that are actively looking for land.”
It’s giving him flashbacks to the last big building boom in Boston during the 1980s. “We’ve been chasing stuff down, and we’re not alone, because we’ve been losing out on properties – there are people out here looking to do the same thing,” he said.
Upper-End Sales
Most Realtors started to see the market on new houses move last spring.
“I worked with a buyer this past year who was looking for newer homes,” said Pam Cote, an agent with RE/MAX Advantage RE in Beverly. “A couple of the homes had been on the market for almost a year. And when my buyer decided to make an offer on the first home, all of a sudden it went under agreement, and when he decided to make an offer on a second home, all of a sudden that one went under agreement. Finally, he went back to a home in Boxford that was new construction and that had been on the market for a while and they bought that.”
That kind of activity can be enough to get the market moving. “It helps buyers to realize you snooze, you lose,” Cote said.
Certainly it appears to have been enough to get builders building. Spec homes are now appearing at all price levels. While Matos was seeing activity between $300,000 and $500,000, the upper end of the market is also covered.
Debi Benoit, co/broker owner of Benoit Mizner Simon in Wellesley, said “There’s a lot of new construction around for sure. I’ve sold several this year at $2.5 [million] and up. It’s very popular, because the builders are around and if you want changes, the builder’s there to do that.
“When they pay a certain dollar amount, they want what they want,” she laughed.
But agents shouldn’t expect a huge wave of new developments this spring: Financing remains too tight. Though one of the builders Harris is working with is looking for a couple of hundred acres to develop, “the majority of my guys are looking for onesies, twosies that they can pick up.”
“Because of the way the [underwriting] has changed, anything more than four units, they end up having to put much more of their cash into it. The banks look for the builder to come up with a lot more money. Whereas if they’re doing one at a time or something they can probably figure out a way to finance the whole thing, which is something they’re looking to do,” he said.
Email: csullivan@thewarrengroup.com
