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How will your Berkshire property value fare in 2015 and beyond?
Paul Harsch On: 01:03PM / Sunday January 18, 2015
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Berkshire property valuation is a daily task of Berkshire real estate agents.  The Berkshire home seller first wants to know "how much is my property worth"?  And that brings me to one of the most common laws of physics.

Newton's law of motion states that a body in motion tends to remain in motion unless acted upon by another force e.g. gravity, friction, etc.

This same rule applies to the value of Berkshire real estate. Rising values, a state most sellers had come to more or less "accept" as a given in real estate through 2007, sometimes rising faster and sometimes slower, gave way suddenly to massive systemic reversal.

My own real estate career began in 1975 and from that time until the early 2000s we could pretty much count on an average rate of appreciation here in the Berkshires over the years of around 5 percent.  What accounted for this reliable pace?  Inflation, the general rise in prices of goods and services in the nation's economy.

Following the horrific events of 9/11 the economy took a nosedive and the FED stepped in with historically low interest rates which naturally are favorable to borrowing money which is what feeds in large measure the real estate markets as the vast majority of buyers take out mortgages.  The very low rates as well as very low down payment loans and lenient lending standards helped build momentum for a recovering economy and the dramatic rise in real estate prices that peaked in '07 in what was a classic bubble.

This happy scenario was inevitably followed by the downside of foreclosures and tumbling prices to where we are today, at roughly 35 percent off the peak in this region.

We read in the media of the real estate recovery and to be sure, parts of the country have definitely experienced some notable reversals of fortune such as San Francisco, Seattle, Portland, Manhattan, Miami, and even Boston in the Northeast.

In the Berkshires we have some forces at play that act as headwinds to a stronger recovery and which have been slowing the momentum of prices.  Not only has inflation been muted as in energy for example but we still face the headwinds of falling population and declining employment, more acute in central and northern Berkshire County but the southern sector has by no means been immune.

Besides the economic and demographic headwinds which have added inventory (supply) and reduced demand there is one other really crucial element to value that is often overlooked by many sellers namely depreciation.

When demand was high, anything could and did sell simply because there were more buyers than homes.  Today the opposite is true; inventory far exceeds the demand for housing so unless a property stands above the competition its chances of selling are far less favorable.

How does a property excel?  Obviously location is vital however even that can be hindered if the seller has lived in the home any length of time without maintaining and updating the property. Dated properties are much less attractive to young buyers. 

Buyers today have so many choices and will naturally choose an updated home when all else is equal.  Updates desired include kitchens, baths, updated heating systems, energy saving appliances and construction, homes in "move in now" condition. 

Tired, outdated, and out of style homes have significantly lower market appeal and as such will inevitably remain longer on the market without some counterbalancing steps being taken.  These would include either correcting the defects or lowering the price to be more competitive.

Unlike antique cars for example which derive their increasing value with time and scarcity, the older a home becomes the more it depreciates in value.  With renovations and updating some of the impact of natural depreciation can be offset but of course that also involves an investment of more time and expense to the seller.

Sellers of anything but new homes need to heed the advice of their real estate agents who are qualified to price a "used home". These sellers may have loved and enjoyed the home for years and have difficulty separating themselves emotionally when it comes to pricing.  Buyers don't have the emotional attachment.  Just like pricing cars on a used car lot, it is essential that the home be priced relative to other homes that have recently sold and which offered similar age, qualities and features.

For 2015 and the foreseeable future it does not appear likely that inflation will return, that demand will outpace supply or that employment will return to the area in significant numbers.  As such any home that is 4,7,15, 30+  years old cannot by the law of economics increase in value without offsetting repairs and substantial updating.

If you want to fly, there is no sense in ignoring the law of gravity and if you want to buy or sell real estate, best to keep the law of real estate market value equally in mind.



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Be A Contrarian
Paul Harsch On: 04:59PM / Thursday January 01, 2015
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Williamstown MA housing marketFollowing "conventional thinking" definitely has its merits.  Knowing others have gone before you is comforting and therefore they can't ALL be wrong.  Right?  Not necessarily.  In fact once the crowd hops onto a trend in the stock market, that is frequently a sign of a top in that market and thus those who jumped late on the band wagon will be the biggest losers.

Do you remember 2005, 2006 or even 2007?  Real estate was everyone's darling and buyers were piling on top of each other, putting in competing bids and selling prices were often over listing prices particularly in the really hot markets.

Those who jumped into real estate in those years have found the rug and the floor pulled out from under them and if they had to sell, significant losses have often been the result. Values fell 30 percent from the very peak and anyone with less than that in equity (over an mortgage they may have taken to purchase) has had their equity wiped out.  Not a happy condition.  We have all read the stories of the sub-prime lending that was rampant and home buyers who bought with such mortgages lost their equity and the lenders also took a loss. However the buyers typically had virtually no dollar investment to begin with.

So, now the majority of buyers are holding back.  What is the Contrarian approach in this market?  That should be clear.  Taking a Contrarian approach now could prove to be the very best opportunity to purchase a home we may see for years to come.

With steady economic indicators showing improvement in the employment numbers and hints of inflation in some parts of the economy (food yes, fuel no) it is pretty widely accepted that the Fed will begin raising rates this year and of course that means the cost of financing a home will rise.

Real estate prices have already started to rise in some markets and thus this rise in prices  could trickle up to the Berkshires in due course.  If you are contemplating purchasing I would think seriously about acting sooner than later so I could not only benefit by current soft housing prices but also pick up a long term mortgage at what may prove in 6-8 months to be historically low rates.

Being a Contrarian can definitely be a bit scary but often the most beneficial course of action.

Best Wishes for a Prosperous 2015

Paul Harsch

 

 

 

 

 

 



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Come Home to the Berkshires | Berkshire County, Mass.
By Paul Harsch On: 02:13PM / Saturday August 30, 2014
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Traveling the world is exciting ... and exhausting, too.

Spending vacations at the beach is fun ... but then there is the sunburn.

Skiing in Colorado is thrilling ... but when the snow melts what else to you do?

Arizona is hot and dry and sunny ALL the time ... enough said.

Florida is great for the winter months but year around?  Oh my.

Home, yes, that is what the Berkshires are for.  And these are the reasons why:

The Berkshires are about crisp fall days of spectacular color followed by cool fall evenings and the wonderful aroma of fallen leaves.

The Berkshires are about fresh fallen snow blanketing everything in silence and turning everything it touches into a silhouette of pure magical white.

The Berkshires are about the brittle cold of winter made perfect in front of a blazing fireplace for snuggling inside with hot chocolate or mulled cider and your favorite book.

The Berkshires are about the exuberance of spring when it finally arrives and the joy of seeing the new shoots of green breaking ground, the sounds of the first spring birds joyously returning to start new families of their own, the first night of frogs singing in the ponds, the rich aroma of spring rains...

Then our summers, hot days, swimming in our pristine lakes or under a waterfall, boating, tennis, golf, gardening, hiking and sipping iced tea in the long afternoons.

The Berkshires are about the theater and art venues so plentiful here and lacking in  all those other locations.  Where on earth is there so much to see and do, to hear and be engaged in that stimulated the senses and intellect?

Where else but in towns like Lenox or Stockbridge can one get from home to an extraordinary experience like Tanglewood in such ease, no traffic (except at the gate itself)?

Where else can you virtually step from your home in Great Barrington or Williamstown onto trails in minutes that take you to breathtaking views?

Where else but towns like Monterey or Sandisfield, Otis or Becket can you live right on the lake of your dreams and yet be just minutes away from fine dining, winter skiing and the theater?

Where else but in Williamstown can you take classes at the top rated college in the U.S. in the morning, [play a round of golf on one of the top rated courses in the east, attend award-winning theater in the evening following a fabulous meal including farm to table local produce and cheeses and all within a short stroll or 3-minute car trip?

Nowhere else can you find living like in the Berkshires!  Isn't it time you called the Berkshires home?



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For Sale By Owner: Homes for sale in the Berkshires
Paul Harsch On: 01:17PM / Wednesday August 20, 2014
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WHY do I need a Berkshire real estate agent to sell my Berkshire County home? 

How often have you heard these next statements.  Real estate agents don't do anything that I cannot do myself. Real estate agents don't do anything but get you to sign a listing form and then forget about you.  You never hear from them after you sign the paper.  I can save myself loads of money buy selling my Berkshires home myself.

How many times have you heard friends and family say this when they are considering selling a Berkshires property? I am betting more times than you can count on one hand. 

Selling your property online on Craig's list or through an assist to sell "for sale by owner agency" or a FSBO website for a small fee that covers putting the property in the local MLS sounds like a great bargain doesn't it? 

How hard can it be? So you have made the decision now to sell it your self.  Now comes the serious part.   Keeping your Pittsfield Real Estate FSBO house spotless (ongoing), fielding inquiry calls, separating the "nosy lookers" from the actual "qualified buyers", arranging your schedule to show your home between picking up the kids, going work and dropping off the dog at the vet. 

And if that doesn't put a damper on your enthusiasm for selling your Williamstown property yourself consider this, how good are you are negotiating, when was the last time you had your home appraised by a professional home appraiser, how many bank loan officers do you know, how much should you allow for the roof that is 11 years old and the basement that floods once a year in the spring.  Can you prepare a professional counter offer when you get the initial offer. 

What are the laws concerning real estate transactions in your state.  What fees are you responsible for and what fees is the buyer responsible for.  What disclosures are you legally responsible for providing a buyer with?How many websites will you be able to put your for sale by owner property on?  How often will you be able to monitor the hits and field the inquiries from buyers on those websites?  How will you attract the attention of local Real Estate Brokers, and professional Real Estate Agents so they know your home is on the market. 

How much of a commission will you offer these professionals to bring buyers to your home?  And if you don't offer a commission, why should they bring you a buyer?

Do you know what kinds of legal protections you need related to contracts in Masssachusetts with purchase/sale clauses.  How will you know a good offer from a great one?  These questions are one of the reason that more people are choosing professional real estate brokers and agents to handle their real estate needs.

In fact the number of people selling their home without the help of a real estate professional plummeted in 2009. Today's challenging marketplace favors the buyers.  Buyers are taking their time and exercising extreme caution when investing in home ownership. Buyers often come with a representative who is a professional Realtor. 

 This professional protects the interest of the buyer and is aware of all the rules we listed above and you can bet the farm that they will cover all bases before they advise their client to make an offer.  What professional is protecting your best interests?

"Selling a home is a full-time job," said National Association of Realtors® (NAR) president Vicki Cox Golder in 2010. "Unrepresented sellers often don't understand the complexity, range and timing of tasks they'll have to perform. In this competitive market, sellers need every advantage they can get."

According to the National Association of Realtor's  2009 Profile of Home Buyers and Sellers, "for-sale-by-owner" transactions dropped to a record low 11 percent, and almost half of those sellers sold their home to someone they already knew, such as a relative, friend or neighbor.  These are the facts: For every 100 homes sold only 11 are sold by owner and half of those are sold to a relative. 

Do you have a relative who wants to buy your home?  Read no further. Sell the house to the relative who offers the best price and is bank qualified to buy.

Realtors sold 89 of the 100 homes described above because Realtors have the buyers.  On the open market, today's sellers have to compete with bargain priced short sales and foreclosures as well as other homeowners who may be trying to sell their homes through professional real estate state agencies.

In addition, managing the appraisal process, inspections and buyer qualifications in a tougher credit market has become more complicated in this environment, adding to the already intricate transaction process.

Without professional assistance, sellers are faced with a marketing disadvantage. The survey revealed that more than half of unrepresented sellers did not actively market their homes to potential buyers. Those who did used yard signs, Internet listings and print newspaper ads.

Unfortunately, many unrepresented sellers don't have access to fundamental marketing services, such as a multiple listing services, and can't list their homes on these sites to reach a broader audience. 

Professional insights into preparing, pricing and positioning a home for sale pay off. In 2012, a typical property without professional assistance sold for $162,000 compared with $205,000 for the typical agent-assisted property.  The decline in "for-sale-by-owner" properties available indicates a growing awareness of how complicated today's real estate market is.

A Berkshires Realtor® has specific knowledge of the Berkshires market and can save consumers time and money. They can help a seller set a realistic price and ensure that the proper paperwork and various disclosures and inspections are handled correctly. Sellers will get broader market exposure and are more likely to generate competitive bids by working with a real estate professional.  Sellers should always interview several real estate agents and ask as many questions as needed to ensure comfort with the agent they choose.

Best Wishes,

Paul



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The Best Small Town in America
By Paul Harsch On: 10:56AM / Wednesday July 30, 2014
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Everyone has their own favorite and usually it's the town they grew up in or live in, or at least I hope many can feel that way about where they live.

Take Williamstown for example. Is Williamstown the best small town in America? Here are some reasons to consider it just might be (and in future blogs I'll probably cover other towns and cities in the Berkshires and why they could be the best, too).

Reason 1.  The lack of traffic. Williamstown has none except when there's something big going on like the Williams alumni parade or fall alumni homecoming and those conditions last all of 15 minutes. Even on those rare occasions a driver can still drive the length of Main Street from the library in the west to the town line in the east in five minutes, give or take a minute, and pass through just one traffic light that is more often than not green as it changes only on demand.

Reason 2. You can dine out at any one of about 15 different restaurants and almost never have to wait for a table, how great is that? You can enjoy a unique dining experience every night for at least two weeks ranging from authentic Indian to sushi, to contemporary American, to a diner-style burger, to pub, to Mexican among others.

Reason 3. Williamstown has its own independent movie theater that shows a kaleidoscope of different films, most of which never hit the big commercial theaters.

Reason 4. Williams College. Awesome! Residents can attend athletic events, theater, use the college's outstanding facilities like the pool, squash and tennis courts, gym for modest fees or audit courses. This is no ordinary town thanks to the college and Williams, as is well known, is no ordinary college. Students are among the top in the nation. There is no wild fraternity scene or crazy behavior that some university towns have to deal with but instead the college attracts smart, hard-working, ambitious and outstanding students who for the most part are focused on their studies.

Reason 5. The scenery is some of the best in the nation. Any time of year it's just beautiful here. No, The Berkshires are not the Rockies or the Pacific coast but neither is there a dense urban environment. Here one enjoys plentiful natural beauty at your doorstep while for those needing an urban escape the big cities are only a few hours away.

Reason 6. The climate is terrific, too. Yes, we have winter, and what a wonderful time of year that is when those who enjoy winter sports are in their glory and residents can also turn indoors and get lots of good reading done and enjoy time by the fire. Spring and fall are spectacular seasons and, of course, summer, brief as it is, allows time for gardening, boating, golf, tennis, outdoor cultural events, hiking and basking in the summer sun.

Reason 7. The town is really clean. It's not that there isn't an occasional bit of litter around but by and large the residents are so happy with the way the town looks that they'll pick up a bit of trash and put it in its proper place. The water is clean, the air mostly clean (can't do much about what blows here from other parts of the country), the streets are clean and everyone keeps their properties looking really well maintained.

Reason 8. Part of this super town has to do also with the condition of things like the streets and availability of services. You would be hard pressed to ever find a pothole here (or to avoid one in major cities across the nation). Public services and employees from highway to police to volunteer firefighters are all dedicated and friendly (also hard to find in major cities). Medical services are outstanding and readily accessible, too.

Reason 9. The real estate is great because it is "just right." There is something that fits just about any budget and the median value is near the mid-range in the nation. This is neither a rich nor a poor town and there are residents who fit in just about every point of the spectrum from quite wealthy to those who need and receive support and help. Affordability has actually improved since the recession, so housing here is again much more affordable. The town has committed to building more affordable housing because to make it possible for as many who would like to live here to be able to do so.

Reason 10. No real need to go on vacation when you live in such a vacationlike location anyway.

Reason 11. A wonderful town for any age from excellent schools and pre-schools which are uncrowded and staffed by caring, dedicated and energetic adults. We also have a host of things for adults to do and enjoy, we have churches, we have all sorts of groups from Yoga to knitting, paddle tennis to bridge and we also have wonderful places for seniors to live in community if they choose that over living at home in their later years.

Reason 12. Maybe the most important reason to consider Williamstown as the best small town in America is the people. What a great bunch. Relatively open minded, committed to learning, committed to the quality of life here, interested in the arts, living a healthy life-style, showing consideration for others. This is not a fanatical bunch and the residents have a wide variety of interests and talents. Unlike a ski town for example where everyone is engaged in one way or another in that activity or a yachting community, Williamstown is home to a spectrum of different interests and education and learning are a prominent focus.

So there you have it, the 12 reasons why Williamstown is number one in my book (I hope everyone not fortunate enough to live here will write their own list about how they like their own town best). While Williamstown residents don't ever want to see the town become overcrowded they lay out the welcome mat for anyone else who cares to join this exceptional community. It's simply a great place to live!

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.



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Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years. He has achieved personal career sales exceeding $131 million and company sales from 1979 will top $500 million in 2014. Harsch is a member of the Berkshire, Massachusetts, Southwestern Vermont and National associations of realtors, is a licensed Massachusetts real estate instructor and earned the CRB, CRS, GRI and CBI designations. Harsch is a 1969 graduate of Williams College.

To submit comments, questions or requests for future blog topics write him at paul@harschrealestate.com.



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