100 Burlington St, Lexington

Market Analysis for: Fariba Esbah

I've done a market analysis on your home at 100 Burlington St in Lexington and have prepared this document to help explain how I've arrived at a price for your home. I perform a market analysis and calculate a price taking into consideration a home’s location, size, configuration, number of bedrooms and baths, lot size and general condition. I also scrutinize the home for issues that, in my experience, will impact the price of a home making it more or less valuable. Then, I look at your current competition - the other homes that buyers in your price range will be viewing, to help determine your price.

Contents

1. Market Dynamics
2. Market Analysis
3. Pricing Strategy

Market Dynamics

There are always a number of buyers looking to buy in Lexington because of the strong school system, the community dynamics and vibrant downtown. People like the feeling of the downtown area, and want to stop and have a coffee, or have dinner at the many restaurants, or just watch the world go by, chatting with folks who are out and about. The Minuteman bike path and conservation areas close by pull those who desire an outdoor lifestyle while still remaining within commuting distance to Boston.

Each of the data points in the graph below show the number of available homes to buy at the beginning of the month. Between 2012 and 2013, buyer confidence increased and the demand increased.  From 2013 - 2016, even though supply increased the increased buyer demand meant that the number of available homes decreased. The drop in available homes for 2017 and 2018 is caused by a decrease in supply also. The Lexington market had been seeing increasing prices over the last few years but had stalled during 2018 and 2019 and the market was becoming a softening sellers market. With COVID-19 impacting the market in 2020, the buyer demand skyrocketed, along with the number of homes for sale, but the net increase in buyer demand has had the market move into a definite sellers market again. Since June 2022 we are seeing a softening of buyer demand with concern over mortgage interest rates and economic conditions, but we're still seeing competing offers if a home is realistically priced. 

Average prices in Lexington are well above average prices obtained in the peak of the market in 2005. Average single family home prices have been increasing steadily since 2009, but over the last 3 years had begun to stall given concerns over a potential economic downturn in the future. COVID-19 and the resultant skyrocketing buyer demand have meant that average prices increased dramatically in 2021. 

Its important to note an important metric with regard to the average sale price graph shown above. At a cursory glance, it looks like the average prices increased in 2019.  When we look at a graph showing the median prices over the last decade, we can see that in 2017 and 2018 the median price was identical. In 2019 we can see an increase in the median price showing the sales distribution is increasing and more expensive homes were selling in 2019 than in prior years.  This corresponds to the increase in the average sales price in 2019, as a result of the median price increase. Similarly, this same characteristic is seen in COVID-19 2020, and more higher priced homes were sold in 2020 & 2021 than in prior years.

Sales distribution statistics for single family homes show that the $1M-$1.5M price-range is the most active in Lexington. The next busiest price range in Lexington is the $1.5M - $2M price range and then again the $2M - $3M range. This is an indicator that new construction is having a significant impact on the average single family home prices in Lexington. 

Before reviewing the price per sq foot charts it is important to throw in a caveat of using the average as the definitive guide. There is wide variability among agents as to what is included in the living area reported in MLS. In some instances, agents will include a finished component of the basement in the living area and this is acceptable so long as how the living area is calculated is disclosed. Others report the living area reported in public record, which never includes finished areas in the basement, but note in MLS that there is a finished basement. To this end, it is important to review each individual listing to determine the ‘true’ price per sq. ft. of above ground living area, but we also need to factor into this when a home has a finished basement.

Reviewing the price per sq. foot charts for single family homes shows us that the average price per sq. ft. in Lexington along with the maximum price per sq. ft. and the minimum obtained for each price range.

The following graph shows the average, maximum and minimum price per sq ft for the year built of a home. 

The chart below shows the price per sq ft of single family homes in Lexington given the total living area of the home. It is common across towns to see an increase in the price per square foot for smaller sized homes, as it reflects the minimum cost of a home in a town irrespective of the property size. 

The chart below shows how many months’ supply of inventory there is in a given price range. It uses the assumption that given the same rate of sales over the prior 12 months, and considering current inventory available for sale, how many months it should take to sell the available inventory. This is referred to “Absorption” in the real estate world. 

Any price range where there is more than 7 months’ supply, we consider there to be an oversupply of inventory, also known as a ‘buyer’s market’. Anything between 4 – 6 months is considered a balanced market. Anything less than 3 months’ supply is considered a shortage of inventory on the market at this price range, also known as a ‘sellers’ market’.

Pricing Strategy

My analysis of the relevant homes outlined above suggests a final market value for your home of $1,175,000 - $1,225,000.

Given the current market dynamics in Lexington, I would suggest listing  your home at the lower end of this price range to attract more interest  and potentially multiple offers.  If the market deems your home to be  worth more than the list price, then the price will be pushed over the  market value of your home, and sometimes well over when we get multiple  offers. When homes are overpriced they end up sitting on the market and  ultimately selling for less than market value, whereas homes priced  realistically can often sell for well over market value. Competition is  what will get us the highest sales price. As we see time and time again,  if the buyers consider the market value of your home to be realistic in  relation to the asking price, then competition will push the price up  higher and often over the market value of the home. The challenge with  overpricing is that the buyers are very educated – they go week after  week to see homes in their price range so they KNOW what the prices are  and what ‘feels’ right. 

I have to stress that these are recommendations.  We would bring your home on the market at whatever price you deem to be appropriate.  

When determining the right price - it all depends on your motivation and your risk tolerance level. We know that homes that are priced at the 'strike price' will sell quicker and may generate more than one offer.  I’m an excellent negotiator and know how to push a price up if we have the market activity. I also know that some sellers want to put their home on for a higher price than I might recommend, which I’m willing to do, so long as it is understood that putting the home on for more than the majority of buyers perceive its value, could mean that your home will have a much longer market time and sell for less than it should have had it been priced properly out of the gate.

I DO NOT DETERMINE THE PRICE - the market dictates the value - what a buyer is willing to pay. My job is to make sure that you have the best market exposure and that your home is positioned well in the market.   I do not believe in projecting more money than I think your home will sell for just to get your business.

My team and I know how to stage and market your home, and I understand its value, but I can only sell it for what the market or a buyer will pay. I strongly believe that a home should be priced compared to the current competition, not just on what has sold in the last six months.  At the end of the day, you will be competing for the buyers looking for a home like yours and in the same price range. 

It is important to stress the value of marketing your home to capture the highest price.  In times of low inventory, we know your home will sell by doing the bare minimum to market it, BUT that is not going to get you the maximum price for your home.  Key to getting the maximum price for your home is to prepare a comprehensive marketing plan that incorporates all avenues available to us to expose your home to the maximum number of buyers out there looking.  Exposure, and feet in the door, is what will get you the highest price for your home. Basic ratios help explain this.  If 10% of the buyers who walk in your door fall in love with your home, then if you only have 10 buyers walking in, then potentially there is only 1 buyer - if you have 100 buyers walking in your door then using the same ratios, you will potentially have 10 buyers falling in love with your home.  10 buyers will push the price up versus only one buyer.

New statistics state that over 100% of potential buyers search the web as their primary search vehicle.  Thankfully, your home will show fabulously in photos. With historically low interest rates likely to increase and inventory rising, there are homes that do not sell in this market.  I’m making my recommendations to ensure that you are one of the sellers who will have success in the first month of being on the market, but optimally the first weekend.