January 17, 2014
Conversations about valuing and comparing Needham properties often begin (and sometimes end) with the school district in which the properties fall. The perception, right or wrong, is that the Mitchell and Broadmeadow school districts are more desirable than the other three. We at Hawthorn Real Estate know this based on the inquiries we receive from current and potential customers, as well as through feedback from residents and other realtors. But do the numbers support this mindset? Is a home in Mitchell or Broadmeadow more valuable than a home in one of the other three school districts? The answer is…Maybe. Depends. Possibly. With another strong year of Needham sales data begging to be analyzed, we’ve broken out the total single family sales (per MLS) into five relevant categories:
- – number of homes sold,
- – average sales price (“ASP”),
- – average price per square foot (“$/SF”),
- – average days on market (“DOM”)
- – average size in square feet.
The results year over year tell a story of a strong real estate market with a lot of moving parts.
Contrary to the popular assumption, the district with the highest ASP is Newman. In 2013, the ASP in Newman was $1.015m versus $944k and $868k in Mitchell and Broadmeadow, respectively. But does that mean that a house in Newman sells for almost $150k more than the same house if located in Broadmeadow? No, not necessarily, because the Newman house is on average almost 500 square feet (“SF”) larger than the Broadmeadow house (3,220 SF versus 2,737 SF). This brings us to another one of our analytical metrics: average price per square foot.
Price per square foot is the gold standard when evaluating a condominium in the Back Bay or Beacon Hill, but not always the most telling statistic when comparing homes within a market that has large spreads in gross living areas. Using this number as the barometer, Mitchell takes over as the most valuable dirt in town with an ASP/SF of $340/SF, which is only slightly higher than Hillside’s $338/SF. In Newman, where the homes are worth the most money, the ASP/SF is only 4th highest at $327/SF. This discrepancy is due to the fact that not all SF are equally valuable. A SF in the kitchen is worth significantly more than a SF in a bedroom, laundry room…etc. This is why $/SF is not the be all and end all with single families as it can be with smaller condominiums. As your house’s living area increases, the $/SF usually drops. You can have a 5,000 SF house, but chances are you still only have one kitchen so the price of the incremental square feet in the difference between your 5,000 SF home and its smaller counterparts is diminished because the additional space is usually due to larger rooms rather than more of them. Further indicative of the strength of Needham’s single family market in 2013, is that in 2012 only Mitchell homes averaged more than $300/SF. This year, all five districts averaged over $300/SF with Eliot being the lowest at $320/SF which equaled last year’s high in Mitchell.
Another positive 2013 statistic is the low average DOM. In 2012, the district with the lowest average DOM was Mitchell at 59 days and the other four ranged from 87 days (Hillside) to 129 days (Eliot). This year, Newman’s homes took the longest to sell at 74 DOM, which is to be expected given the fact that larger and more expensive homes usually have fewer prospective buyers and thus a longer sales cycle. Broadmeadow, despite its ASP dropping from $891k to $868k, actually had the lowest DOM with 43, a full two months less than its 2012 DOM of 110.
After all this have we learned anything about the Needham school districts as they relate to real estate values? We know that numbers are up almost across the board versus 2012 and that Mitchell and Broadmeadow scored high as expected in all categories (Broadmeadow’s ASP decline vs 2012 notwithstanding). Newman’s sales represent the biggest sample size, the largest homes, the highest ASP, but they take the longest to sell and are at the lower end of $/SF. Hillside and Eliot continue to provide buyers with good value and sellers with strong DOM and $/SF.
Numbers and trends aside, the real question that most prospective buyers are asking heading into the 2014 spring market is whether there will be inventory. As the past two years have shown, well priced homes in any district will sell, and they will sell fast. Sellers should take comfort in knowing that there is significant demand town-wide, and we expect these trends to continue in 2014.