by Nick Grabbe
A flurry of home-buyers caused sale prices to jump in Amherst this spring, with houses often selling for more than their asking prices.
“It was such an unusual time, and we were all walking around scratching our heads,” said Kathy Zeamer, a spokeswoman for Jones Realty. “Even realtors who have been in business for 40 years said they’d never seen anything like this.”
“Frenzy” isn’t too strong a word for the bidding wars that real estate agents saw over houses that were well-maintained and priced reasonably, she said. She offered some eye-popping examples:
- A two-bedroom house on East Pleasant Street (shown at left) was listed for sale at $299,900. In three days, there were 50 showings and nine offers, and it sold for $345,000 to an out-of-town buyer.
- A house on Middle Street was listed for $599,900, and someone bought it the first day it was on the market, for $612,500 – in cash.
- A house on Amity Street was listed at $665,00 and sold for $708,800 in four days.
(For a list of recent sale prices of single-family houses in Amherst, click on “Recent House Sales” at left.)
If you already own your house, this white-hot market means it is now likely worth more than a year ago, and your net worth just went up a notch. My own Amherst house, which I bought for $66,000 in 1984, is now worth about six times as much. This hot market also works well for people who have just sold a brownstone in Brooklyn for $2 million and want to buy a house in Amherst and still have plenty of money left over.
But for middle-income people and first-time home-buyers, it’s been a frustrating time. And this price run-up has increased the already-wide wealth gap in Amherst between people who own homes and those who rent.
During the pandemic, many people living in urban areas and working from home figured they could do that just as easily in Amherst. Some were attracted to the cultural and outdoor activities in the area, and some had family members here, Zeamer said. Many sales this spring were to buyers from urban areas.
“They come with a lot of cash, and look at the prices of properties here, and it looks like quite a bargain,” she said.
It’s hard for a local buyer to compete, Zeamer said. Presented with a cash offer, many sellers don’t want to take the risk that a bidder won’t be able to get financing. It can take four to six weeks to get a mortgage commitment.
Some bidders have taken to writing letters to the sellers pleading their cases, or even agreeing to waive inspections or pay closing costs, she said. But many companies counsel against writing letters to sellers “due to the possibility (or even the perception) of favoritism that may be interpreted as discriminatory,” Zeamer said.
One buyer sold his house in California for $5 million and bought a house in Amherst for $1.4 million, said real estate agent Nancy Hamel. “A first-time buyer putting down 5 percent might as well not even make an offer,” she said. “FHA buyers don’t have a chance. How do you compete with that kind of money?”
Another reason for the frenzy is that there have been fewer houses for sale than usual. Normally, there are about 100 houses for sale in Amherst. By mid-June, there were around 10.
“Many homeowners did not want people coming through their homes during the pandemic,” Zeamer said. “Since vaccines have become available, people are more relaxed about opening their homes.”
Another attraction for buyers is that mortgage interest rates are very low now. Many people worry that inflation will cause them to go up next year, so they figure that now is a good time to buy.
Although your house is worth more now, you are paying taxes on only a portion of its value. But that will change.
Many houses have sold in the last few months for 30 percent more than their assessed value, which is Town Hall’s estimate of how much a house is worth. It is calculated to determine how to distribute the property tax burden, but it takes a while for assessed values to catch up with increasing sale prices .
For example, a house on Aubinwood Road, assessed at $338,900, recently sold for $485,000. A house on Baker Street, assessed for $290,300, sold for $450,000. A house on South East Street, assessed at $365,800, recently sold for $532,000.
Property taxes are due Aug. 2. Your annual property tax is calculated by dividing your assessed value by 1,000 and then multiplying by the tax rate, which was $21.82 in the fiscal year that just ended. The tax rate for the new fiscal year has not been set yet.
The median assessed value for a single-family house is $365,650, with an annual tax obligation of $7,978 in the fiscal year that just ended.
Assessed values will likely increase next year to reflect higher sale prices this year. That will probably cause the tax rate to go down. But tax bills always go up because the amount the town needs to raise in taxation always goes up by slightly more than the 2.5 percent limit set by state law. Changes in assessments don’t directly cause tax increases and happen every five years or whenever the average sale price is more than 10 percent above assessed values.
The frenzy of buyers is now past. “It’s calmed down a little bit, and in the summer things slow down,” said Zeamer.
But the price of a house in Amherst is likely to remain high.