Weston Property Has Underperformed

Weston Town Crier, January 28, 2021
The following was submitted by John Sallay

There was a wide-ranging discussion on the Weston Facebook page earlier this week surrounding the new group Focus On Weston, and the group’s first of several planned Town Crier articles. In particular, some questioned the statement, “Unlike in other affluent Boston-area towns, homes in Weston have not appreciated materially in value over the last 5, 10, or even 15 years.”

This chart was the basis for that statement, based on publicly available data from the U.S. Bureau of Labor Statistics, and the Massachusetts Department of Revenue. The MA DOR gets their data from the local assessors in each town, who are required by law to report it, since it provides the basis for Proposition 2 ½ levy limit calculations. These real estate assessments are required by law to be plus or minus 10% true market value, though most towns including Weston strive to assess conservatively, to be consistently at about 95-97% of market value.

Briefly, this chart tracks home appreciation in Weston and comparable towns over a recent five- and ten-year period, excluding New Growth, which is largely major renovations or replacements. Over both periods, Weston’s real estate appreciation has been significantly lower than that of other comparable, affluent MetroWest towns. In the recent five-year period when we exclude New Growth, our home appreciation was only 3.2% rather than the 14.5% average in the most comparable neighboring towns. Over the last ten years, the appreciation was 1.5%, compared to an average of 14.1% in these similar towns. Note that Lexington, Wellesley, Wayland, and Concord are near the top in home value appreciation over both periods (and over the last 15 years, as well).

Although there has been some appreciation in Weston’s overall residential real estate value, almost all of that is accounted for by “New Growth”. While some new homes have been built, most of the New Growth in Weston results from older and smaller homes being replaced by much larger new homes, and by expansions. For example, a home valued at under a million dollars is replaced with a much more expensive one. As a result, every year this “New Growth” raises the sum total of Weston’s assessed real estate value, but not the value of homes purchased five or ten years ago which have not been dramatically expanded or replaced, or even those that have been, in the years before and after their expansion.

The impact on the investment value of our homes has been significant. A hypothetical home purchased ten years ago for one million dollars in Weston would have appreciated $15,000, whereas based on the average appreciation in our comparable towns it would have increased by $141,000, or $126,000 more. For the current median home assessed at $1.29 million this difference is approximately $160,000 and for the current average home assessed at $1.63 million the difference is about $200,000.

Why haven’t Weston homes been appreciating in line with our neighboring comparable towns? In addition to speaking with Weston Assessor Eric Josephson about this chart at some length, I have also talked with members of the Finance Committee, Planning Board, School Committee, a Select Board member, and a few Weston real estate agents, whose professional sense of the market generally matches this analysis.

While it would be impossible to answer definitively, one can make a few informed hypotheses. Eric believes that higher priced homes do not appreciate as rapidly as lower priced homes. Since Weston’s homes are priced higher than other towns, our overall or average appreciation would therefore be lower. His systems do not allow for this hypothesis to be proven or disproven over the 5, 10 and 15 year periods shown in the chart, and a single year may or may not be representative. If this were the case, there would still have to be some underlying reason, rather than just price per se.

For example, perhaps owning a very high end, expensive home is not as valued by younger generations as it was a decade or two ago. Perhaps Weston housing is already so expensive that very few people can afford to live here, reducing demand. Or perhaps with more companies now located in the Boston suburbs and more opportunities to work from home, our shorter commute distance into the city, which contributed to higher real estate values previously, may no longer be as advantageous.

It has been suggested that our high property taxes may also be a factor. There are many factors that affect the decision to purchase a home. However, one important consideration is the cost of home ownership. Typically, the buyer as well as the mortgage lender look at the expected monthly payment which includes the mortgage, insurance, and real estate taxes. Weston has by far the highest single family home real estate taxes of all our comparable towns – whether calculated on average, on the median home, or per capita – which increases the cost of owning a home in Weston.

The relative cost and quality of Weston’s public schools may also be a factor. Weston spends far more per pupil than all of our neighboring comparable towns – approximately 27% more, significantly contributing to our higher tax burden – but our schools are not as highly rated as they once were and more families that can afford to send their children to private schools are doing so.

Weston holds undeniable assets that attract home buyers. Weston real estate is considerably more expensive, but a home is often one of a family’s more significant assets. One assumes that it will appreciate over time, so that the much higher price paid upfront will be end up being a good investment. Hopefully this will prove to be the case going forward.