A Year End Perspective

One of the recurring themes of 2013 has been the shortage of supply of homes for sale, accompanied by wondering when sellers would re-enter the market in larger numbers. The latter question often comes with a reference to the fact that prices have risen, say 10%, in the last year.

Well here’s another thought, one which may not be encouraging for those waiting for supply to pick up before they buy. For most of us, our home is our largest asset. When we believe that its value is increasing we feel good about spending generally and borrowing money to do so.Conversely, during the period when prices were falling, we felt poorer and were less willing to spend.

While home prices are now recovering, they are still below levels of 2006/7, whereas the stock market is at an all- time high.

Many people are feeling a little more secure in their jobs and in their personal finances, but believe their homes are still not worth what they once were – and they are not selling unless they need to move or are trading up or down.

In Marblehead, the median price for 2013 is likely to be the highest since 2007, but still 8-9% below the peak level of 2005/06. 8-9% may sound like a small number but it translates into $50,000 – and that’s real money. And when you read forecasts that prices may rise by “only 5%” in 2014, that’s still $25,000 or more.

The law of supply and demand applies to the housing market. As we approach 2014 it seems that demand is likely to remain strong, while there is no sign that supply is about to increase.Currently there are just 55 homes for sale in Marblehead with only half of those under $1 million.

And that means that prices are likely to rise again.

If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or andrew@HarborsideRealty.com.

Andrew Oliver is a Realtor with Harborside Realty in Marblehead.

New FHFA Head moves to delay fee increases

According to the Wall Street Journal’s Nick Timiraos, Rep. Mel Watt (D., N.C.), the incoming director of the regulatory agency that oversees Fannie Mae and Freddie Mac, said on Friday night he would delay an increase in mortgage fees charged by the housing-finance giants, which was announced earlier this month by that agency.

Upon being sworn in, “I intend to announce that the FHFA will delay implementation of the loan-fee increases until such time as I have had the opportunity to evaluate fully the rationale for the plan,” said Mr. Watt in a statement.

A great time to sell a Marblehead condo

Over the last several years the condo market in Marblehead, limited as it is, has tended to see over supply. At many times there have been 30-60 condos for sale. But not now. There are just 10 available, low even for this time of year.

Here’s a table for 2013 data:

Source: MLS, Oliver Reports

Source: MLS, Oliver Reports

It is possible 1 or 2 of the pending sales will close by year end. What is significant is that after a very quiet first half (12 sales) activity really picked up with 32 sales already in the second half of the year.

Here’s another thing. Condo buyers often take out an Adjustable Rate Mortgage, most commonly a 5/1 where the rate is fixed for the first 5 years, often encompassing the time a young person or couple will live in the condo. And despite higher mortgage rates generally since the summer, the rate on a 5/1 is still about 1% cheaper than the 30 year.

Here are  reasons to think about selling now:

1. Supply and demand – very little supply, good demand
2. With the Federal Reserve finally starting to cut back on its bond purchases, and with new rules increasing the fees on mortgages in 2014, rates are almost certainly going up in 2014. ( I know that’s been said for a couple of years, but it happened in 2013 and forecasts are for a further increase in 2014).

If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or andrew@HarborsideRealty.com.

Andrew Oliver is a Realtor with Harborside Realty in Marblehead.



Flood insurance (4): vote to delay Act set for early January

According to multiple media reports, Senate Majority Leader Harry Reid is planning to fast track legislation for a January vote that would require 60 votes and there are reported to be enough support to pass it. The proposed legislation would delay the implementation of the new flood rates for up to 4 years. (more…)

Flood Insurance (3): are the new maps accurate?

As Congress continues to bicker over reforming the Biggert-Waters Act (this week one Republican Senator blocked the unanimous consent required to move forward one Bill delaying the implementation of the new rates) a concern has been raised about the accuracy of the new maps for Massachusetts.

Independent coastal experts say the federal government used outdated wave methodology better fit for the Pacific coast when they drafted the new flood maps. As a result, they say, the government over-predicted flooding that would occur during a 100-year storm for much of the state.

According to this Patriot Ledger article Experts say FEMA cut corners on flood map methodology, the engineering experts claim that FEMA “used a mapping method fit for the Pacific coast, where the wave periods are much longer and the beaches are straighter, instead of developing a correct approach for New England.” (more…)

2014 proposed North Shore property tax rates

Individual towns and cities in Massachusetts propose a tax rate each year and then the State has to approve that rate. There is occasionally a minor difference – as in a penny or so – in the rate approved. My table shows the rates proposed – and in some cases approved – for FY’14. This is the rate that applies for the entire year to June 30, 2014 so the February and May tax bills will be adjusted for any changes occurring from the new rate.

As of December 13,  254 of the State’s 353 communities have had their FY14 tax rate approved. The highest residential rate I have been able to find is Longmeadow at $23.15  and the lowest Hancock at just $2.83. The highest commercial rate approved is $39.04 in Springfield, with Hancock again the low at $2.83.

Here on the North Shore Wenham has overtaken Swampscott for the highest residential rate in the 17 communities I track, while Lynn has pipped Swampscott for the highest commercial rate.

Sources: MA Department of Revenue; Assessors Offices

Sources: MA Department of Revenue; Assessors Offices


If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or andrew@HarborsideRealty.com.

Andrew Oliver is a Realtor with Harborside Realty in Marblehead.






Boston condo boom: some signs of life at top end in Marblehead

From time to time I have reported, as in Boston 77 Marblehead 1, on the booming market at the higher end in Boston and contrasted it with the slow pace of sales at the upper end on the North Shore and in Marblehead in particular.

In this excellent Boston condo sales Bates on the Market (www.curbed.boston.com) article I came across this chart of condo sales in Boston since 2009:

Source: boston.curbed.com

Source: boston.curbed.com


Conforming mortgage loan limits raised for Essex County

While the Federal Housing Finance Agency (FHFA) has announced that the 2014 maximum conforming loan limits for mortgages acquired by the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, will remain at $417,000 for one-unit properties in most areas of the country, the limit in Essex County will increase from $465,750 to $470,350.

Earlier this year FHFA had announced that it was contemplating a reduction in loan limits for 2014, but that announcement was met with a tsunami of protests.

With the change in the rules for Senate approval of most nominees, it is highly probable that the FHFA will soon have a new head, Rep. Mel Watts, who is expected to be more amenable to carrying out the Administration’s goals in the housing market.

Here is an article with comment on some of the effects expected with Mr. Watts in charge.

Conforming Loan Limit

Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.” Loans above this limit are known as jumbo loans. The national conforming loan limit for mortgages that finance single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska,  Hawaii, Guam, and the U.S. Virgin Islands.  Since 2008, various legislative acts increased the loan limits in certain high-cost areas in the United States.  While some of the legislative initiatives established temporary limits for loans originated in select time periods, a permanent formula was established under the Housing and Economic Recovery Act of 2008 (HERA).

If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or andrew@HarborsideRealty.com.

Andrew Oliver is a Realtor with Harborside Realty in Marblehead.




Housing inventory numbers show market remains very tight

While most people are concentrating on the holidays at this time of year, houses are still selling – and quickly – as I reported last week.  With very little inventory well-priced homes do not last for long.

Beverly, Danvers, Georgetown, Lynn,  Lynnfield,  Peabody and Salem have month after month had 3 months or less of inventory (6 months is considered to be a market in equilibrium), while Manchester has had the largest supply. (more…)

Flood Insurance (2): the facts

While waiting to hear whether Congress will take up a bill to delay the implementation of the new flood insurance premiums they voted into law before they understood the consequences ( telling  the National Flood Insurance Program, NFIP, which is losing money to end subsidies and go to full actuarial rates results in premiums going up. Apparently nobody in Congress took any economics courses in college and this has come as a surprise to them – or maybe it was just because they don’t read Bills before voting on them), I have been digging into the history of the NFIP. In particular I have looked at the record of Massachusetts as a whole, by County and by Town.

It is extraordinary how many reports I have read on flood insurance without any of them providing basic data. Tracking down what follows has been a challenging task but I think the numbers are accurate and provide an understanding of the magnitude of the subject.

I will start with the overall NFIP.

As of September 2013, there were 5.6 million flood insurance policies in force (PIF).Two-thirds of the policies were in just 6 States; Massachusetts has just 60,000 of the 5.6 million policies, or 1.1%: (more…)

Marblehead’s Property Tax Rate for 2014

At its meeting this week the Selectmen approved a tax rate for FY2014 of $11.09, an increase of 2.2% from FY2013’s $10.85. As is customary, the Selectmen set the same rate for commercial premises, stating that it would be “unfriendly to business” to set a higher rate for commercial property.

The tax rate includes the effect of debt exclusions (or overrides as we call them). Here is my estimate of the breakdown between the base levy (which is the 2 1/2% increase over the prior year plus new growth, such as new construction) and the cost of debt exclusions:

Sources: Board of Assessors

Sources: Board of Assessors, Oliver Reports


Mortgage rate forecast to rise to 5.1% in 2014

This time last year, when the 30-year mortgage rate was under 3.5%, the Mortgage Bankers Association forecast that it would rise to 4.5% by the end of 2013. That is very close to current mortgage rates so with that track record their forecast for 2014 bears noting.

MBA is forecasting a rise to 5.1% by the end of 2014 and a further rise to 5.3% by the end of 2015. (more…)

One year and 147 posts later…..

This weekend marks the anniversary of my first blog. I remember being concerned about making a commitment to writing every week and publishing at 8 a.m. on Saturdays. Perhaps I remembered what a journalist told me that it is easier writing to a deadline. I may have had a few late Friday nights and many early Saturday mornings but I have not missed a post all year. I have learned the joy – and angst – of hitting the Publish button. And yes I have unintentionally deleted a few blogs.

I wondered if I would find something of interest every week. Well I guess 147 posts in 52 weeks suggests that I did, at least to me. I have tried to include commentary on all major issues that might affect a decision by a buyer or seller of real estate.

I have written quite a lot about mortgages and mortgage rates; about national and State data on sales and median prices; and about supply at different price points.

I have published an interview with Marblehead’s Assessor talking about property taxes (watch for the latest news in a few weeks) and have started a series about flood insurance.

Specifically in Marblehead and other North Shore cities and towns I have posted detailed breakdowns of sales and prices for both SFHs and Condos, and on more than one occasion the data has demonstrated a change in trend. (more…)

Flood insurance: Part One

A friend said to me recently: “why don’t you write an article about flood insurance?”

Ah, if it were only that simple.

I do plan to write regularly on flood insurance, so please regard this as the first in a series. It does not have all the answers because the story is still unfolding. Two things to bear in mind are that flood damage is not covered under a standard homeowner policy and that flooding occurs throughout the country, not just in coastal areas.

I do have an important message at the end of this article for anybody who is paying flood insurance. (more…)

Housing market recovery to last

This week Forbes published an article, link below, suggesting – with data to support the argument – ” that housing is finally shaking off both the Great Recession and the excesses of the preceding housing bubble.”

The article concludes: “we can expect to see more good news coming – most likely when the 2014 spring/summer selling season emerges. It looks as though 2013 could be the pivotal year needed to produce a bright future in housing.”

The housing recovery is a world-wide phenomenon, as I know from seeing daily reports from around the world.

Here is a summary of the article: (more…)