Housing inventory: how low can it go?
A recent Boston Globe article Snow delays spring market highlighted the lack of inventory in the, you know, “important” markets such as Cambridge and Somerville.
We know inventory is down from last year, when if you remember we had the polar vortex, but where do we stand, here in Essex County and indeed throughout Massachusetts, compared with the last several years? (more…)
Last appeal of new Salem Power Plant withdrawn
Opponents of the new natural gas power plant have withdrawn their last appeal “putting an end to three years of legal objections to the project”, according to this Salem News article.
The new plant is scheduled to come online by June 2017, while the second phase of demolition at the old coal plant will take place this spring together with further site remediation. (more…)
How much business has been lost to the weather?
Anecdotally, we know that small businesses have been affected by this winter’s weather but now we know by how much following a survey by the Retailers Association of Massachusetts.
The main points are:
– overall sales fell 24% with a 7% drop in payroll
– restaurant sales fell 49% with a 14% drop in payroll
While it is tempting to buy everything from Amazon when the weather outside is foul, when the weather improves we should all make a point to SHOP LOCALLY! (more…)
Essex County Housing Inventory by town
Here is a town by town breakdown of inventory compared with a year ago.
Source: MLS, Oliver Reports
Essex County Housing Inventory at low levels
Low inventory has, rightly, been cited as a factor frustrating many would-be home buyers. But how low is inventory currently?
Here is the answer, comparing today’s supply with that a year ago, for Essex County, first for Single Family Homes (SFHs). To put these numbers into perspective, the total represents just over two months of sales based upon the last year. A market with six months of supply is generally regarded as one being in equilibrium between buyers and sellers.
Sales are, of course, lower in winter, but nevertheless these numbers suggest a severe shortage of homes for sale as we move towards spring. (more…)
The snow may disappear sooner than you think
On this morning of extreme cold, when we may fear that this winter will never end, there is good news from Boston.com’s excellent meteorologist David Epstein (@growingwisdom) in this When will we see bare ground? article. (more…)
The best and worst performing real estate markets
I have read a number of articles recently about the best and worst real estate markets but none of them mentioned Essex County. This article corrects that oversight.
The first table follows the pattern of many articles in looking at the extent of the recovery since 2009: (more…)
How do I know if I have an ice dam?
In recent weeks we have all learned to toss the phrase “ice dam” into our conversation with friends and neighbors, but what exactly is an ice dam, how do we tell if we have one, and what should be do about them?
Here’s an Ice dam guide from today’s Boston Globe.
The most popular tip may be number 7. (more…)
Marblehead sales history under $1 million
After I published my Record Million Dollar Sales post with numbers for the last 15 years I was asked to do the same for sales under $1 million. Here goes – in chart form!
First, the number of sales. Note that in 2000 there were 54 sales under $300,000. That number slumped to just 1 in 2005 as prices increased. Similarly, the number of sales from $300-499k more than halved in the strong market of the early 2000s, while sales from $500-749k doubled. The trends then reversed during the slump and changed again as the market recovered.
Source: MLS, Oliver Reports
Million Dollar sales jump in Essex County
Sales of Million Dollar homes in Essex County in 2014 jumped by 40% and are within 10% of peak levels of 2005/2006.
Of the 34 cities and towns in Essex County, 30 recorded at least one sale over $1 million in the last 15 years; 20 saw a sale over $2 million; and 18 notched up a sale above $3 million.
Source: MLS, Oliver Reports
For those wanting a town by town break down, here is a spreadsheet with all the details: Essex_County_Million_Sales_2000_14_town (more…)
Record Marblehead Million Dollar Sales
In line with my forecasts during the year, sales of Million Dollar houses in Marblehead reached a new record level in 2014.
Source:MLS, Oliver Reports
Over the last 2-3 years we have seen the normal trend in a recovering market. The improvement started at the lower end has since spread upwards, reaching the upper end in 2014.
At the highest level, however, there are substantial variations. On the one hand are modernized, well-protected houses that are selling at good prices. But houses that need substantial work or need completely redoing, or which have weather-related exposures which are better understood with all the publicity given to flood insurance in the last few years, are selling at what can appear to be bargain levels.
Truly at the top end, buyers need to be aware of what they are getting – and they seem to be. (more…)
Essex County Inventory declines
Somebody once said a week is a long time in politics. So also in real estate. A week ago the focus was on the limited inventory and the surprising drop in mortgage rates which was giving buyers another great opportunity.
This week the focus is on snow, snow and yes snow. Just imagine how bad these storms would feel today had not the Patriots won last night? (more…)
How Your Property Taxes are calculated
Third quarter property taxes are due today. This topic interests us all and yet it is probably the least understood aspect of owning real estate. This article will attempt to explain how property taxes are calculated. I will also make an estimate for the tax rate for Marblehead for FY2016.
Let’s get started.
Tax year
The fiscal year (FY) runs from July 1 to June 30. Thus we are currently in FY2015.
What sales are used as the basis for assessments?
Assessments for the FY2015 are based upon values as of January 1, 2014, using data from calendar year 2013 sales.
It is crucial to understand this time lag. Sales occurring in 2014 will be the basis for FY2016 assessments to be announced in late 2015.
How much can taxes increase each year?
Asking this suggests you are familiar with Proposition 2 1/2, which limits the $ amount that can be raised from property taxes to a 2 1/2% increase from the prior year plus any new growth in the tax base such as new construction. Note that Prop 2 1/2 does not apply to debt exclusions or general overrides. And note also that this limit applies to the overall taxes collected, not to individual tax bills.
Click here for a brief explanation of Prop 2 1/2 on the Marblehead Town website.
Now let’s show how Marblehead’s FY2015 tax rate was calculated. Here’s a table:
Source: Board of Assessors
The starting point is the amount of the levy for the prior year, i.e. FY2014, of $52.46 million. To this is added the allowed 2 1/2% increase and also new growth, taking the total to $54.1 million. Now add on debt exclusions of $4.9 million bringing the total levy for FY2015 to just over $59 million.
For FY2015 the total assessed value of all property – residential, commercial and personal – is $5.3 billion. Divide the tax levy, $59 million, by this $5.3 billion, and the result is a tax rate of $11.08 (per $thousand).
FY2016 Tax Rate estimate
In January this year the Town Administrator presented the FY2016 Financial Outlook to the Board of Selectmen (see AAA Marblehead). This contained projections for the tax levy for FY2016 as follows:
Source: Town of Marblehead
Now we know how much tax needs to be raised. The tax rate will be calculated by dividing this number by the Assessed Value of all real estate for FY2016, i.e. based upon sales that occurred during calendar year 2014. In 2014 the median price of a SFH in Marblehead increased by 10% while condo prices were stable. I am going to go with an 8% increase in Assessed Values to $5.75 billion.
This will give a FY2016 tax rate of …….. $10.65 vs the FY2015 rate of $11.08.The only other factor would be any additional debt exclusions approved by voters.
Bear in mind that the tax rate will depend upon the actual Assessed Values for FY2016 and these may well differ from my estimate, but I feel that $10.65 is a reasonable number at this stage.
Are overrides included in the tax rate?
In asking this question of several people I discovered that most assumed that debt exclusions and general overrides were a separate item. They are not. They are included in the tax rate that is announced each year. Here is the breakdown of the tax rate for the last three years with my estimate for FY2016:
Source: Board of Assessors, Oliver Reports
What is the difference between a debt exclusion and general override?
Here are some quotes from the MA Department of revenue website:
“An override is a voted increase in the levy limit. The amount of the override becomes a permanent part of the levy limit base.The budgets adopted by town meetings in Massachusetts are affected by the Proposition 2 1⁄2 limitations upon local property tax levies. So-called overrides of these tax limitations,which allow for additional taxing capacity to fund the budget, may only be approved by a general referendum vote of all town residents.”
“A debt exclusion creates a temporary increase in the levy limit to fund the payment of debt service costs for capital projects funded by borrowing. The additional amount for the debt service is added to the levy limit for the life of the debt.”
Thus an override to fund an operating deficit becomes part of the permanent tax levy and increases occur each year from this higher base.
A debt service exclusion is temporary and disappears when the specific debt is repaid.
Marblehead’s FY2016 Financial Outlook stated: ” there is no need to consider any permanent overrides to fund the town’s operating budget. This has been the case now for 10 years.”
What does Marblehead’s debt exclusion cover?
By far the largest proportion (72%) of the FY2015 exclusion of $4.9 million relates to school costs at MHS, Village and Glover. Next at 17% is the Causeway Seawall. The balance of 11% comes from a variety of sources including the new fire truck, Lead Mills, Stoney Brook clean up, and the Landfill/Transfer Station work.
What effect would general overrides have on the tax rate?
Marblehead’s annual budget is around $70 million (property taxes contribute about three-quarters of the total revenue raised). What if MHD had a budget shortfall and asked residents to vote for a $1 million override? The next table shows the impact if this were to happen for three years in a row:
Source: Assessors Office, Oliver Reports
While it is highly unlikely to impossible that this would happen in Marblehead for a number of reasons, you can see the impact sustained deficits could have on a town’s tax rate.
Conclusion
Low tax rates don’t just happen: they are the result of wise and prudent financial management by a town and a concerned and involved citizenry. In Marblehead we have both.
GO PATS !!!!!!!!!
If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
You can REGISTER to receive email alerts of new posts on the right hand side of the home page at www.OliverReports.com.
@OliverReports
Reasons to Sell your Home in Winter
Today’s Boston Globe carries this article Why selling in winter may be a good idea.
In addition to the benefits mentioned – less inventory means less competition for sellers, while those buyers who are out there are serious – I would add that mortgage rates have dropped sharply already this year and are not far off record lows. See my Mortgage rates: how low can they go? post from yesterday. (more…)
What does $27 million buy in Nantucket?
Answer: a 5,000 sf, 5 bedroom home on 1.5 acres, but….. it is on a cliff overlooking Nantucket Sound.
8 homes in total sold for over $10 million in 2014.
It may not be Nantucket but the North Shore offers great value in oceanfront property and I expect a strong market for such properties in 2015.
Read this Nantucket mansion sales through the roof article from boston.com.
If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
You can REGISTER to receive email alerts of new posts on the right hand side of the home page at www.OliverReports.com.
@OliverReports
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