Housing inventory: spring is coming, right?
Two years ago the month of February saw just one day when the temperature was below freezing. This year….well you know what’s it been like, hibernation for most of the month. Statistics for sales at this time of year are, therefore, largely meaningless.
Instead, I have been looking at the supply of houses and condos for sale and comparing numbers with a year ago, which was also a cold month if not quite as brutal as this year.
We are assured that it will warm up one day, if not soon. With signs that the economy continues to improve, if slowly, it seems quite likely that spring, if and when it comes, will find buyers chasing limited inventory, again, and that prices, certainly at the lower end, will continue the improvement of 2013.
Here is the inventory by price for Marblehead, Beverly, Salem, Swamspcott and Essex County overall. (more…)
Fannie Mae and Freddie Mac continue to finance Government deficit
My goal in this post is just to report the facts. My opinions on the ethics of the change the Treasury imposed on the terms of the bail-out of Fannie and Freddie have been expressed in previous posts. The result of the change is that by the end of March 2014 Fannie and Freddie will have repaid more than they borrowed from the Treasury but, because these payments have been deemed by the Treasury to be dividends rather than capital payments (like interest rather than principal on our mortgages) the two companies still “owe” the Treasury as much as before they made payments.
The “dividends” from Fannie and Freddie in calendar 2013 totaled $134 billion which contributed to a reduction in the budget deficit as shown in the chart below. Bear in mind that the numbers relate to a September 30 year end but the basic argument is intact:Fannie and Freddie have been helping to reduce the deficit. (more…)
Essex County 2013 Housing Market Reports and 2014 Outlook
In 2013 the median price of a Single Family Home (SFH) in Essex Country increased 6% to a level just 6% below the peak of 2005, while sales continued the strong recovery of the last two years, and were 9% below 2004’s peak. This is in contrast to the condo market – click here for my Essex County 2013 condo report – where sales in 2013 were still almost 40% below peak levels, although the median price is now just 2% below the peak
Sales
Sources: MLS, Oliver Reports
Distressed sales – foreclosures and short sales – dropped from 17% of all sales in 2011 to 8% in 2013. Non-distressed sales increased 19% in 2013.
(more…)
Million dollar home sales picking up in Marblehead
I commented several times last year that the higher end of the market, in Marblehead and throughout Essex County, was not enjoying the level of activity seen elsewhere, something which puzzled me. I wondered whether it was just a timing issue, as activity spread out from Boston and its nearer-by towns.
A few short and very cold weeks into 2014 there is evidence that activity is now picking up for houses priced $1 million and up.
First, a chart showing sales in recent years:
Source: MLS, Oliver Reports
Already in 2014 we have had 3 sales over $1 million, plus we now have a further 8 pending: 7 in the $1-2 million range and one in the $2-3 million range. That makes 10 sales or pending sales in the $1-2 million range already in 2014, suggesting that 2014 may well see sales at that price getting back to the numbers of 2004-07.
Sales at $3 million or more have not exceeded the 3 of the last two years except for the 4 in 2007.
It is the $2-3 million bracket has really been hit. Total sales in this range for the last three years combined are just 3, compared with 5-8 each year in the 2004-07 years.
One of the consequences of the Federal Reserve’s policy of keeping interest rates low has been a boom in the stock market, creating wealth for those who have been able to invest. Perhaps 2014 will be the year that some of these investors decide that higher-priced real estate is now a better investment than the stock market.
In a typical real estate market recovery activity and prices improve first at the lower end and then that activity moves up into higher price brackets as people trade up and buyers have more confidence in spending more on real estate. There are increasing signs that this is happening in Marblehead.
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 781.631.1223 or [email protected].
Andrew Oliver is a Realtor with Harborside Realty in Marblehead
Salem Power Plant agreement good news for real estate market
Last summer I showed a beautiful house on the West Side of Marblehead to a client who loved the house but balked at the view of the power plant. I explained that the plant was due to close in May 2014 and be replaced by a much smaller gas-fired plant. “I’ll believe that when it happens” was the response.
Well now it is time to believe. After much to-ing and fro-ing, all the parties have reached agreement, and this week the State approved the plans.
According to the Salem News: “the Historic Commission gave Footprint the go-ahead to tear down the Salem Harbor Station. The plant is scheduled to close on May 31. Along with constructing a new power plant and tearing down the old one, Footprint plans to clean up the 65-acre site, 40 acres of which will be repurposed.”
This settlement is good news all round: it maintains a major tax base for Salem; allows redevelopment of a substantial amount of waterfront; ensures electricity reliability for the region; and for Marblehead removes an eyesore which has also been a major source of pollution.
The final confirmation of the go ahead should encourage renewed interest in houses in Marblehead in sight of the old power plant.
Here’s the Salem News article: State OKs settlement between Footprint-CLF
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 781.631.1223 or [email protected].
Andrew Oliver is a Realtor with Harborside Realty in Marblehead
Twenty Question with Marblehead’s Assessor
Twenty Questions with Marblehead’s Town Assessor, 2014
The FY2014 tax rate has been set at $11.09, up from $10.85 in FY2013. The median single family assessment increased 1.1% to $481,500, and the median single family tax bill increased 3.4%, or $175, to $5,340. The commercial rate has once again been set at the same rate as the residential rate.
Note that the tax rate includes the cost of overrides voted at Town Meeting. These account for $0.85 of the 2014 tax rate, up from $0.81 in 2013.
Marblehead’s 2014 tax rate will be the third lowest of the 17 North Shore cities and towns and also the third lowest of 34 Essex County communities. The highest rate in Essex County belongs to Amesbury at $20.97.
Approximately 70% of Marblehead’s revenue comes from property taxes.
Between September 2013 and June 2014 the Assessors’ office will physically measure and inspect every property in Marblehead.
Real-estate assessments for Fiscal Year 2014 were mailed at the end of last year. Assistant Assessor Mike Tumulty answered questions about the process.
1. What is the timeframe upon which assessments are based?
A: For 2014, assessments are based upon values as of January 2013, using sales data for calendar year 2012. Sales that took place in calendar year 2013 will be the basis for the assessment for FY 2015.
2. Can I appeal my assessment?
A: Yes, provided the appeal is based upon data for the relevant year. More information and directions for filing an application are available at www.marblehead.org/assessors. (more…)
Marblehead “Spectacular Seaside Home” Open House today 12-1:30
Click here for details
Do buyers go out in the cold? 160 visitors to one Open House.
People often assume that the cold weather keeps buyers indoors, but last Sunday 160 visitors showed up at a Harborside Open House in Danvers.
Now, I’m not saying people will go out in a howling nor’easter, but clearly buyers are out there! Supply is low, so if you are planning to sell, now is a good time to come to market.
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 [email protected].
Andrew Oliver is a Realtor with Harborside Realty in Marblehead
Beverly 2013 Housing Review and 2014 Outlook
The Boston Globe named Beverly one of Greater Boston’s “top spots to live” and the real estate market in 2013 reflected this with very tight supply and hot competition for houses.
According to Brad Phillips, Partner/Managing Broker of Harborside Realty’s Beverly office: “homes that were well priced…sold quickly and often with multiple offers” and he expects “more of the same” in 2014.
My inventory reports last year consistently showed Beverly as one of the markets with lowest supply. Low inventory is “the singe largest factor we are dealing with”, says Phillips. “They are plenty of willing, qualifies buyers out there… but there are simply very few choices.”
While sales last year were close to peak levels overall, the median price in Beverly for a Single Family Home (SFH) was still 8% below peak levels. The law of supply and demand suggests that 2014 may well see prices move close to the 2004 peak.
Let’s look at the numbers and charts.
First, sales.
Source: MLS, Oliver Reports
Total sales were just 8% below peak levels. The number distressed sales- foreclosures and short sales – was steady. Non-distressed sales have increased 37% in the last two years.
- Source: MLS, Oliver Reports
Median price: after holding mostly in the $320-350,000 range for several years, the median price moved firmly above $350,000 during 2013.
Source: MLS, Oliver Reports
On an annual basis, the median price increased just 2%, although this seems to reflect the price mix of sales, i.e. more sales at lower price points.
Source: MLS, Oliver Reports
One of my consistent themes is that the ratio (ASR) of Assessed Value (AV) to Sales Price (SP) can give a good indication of what is happening to underlying prices. If the ASR is above 100% that means that properties are selling for less than their AV. Conversely, properties selling above their AV will have an ASR below 100%.
As we all hope our properties are worth more than the AV we look for an ASR below 100% as a positive sign. Remember that AVs are a lagging indicator: the tax bills for FY2014 are based on actual sales in 2012. Thus the 2013 sales data, reported in this review, will be the basis for FY2015 assessments.
What this means is that in a period of falling prices the ASR is likely to be rising. The ASR is the AV divided by the SP: if the SP is falling (prices going down), the ASR will rise. And when prices are rising, when the SP is rising, the ASR will fall.
So what we, as homeowners, want is an ASR below 100% and falling. Let’s look at the ASR for Beverly SFHs in recent years:
Source: MLS, Oliver Reports
As we can see the ASR has been falling, an indication that prices have been rising. Note that while the median price increased only slightly in 2013 the ASR dropped from 98.6% to 92.5%, suggesting a larger underlying price increase, with the sales mix accounting for the difference.
2014 Outlook
Beverly has been working to improve and modernize its schools. A new middle school is in the planning stages and Phillips says:”this will be the last piece of the puzzle that will provide Beverly students with completely modernized, state of the art facilities.”
Beverly is a vibrant and exciting city. A tight housing market and strong demand suggests that prices will increase overall in 2014.
See also my Beverly 2013 Condo Market Review
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 [email protected].
Andrew Oliver is a Realtor with Harborside Realty in Marblehead
Brad Phillips is the Partner/Managing Broker of Harborside Realty in Beverly and can be reached at 978.884.4823 or [email protected]
Beverly Condo Market 2013 Review and 2014 Outlook
The Boston Globe named Beverly one of Greater Boston’s “top spots to live” and the real estate market in 2013 reflected this.
Apart from two years of extraordinary sales activity in 2004 and 2007, overall condo sales in Beverly in 2013 were within about 10% of prior levels. The median price increased 7% in 2013 and was 11% below the 2005 peak.
Let’s look at the numbers.
First sales.
Sources: MLS, Oliver Reports
Distressed sales – foreclosures and short sales – dropped sharply in 2013, and non-distressed sales increased nearly 90% over the last two years.
Source: MLS, Oliver Reports
The last three quarters of 2013 saw a steady move in the median price above the $220,000 level:
Source: MLS, Oliver Reports
In the next table the number in bold shows the highest quarterly median price each year. Note that this varies from year to year, so the fact that the median price in Q3 and Q4 was lower than in Q2 has no significance.
Sources: MLS, Oliver Reports
One of my consistent themes is that the ratio (ASR) of Assessed Value (AV) to Sales Price (SP) can give a good indication of what is happening to underlying prices. If the ASR is above 100% that means that properties are selling for less than their AV. Conversely, properties selling above their AV will have an ASR below 100%.
As we all hope out properties are worth more than the AV we look for an ASR below 100% as a positive sign. Remember that AVs are a lagging indicator: the tax bills for FY2014 are based on actual sales in 2012. Thus the 2013 sales data, reported in this review, will be the basis for FY2015 assessments.
What this means is that in a period of falling prices the ASR is likely to be rising. The ASR is the AV divided by the SP: if the SP is falling (prices going down), the ASR will rise. And when prices are rising, when the SP is rising, the ASR will fall.
So what we, as homeowners, want is an ASR below 100% and falling. Let’s look at the ASR for Beverly condos in recent years:
Source: MLS, Oliver Reports
The drop in the ASR in 2013 matched the increase in median price and suggests that the price range of sales was consistent between 2012 and 2013.
Outlook for 2014
Beverly has been working to improve and modernize its schools. A new middle school is in the planning stages and Brad Phillips, Partner/Managing Broker of Harborside’s Beverly office says: “this will be the last piece of the puzzle that will provide Beverly students with completely modernized, state of the art facilities.”
Beverly is a vibrant and exciting city. A tight housing market and strong demand suggest that prices will increase overall in 2014.
See also my Beverly 2013 Housing Market Review
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 [email protected].
Andrew Oliver is a Realtor with Harborside Realty in Marblehead
Brad Phillips is the Partner/Managing Broker of Harborside Realty in Beverly and can be reached at 978.884.4823 or [email protected]
Widespread flooding hits the UK: a different approach to flood insurance
Today England has posted two severe flood warnings, meaning a danger to life, for the Somerset Levels, as well as more than 160 flood warnings and over 300 flood watches covering every other region of England. It is, therefore, topical to ask: How does the UK deal with the problem of flood insurance?
I spoke yesterday to Matt Cullen, Policy Advisor on Flood at the Association of British Insurers. One huge difference between the UK and the US is that in the UK flood is included in a standard homeowners policy, whereas it is excluded in the US. A second is that the UK has really accurate flood maps, while as we have seen of late not only are existing flood maps widely out of date in the US but there have been suggestions that the new maps, in Massachusetts for example, are not being produced using appropriate techniques.
One of the basic tenets of insurance is to spread risk over as many people as possible. In the UK there are about 20 million homes of which more than 90% carry property insurance and 70% contents insurance. Since flood is included in standard policies, the cost is shared widely. By way of comparison the Congressional Research Service in a February 2013 report stated:”Nationally, recent reports suggested that only 18% of Americans in flood zone areas have flood insurance.” Another report suggests that 40% of federally backed mortgages, required to carry flood insurance, do not do so. (more…)
The weather is freezing, but 2014 could be a really good year for real estate
Since its low in March 2009 the stock market, even after the January correction, has increased by 141% and is 12% above its prior 2007 peak.
By way of contrast, the housing market is up 22% from its low and is still 21% below its 2006 peak.
Sources: Dow Jones, Case-Shiller
Throughout the country the cry is the same: there is not enough supply. Come on sellers!
Well, here’s a thought. For most of us our home is our largest asset. During the great recession, as values decreased, we felt worse off. Now, as prices are recovering, we feel better off. But human nature is such that we are reluctant to sell at a price lower than one that could have been achieved in the past. And nationally prices would need to increase 25% to get back to 2006 levels. (more…)
Salem 2013 Condo Review and 2014 Outlook
The condo market in Salem is larger than the SFH market in terms of number of units sold and so I am writing separate report on each segment. Here’s the condo review.
The headlines: sales continued to recover, but the median price was down 7% from 2012 and remains 18% below the peak of 2005. A median price decline, however, can reflect either an overall reduction of prices or a change in the mix of sales. As this report will show, it was a mix change in 2013, and, as another calculation will demonstrate, underlying prices actually increased. (more…)
Salem 2013 Housing Review and 2014 Outlook
The Single Family (SFH) market in Salem had a very good year in 2013 with total sales within 2 of the peak year of 2004, median prices rising 16% to get back to within 7% of the all-time high, and the ASR (the ratio of Assessed Value to Sales Price) dropping to below 90%. (more…)
2013 Housing Market in 4 numbers
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 [email protected].
Andrew Oliver is a Realtor with Harborside Realty in Marblehead
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