Open Houses weekend December 7/8
Here are this weekend’s Open Houses. It is the Marblehead Christmas Walk and Concerts this weekend so come and enjoy!
A revised list of Sunday Open Houses will be published at 8 a.m.tomorrow.
Marblehead Open Houses
Swampscott Open Houses
Salem Open Houses
Beverly Open Houses
Lynn Open Houses
Click Other towns to search towns not listed above.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Conforming Mortgage Limits raised for 2020
The Federal Housing Finance Agency (FHFA) has announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2020. In most of the U.S., the 2020 maximum conforming loan limit for one-unit properties will be $510,400, an increase from $484,350 in 2019.
Essex County
The first table shows the limit both nationally and in Essex County in recent years, as well as the maximum home price that would qualify for a conforming loan. Since 2012 the limit has increased 22% nationally and 48% in Essex County.
Massachusestts
The second table shows the 2020 limits for each County in Massachusetts for 1,2,3, and 4-unit properties.
How is the limit calculated?
The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. According to FHFA’s seasonally adjusted, expanded-data HPI, house prices increased 5.38 percent, on average, between the third quarters of 2018 and 2019. Therefore, the baseline maximum conforming loan limit in 2020 will increase by the same percentage.
High cost areas
For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling” on that limit of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2019, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 — or 150 percent of $510,400.
As shown in the table above in Essex County the ceiling for 2020 is $690,000.
Conventional vs Conforming
A conventional mortgage is any type of home buyer’s loan that is not offered or secured by a government entity, such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the USDA Rural Housing Service, but instead is available through or guaranteed by a private lender (banks, credit unions, mortgage companies) or the two government-sponsored enterprises, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
A conforming mortgage is one whose underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. Chief among those is a dollar limit, set annually by the Federal Housing Finance Agency (FHFA)
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Open Houses Sunday December 1
Here are today’s Open Houses:
Click on these links for details:
Marblehead Open Houses
Swampscott Open Houses
Salem Open Houses
Beverly Open Houses
Lynn Open Houses
and Other towns to search towns not listed above.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Open Houses Sunday November 24
Grab your rain gear as you head out to these Open Houses:
Click on these links for details
Marblehead Open Houses
Swampscott Open Houses
Salem Open Houses
Beverly Open Houses
Lynn Open Houses
Click Other Towns to search towns not listed above.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
EXPERIENCE MARBLEHEAD AT ITS FINEST IN THIS AUTHENTIC “OLD TOWN” COLONIAL
7 Middle Street,Marblehead, Massachusett Open House: Sunday 11:30-1:00 PM Or call me on 617.834.8205 for a private showing.
Time-honored properties occupy a different place in the world than do other homes. Homes that have acquired charm, quirks, and storied pasts add their own lives to yours.
We take great pride in presenting 7 Middle St, in Marblehead. This thoughtfully updated antique offers timeless appeal at every turn.
Offered at $799,900 | 4 BR | 2.5 BA. LEARN MORE
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
How is Marblehead’s 2020 Property Tax rate calculated?
This article, which explains how the tax rate is calculated, is a follow up to Marblehead 2020 Tax Rate drops sharply
The formula is actually very simple: take the $ amount of the previous year’s tax levy, add 2.5% for Proposition 2 1/2, and also add any new growth (such as new construction or a condo conversion). This figure is the new tax levy. To this figure is added debt service – the Principal and Interest payable on the town’s debt.
Here are the numbers for Fiscal Year 2019 and 2020, remembering that the FY runs from July to June.
The Tax Levy calculation
The dollar amount raised by the property tax will increase year by year. That is because of the formula: last year’s number plus 2.5% plus new growth. In the table above you can see how the FY 2019 tax levy of $61,400,179 becomes the base for FY 2020. Add $1,535,004 for Prop 2.5% and $303,231 for new growth and the new figure is $63,238,414. To this number is added the debt service – Principal and Interest on the town’s debt, much as homeowners pay P&I on their mortgage – to give a total amount to be raised of $69,809,220.
The Tax Rate
The actual tax rate depends upon the total Assessed Value of all property: residential, commercial and personal. The tax rate is calculated by dividing the total dollar amount to be raised by the total Assessed Value of all property. Thus, while the $ amount raised by the tax (and therefore the median tax bill) will increase each year, the headline tax rate will fluctuate depending upon the direction of Assessed Values.
In simplistic terms, the $ amount raised before debt service will increase by a little more than 2 1/2% each year, so if the median Assessed Value also increases by a little more than 2 1/2% the tax rate will be unchanged. If the increase in Assessed Values is less than 2 1/2%, then the tax rate will rise. And if the increase in Assessed Values is more than 2 1/2% then the tax rate will rise. One other variable is the cost of debt service.
In FY 2019 the tax rate was $10.74, achieved by dividing the almost $67.8 million to be raised by the $6.3 billion of Assessed value. And in FY 2020 the calculation is $69.8 million divided by $6.7 billion, which produces a rate of $10.39. While the tax rate will decline in 2020, the median tax bill, based on the higher Assessed Values, will increase by $236, or 3.5%, to $7,003.
Note that the calculation of the tax rate is made simpler by the fact that Marblehead’s Board of Selectmen votes each year to have a single tax rate for both residential and commercial tax. In towns which elect to have a differential rate – i.e. by taxing commercial property at a higher rate than residential – there are generally two different tax rates, achieved by dividing the amount to be raised from residential and commercial taxpayers by their respective aggregate Assessed Values.
How does debt service affect the tax rate?
The announced property tax rate announced each year includes the cost of debt service, which Marblehead tries to keep to 10% or less of the total tax bill.
The historic link between tax rates and median prices
This chart shows the tax rate for each Fiscal Year together with the median price for the year used for the calculation (e.g. the median price for 2018 is used for the 2020 tax rate).
Remember that for the tax rate to go down, Assessed Values have to increase by more than the approximately 2 1/2% that the total tax levy will increase each year.
What is the outlook for FY 2021?
The residential real estate market in Marblehead has been firm again in 2019 (and 2020 prices will be the basis for the FY 2021 tax rate). At this stage it looks as though the SFH median price will be around $710,000, a modest 3% increase from 2018’s $689,500. But bear in mind this is the median price of the roughly 240 SFHs that will sell this year out of the more than 6,200 SFHs in Marblehead. This does not imply that the Town’s Assessed Value will increase by 3%, including as it does all types of property.
Nevertheless, it seems reasonable at tis stage to expect that the tax rate in FY 2021 will be similar to that for FY 2020.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
This is Not 2008 All Over Again: The Mortgage Lending Factor
According to this Keeping Current Matters article : Some are afraid the real estate market may be looking a lot like it did prior to the housing crash in 2008. One of the factors they’re pointing at is the availability of mortgage money. Recent articles about the availability of low-down payment loans and down payment assistance programs are causing concern that we’re returning to the bad habits of a decade ago. Let’s alleviate the fears about the current mortgage market.
The Mortgage Bankers’ Association releases an index several times a year titled: The Mortgage Credit Availability Index (MCAI). According to their website:
“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is…a summary measure which indicates the availability of mortgage credit at a point in time.”
Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available the mortgage credit.
Here is a graph of the MCAI dating back to 2004, when the data first became available:
As we can see, the index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, so did the MCAI (to below 100), as mortgage money became almost impossible to secure.
Thankfully, lending standards have eased since. The index, however, is still below 200, which is half of what it was before things got out of control.
Bottom Line
It is easier to get a mortgage today than it was immediately after the market crash, but it is still difficult. The difference in 2006? At that time, it was difficult not to get a mortgage.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
7 Middle St in Boston Magazine
“To survive the long, frigid days of New England winter, we want a homebase that feels warm and cheerful on even the most below-zero of nights. Thankfully, this Marblehead Colonial is essentially the real estate version of a HappyLight. Not only does 18th-century charm permeate the original beams and floors, but vibrant splashes of color amp up the energy in each room. Not to mention, a total of six fireplaces radiate heat throughout the four bedrooms, the living room, and the kitchen. Prepare to canoodle away those winter days.”
Offered at $799,900 | 4 BR | 2.5 BA
Read Boston Magazine’s article on 7 Middle Street
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Recession: what Recession?
It is only a short 3 months ago (well I guess in political terms that’s almost a lifetime) that all the pundits were cautioning – not of course forecasting – that a recession was possible.
Since the yield on the 10-year Treasury is the most sensitive to the economic outlook, and since mortgage rates are based on the 10T yield, mortgage rates followed the drop in the yield on 10T, but only to a limited extent.
Basically, the 30-year fixed Rate Mortgage rate went from 4.5% at the beginning of the year to 4% in June and 3.5% around Labor Day, when R talk was all the rage amongst commentators.
So what has happened recently? (more…)
Buyer Demand is Growing
Foot traffic – the number of home showings – is increasing in all areas of the country, with back to back monthly gains for the first time in almost two years, according to this Buyer Demand Growing in Every Region report in Keeping Me Current. (more…)
Open Houses Sunday November 10
Here are today’s Open Houses: (more…)
Housing Supply By Town By Price
I have written before about the difference in supply at different price points. This article examines the supply of Single Family Homes (SFH) by price as at November 1 for Marblehead, Swampscott, Beverly, Sale, Lynn, and for Essex County overall.
A market is generally considered to be in equilibrium between buyers and sellers when the number of properties for sale – the supply – is equivalent to 6 months of sales. When supply is under 6 months it is considered to be a sellers’ market; more than 6 months and it is a buyers’ market.
But the overall figure for a market can disguise a wide range between properties at different price points – as the following tables demonstrate.
Marblehead
The pattern is shown here, as the supply increases – dramatically – as prices rise.
Swampscott
The same story.
Beverly
And again.
Salem
Salem doesn’t really have a top end to the same extent as the other towns so this is effectively a strong sellers’ market at all price points.
Lynn
A very tight market.
Essex County
A simple rule of statistics is the bigger the number the more reliable the statistic. Thus, the numbers for Essex County as a whole are the most significant, and clearly underline the story from individual towns.
Comment
While there is truth in the cliche that “all real estate is local”, it is also true that broader trends, not just in terms just of home sales, but also of consumer confidence,economic outlook and mortgage rates, can give insight into where local markets are heading.
With the economy continuing to show steady growth, mortgage rates close to historic lows, and low inventories, the outlook for the North Shore market continues to be for steady, not spectacular, growth as we head into the election year, particularly if consumer confidence remains strong.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
New Listings week ending November 1
Here are the New Listings over the last seven days:
Click on these links for details:
Marblehead New Listings
Swampscott New Listings
Salem New Listings
Beverly New Listings
Lynn New Listings
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Is the seller’s market coming to an end?
A really interesting article from boston.com asks the question we’d all like to know the answer to: Is the sellers’ market coming to an end?
Witness for the prosecution
According to the President of the Greater Boston Association of Realtors, reporting that the median Single Family Home (SFH) price in Greater Boston had increased just 1.7% to $605,000 over the last 12 months, while the median condo price had slipped 4.1% to $549,000: “The seller’s market is likely over, or at least the balance has shifted. With sale prices having begun to stabilize, more homes and condos available for sale, and properties sitting on the market longer, home values have most likely peaked in many areas.”
Witness for the defence
According to a report from The Warren Group, in Massachusetts as a whole in September, the median SFH price rose 5 percent on a year-over-year basis to $399,000, but the real action was in the condo market, where the median price jumped 14.3% to $375,000.
Comment
Lies, damned lies and statistics was the first article I wrote for the Marblehead Reporter in 2008.The point I made then, and have repeated many times since, is that statistics can be distorted to suit the argument one is trying to make – rather like the way Opinion Polls slant questions to get the answer the sponsor wants.
In real estate I don’t believe there is an intent to mislead; I think it is often a writer quoting statistics without explaining them.
Having said that, the number one reason that I NEVER quote monthly statistics is that they can vary greatly and IMO are pretty meaningless.
Let’s look at Massachusetts sales to see if I can make my reason clear.
Our starting point is the comment that the median price in September (one month) increased 5% Year over Year (YOY) for SFHs and 14.3% for condos. We are using different sources for numbers (mine from MLS, Warren from public records, thereby including more sales) but the numbers for the month of September are quite similar. But look below at the monthly figures for July, August and September, followed by those for the entire quarter – Q3.
For SFHs the monthly increases are quite consistent.
But now look at condos. Note that I have high-lighted September 2018 when the median price was out of whack at just $340,085. The September 2019 median price was down from July and August but up sharply compared with September 2018 – which was an outlier.
So we look at the quarter – Q3 – and see that the median prices was up 3.2%, similar to the 2.8% for SFHs.
Confession time. I have statistics going back to 2000 for all 34 cities and towns in Essex County plus Essex and Middlesex Counties and Massachusetts. In all the years of keeping records the only time I have calculated a monthly statistic was – for this article.
Especially in New England, there is too much fluctuation even from quarter to quarter, in large part because of seasonality caused by….weather. To give another example, I worked with a seller in Watertown and he had a report from another Realtor showing that the median price had dropped by a large amount – something like 20% – for ONE MONTH and suggesting that prices would show a decline in coming months. By showing longer-term data I was able to persuade the seller that the one month figure was meaningless – and in fact the median price increased by double digits in the second half of the year.
So how is the market?
What was long ago called the $64,000 question, when $64,000 still bought something of value.
By now you will understand that I like to use quarterly data and – better yet – Year to Date as we get to 6 and 9 months.
Here’s another table:
For both SFHs and Condos the YTD increase is =/- 2.5% – and in each case Q3 was a little higher than that figure, not suggesting a slowing of the rate of price increases.
But…..MA is a very big place! And numbers for condo median prices are distorted because Massachusetts includes….Boston. In fact, the median price of condos in Boston has dropped 3.1% YTD meaning that excluding Boston the median price has actually increased by 4.6%.
Yes, I know, your head is spinning with all these numbers. And I will add one more. Note that the median prices quoted at the beginning for Greater Boston were $605,000 for SFHs and $549,000 for condos. Compare that with $399,000 for SFHs and $375,000 for Condos in the Warren Group report. In both cases the Greater Boston numbers are about 50% higher than for the State as a whole. The Boston and surrounding towns effect.
Conclusion
As I said nobody is trying to mislead the consumer (or home buyer or seller), but I repeat what I often say to people when they are shown a statistic:”tell me what that means”.
Even if numbers confuse you (and as a numbers wonk that is hard for me to believe….) there is no reason not to ask for an explanation, as they say in prospectuses nowadays, “in plain English.”
For detailed Q3 reports on Marblehead, Swampscott, Salem and Beverly, as well as a town-by-town summary for the 34 cities and towns of Essex County, click
Team Harborside Market Reports.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Beverly Q3 2019 Housing Market Summary
[Click Beverly Q3 2019 Housing Market Summary to download a copy of this report.
Single Family Homes (SFH)
After 8 consecutive quarters in 2017-18 in the $450,000-$475,000 range, the median price of Single Family Homes (SFH) sold in the first 9 months of 2019 (YTD Q3) jumped 10.3% to $520,000. Sales, however, were the lowest since 2012.
Condos
The median condo price YTD jumped 18.1% to $339,000, but was similar to the 2017 level of $340,000. While the drop in 2017 was caused by the end of sales at Elliott Landing, the increase in 2019 in both median price and sales seems to be more a reflection of strong buying interest in Beverly generally rather than any one new development.
NB Numbers in bold represent record levels. Sources: MLSPIN, OliverReports.com
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
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