Mortgage rates near 4%: no need to panic
As anticipated in my Is this the end of ultra cheap mortgages? post last week, the rate on the 30 year Fixed Rate Mortgage (FRM) jumped to 3.94% this week, according to the latest Freddie Mac weekly survey. Before we all panic, let’s consider a few facts.
Mortgage rates are historically extremely low
Look at the chart below. Mortgage rates fell below 5% for the first time ever only in 2010. They averaged a little below 4% in 3 of the last 4 years, but even after the jump since the election rates are merely back to where they were a year ago and remain close to all-time lows. And during the boom years of 2004-2006 the average mortgage rates were 6.84%, 6.87% and 6.41%.
Source: Freddie Mac
There is no clear correlation between mortgage rates and home prices
Data for the last 10 years for national home prices starts as the housing boom was already over, but the chart below shows how home prices tumbled from 2007 to 2012 at a time when mortgage rates were also falling. Once the market turned, the spike in mortgage rates in 2013 did not stop the increase in home prices.
Source: Freddie Mac, S&P CoreLogic Case-Shiller
The next chart shows in a little more detail what has happened in the last 4 years. All I can say is that I see no direct correlation in the chart above or the one below between home prices and mortgage rates. That is not to say that mortgage rates do not have an impact on home prices, just that they are not the only factor.
Source: Freddie Mac, S&P CoreLogic Case-Shiller
Is inflation going to rise?
Since the Great Recession, central banks have been pumping cash into world economies in an attempt to stave off deflation – falling prices. Why are falling prices so bad? Because some consumers will defer purchases in the belief that prices will be lower in the future. Since by some estimates consumer expenditure accounts for 70% of the economy, any concerted move by consumers to defer purchases would have a major negative effect on the economy.
So is inflation going to rise now that the Republicans control Congress and the White House? Probably, and that is the bet markets are making, causing the yield on the 10 year Treasury Note (10T) to jump nearly 0.5% in less than two weeks. And mortgage rates follow closely the yield on 10T.
Is renewed Inflation bad news for the economy?
As the Wall Street Journal put it: “The world should welcome higher long-term bond yields insofar as they signal a brighter outlook for economic growth and a return to moderate inflation after years of fear about falling consumer prices. Central banks have been trying hard—especially in Europe and Japan, without much success—to drag inflation higher. The long run of low rates also has battered banks, pension funds and insurance companies.”
Higher economic growth, the ending of the fear of deflation, relief for financial institutions – there’s a lot to like in moderate inflation – the key, of course, being moderate.
How does inflation affect real estate markets?
One of the key aspects of borrowing money in an inflationary environment is that the asset purchased will appreciate, while the loan will be paid back in depreciated dollars. The incentive, therefore, is to buy now before prices rise – the opposite to the concern in a time of deflation.
Will home prices continue to rise?
The chart below shows the growth in national home prices over the last 40 years. My reading of this is that we have now recovered from the sub-prime boom and bust cycle and that prices are likely to continue to grow modestly over time.
Source: Federal Reserve St. Louis; S&P CoreLogic Case-Shiller
If you are considering selling your home please contact me on 617.834.8205 or [email protected] for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
What does the Election mean for real estate markets?
As I write a blog on real estate, that will be my sole focus in commenting on the outcome of the Election.
The bull case
The removal of a lot of strangling regulations and the end of gridlock in Congress will produce stronger economic growth. Major infrastructure spending will boost jobs and wages at the lower end, while lower corporate tax rates and lower personal tax rates will produce increased personal wealth. Interest rates will rise, reflecting the stronger economy, and the demand for housing will increase. Greater wealth and confidence will provide a boost to the higher end of the market.
The bear case
The next President will, with the support of Congress, implement all the campaign “promises”, in particular those on trade protectionism, which would lead to a major recession. Interest rates will fall and the housing market will slump.
My view
Campaigning and governing are vastly different endeavours, which is why I wrote “promises” in the last paragraph. Since I am an optimist by nature, I find the bull case more plausible than the bear case.
For comment on the outlook for mortgage rates read Is this the end of ultra low mortgage rates?
If you are considering selling your home please contact me on 617.834.8205 or [email protected] for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Seth Moulton: let’s build the North-South Rail Link
Congressman Seth Mouton has just written this North-South Link Key to Boston Economy article in the Boston Herald.
Source: VANASSE HANGEN BRUSTLIN, INC.
Rep. Moulton argues that the construction method for the Link would be entirely different from that of the Big Dig, and that both North and South Stations would continue without interruption, while the roads would stay open and uninterrupted.
Rep. Moulton quotes the new Crossrail link in London, which is 5 times the length of the North-South Link and is being completed on time and on budget (another huge difference from the Big Dig), while the Swiss have just opened the 35 mile Gotthard Tunnel under the Alps to provide a high-speed rail link between Northern and Southern Europe.
For those of us who live on the North Shore, a North-South Rail Link would provide a great boost. Please take the time to read about the proposal and become informed on the topic. (more…)
MA Q3 housing market report: headed for new high
The median price of a Single Family Home (SFH) in Massachusetts rose 4% to $383,000 in the Third Quarter (Q3) and 3% to $370,000 for the Year to Date (YTD). Both numbers represent new highs and suggest that 2016 as a whole will set a new record – finally beating the $362,000 of 2005.
While sales YTD were up almost 10%, they were actually down slightly in Q3, reflecting a 20% decline in inventory compared with a year ago. (more…)
Finally, a private island for sale
From time to time I have commented that while the Sotheby’s International Realty website lists a variety of categories of properties for sale, I have been disappointed that there have not been any private islands (or haciendas for that matter) for sale here on the North Shore.
Source: Robert Paul Properties
Are home prices falling?
Sometimes I think headline writers are deliberately trying to convey a false impression.
Take this will home price appreciation fall? article in the Daily Dose. Ok be honest, if you read this headline quickly, would you think home prices were going up or falling?
or 
(more…)
Sizzling home sales beat summer heat
The Massachusetts Association of Realtors has just issued its July pending home sales report, showing an increase of 8.5% in pending SFH sales compared with a year ago and a 4.1% increase in pending condo sales.
“Historically, the summer tends to be a time when summer vacation and beach days take the place of home buying, but that’s not the case this year,” said 2016 MAR President Annie Blatz, branch executive at Kinlin Grover Real Estate on Cape Cod. “Even with all the heat and burnt-out lawns because of water bans, buyers were in the market putting their best offers forward and having them accepted in record numbers for July.”
On Sunday evening I posted Open Houses swamped today, commenting on the very high turnout at Open Houses last weekend.
There seems to be at least one category of people not on vacation this August – home buyers.
If you are considering selling your home please contact me on 617.834.8205 or [email protected] for a free market analysis and explanation of the outstanding marketing program I offer.
Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Massachusetts schools ranked number 1 in the country
A recent WalletHub study of States with the best schools had Massachusetts schools ranked number 1 in the country.
The WalletHub report used 17 weighted metrics, ranging from SAT scores to school safety.
Other New England States also ranked highly, with Connecticut at number 3, Vermont 4, New Hampshire 6 and Maine 8.
If you are considering selling your home please contact me on 617.834.8205 or [email protected] for a free market analysis and explanation of the outstanding marketing program I offer.
Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Mid-Year housing inventory down sharply
Preliminary data (a lot of sales scheduled to close by 6/30 have not been entered into MLS as yet) suggest that sales were up 14-20% in Essex County and Massachusetts in the first half of the year, and median price up 3-4%. The following table shows current inventory for local towns, Essex County and Massachusetts as a whole. The highlighted last column shows the change from a year ago. There are some huge changes, all showing lower inventory.
If you are considering selling your home please contact me on 617.834.8205 or [email protected] for a free market analysis and explanation of the outstanding marketing program I offer.
Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
How much do you need to earn to afford to rent a 2 bed apartment?
A new report by the National Low Income Housing Coalition finds that it is getting harder and harder for average Americans to afford a modest rental.
In 2016, a worker would need to make $20.30 per hour to rent a two-bedroom accommodation comfortably—without devoting more than 30 percent of income on housing costs. Last year, NLIHC pegged this “housing wage” at $19.35 per hour. The actual average hourly wage is $15.42.
The report highlights the difference in each State between the actual hourly earnings and that needed to afford a 2 bed rental.
This is the summary for Massachusetts: (more…)
Housing Inventory today, by price and town, versus a year ago
This article compares today’s inventory, by price, compared with that of a year ago.We are now past the vagaries of winter weather and the dates of Easter and Passover, thus making the comparisons like for like for probably the first time this year. I will look first at Essex County and Massachusetts for the big picture, followed by Marblehead, Swampscott, Salem, Beverly and Lynn, adding comments where appropriate.
Overall, the story is of a decline in inventory at lower price levels and an increase at higher price points, a trend consistent with a rising market.
Massachusetts and Essex County
Overall inventory is down in the entire State by 9% for SFHs and 6% for condos; in Essex County the decline is 10% for SFHs and 12% for condos. But…. there is a marked difference between supply under $500,000 and above that figure, with large declines in supply below $500,000 and increases above that figure, particularly at the top end.
Source: MLS, Oliver Reports
Marblehead
While Marblehead is one of the few towns to show an increase in inventory over 2015, it still shows a sharp drop from the 92 and 100 SFHs for sales on this date in 2013 and 2014, while condo inventory is more in line with numbers from those years. The increase in SFH inventory is concentrated in the $750,000 – $999,999 and over $2 million brackets for SFHs and, rather surprisingly, in condos under $250,000.
Source:MLS, Oliver Reports
Swampscott
The story in Swampscott continues to be the incredibly low level of supply, most markedly for SFHs below $500,000, where the number available has collapsed from 25 to just 3. And there are just 5 condos for sale in the entire town.
Source:MLS, Oliver Reports
Salem
While overall supply in Salem is down just slightly from last year, here again we see declines in inventory at the lower price levels:
Source: MLS, Oliver Reports
Beverly
The total number of SFHs for sale is much the same as last year but the mix has changed, with a huge drop under $400,000 and increases in most of the higher ranges. Condos for sale under $250,000 plunged from 16 to just 4.
Source:MLS, Oliver Reports
Lynn
The decline is most pronounced in SFHs under $300,000 where supply has more than halved from 48 to 23.
Source: MLS, Oliver Reports
If you are considering selling your home please contact me on 617.834.8205 or [email protected] for a free market analysis and explanation of the outstanding marketing program I offer.
Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Massachusetts Q1 Housing Market Review
This report reviews the Massachusetts Q1 Housing Market by the Numbers, followed by a snapshot of current inventory compared with a year ago.
Median Prices and Sales
Sales of SFHs jumped sharply, not just from last year’s level, but from that of the last several years and were the highest recorded in my records going back to 2000. Condo sales were also up significantly, but are still lower than in the heady days of 2005-2007.
The median price of both SFHs and condos was within 1% of last year’s Q1 levels. Always remember that quarterly numbers can be – and frequently are – volatile, especially during the winter months. We will get a truer picture of the underlying market trends when we get the numbers for the first half of the year.
Source: MLS, Oliver Reports
Current Inventory
The median SFH price in Massachusetts is around $360,000. While overall inventory for SFHs is down 7% from last year, the decline is concentrated below $500,000.
Numbers for the condo market in the entire State are distorted by the inclusion of Boston. The vast majority of the condos for sale over $1 million are in Boston, and places like Cambridge, Brookline and Newton. While the overall decline in inventory is 6%, it is 15-19% under $350,000.
Source: MLS, Oliver Reports
If you are considering selling your home please contact me on 617.834.8205 or [email protected] for a free market analysis and explanation of the outstanding marketing program I offer.
Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Jeopardy answer: Boston 117 Marblehead 3
And the question is: “what is the number of condos in Boston that sold for more than $3 million in 2015 compared with the number of houses that sold in Marblehead over $3 million?”
Following my $20 million condos? post earlier this week, I read with interest this Record number of Boston condos sold for over $3 million in 2015 article on boston.com about condo sales in Boston in 2015. Oh, by the way, overall 286 condos (vs 191 in 2014) sold for more than $2 million and 822 (690 in 2014) for more than $1 million.
I think of real estate as being like a large pond: a pebble dropped in the middle creates ripples which reach out wider and wider with time. Boston is the middle of the Massachusetts pond, but the ripple effect is being seen as more and more buyers from Boston appear to be taking advantage of high prices there to sell and buy further out in the pond.
Here is a list of sales over $3 million for Boston and MA counties in 2015, followed by a breakdown by town. No real surprises – most of the higher end sales were in or near Boston, or on the Cape and Islands (my numbers exclude Nantucket as brokers there use a different MLS service).
Counties (and of course Boston)
Source: MLSPIN, Oliver Reports
Towns
Source: MLSPIN, Oliver Reports
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 [email protected].
Read Which broker will find the buyer for my house?
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. 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
$20 million Boston condos? Bring’em on!
Just a couple of days after posting Tiny house with great views for $40,000, I read this Why Boston can’t build ultra luxury condos fast enough article on Boston.com.
According to the article: “the new Four Seasons tower ( One Dalton) has opened sales office, with its 180 ultra high-end condos, some of which have the potential to break the $20 million mark, expected to go fast as well.”
By my calculation, the $20 million for one of these condos would buy 500 tiny houses, or 70 non-Boston condos at the 2015 Massachusetts median price of $285,000, or 5 oceanfront estates in Marblehead.
While the flood of new millionaires from technology and start-ups of various hues might make it less true today than it used to be that real estate was the most common way for people to become millionaires, there seems little doubt that the wealthy from around the world are investing that wealth in real estate in cities such as Boston, New York and London as both a safe haven and an asset play in an era of close to zero interest rates. (more…)
Massachusetts 2015 Condo Market Review
This Massachusetts 2015 Condo Market review shows that sales in 2015 were steady, while prices overall rose 3%. But – and it’s a big but – the inclusion of Boston in numbers for all 353 cities and towns in the State distort the result. In this report I break out Boston and show how the rest of the State fared in 2015.
Sales
Condo sales in Massachusetts have been steady for the last three years, but are still sharply down from the 2005 peak.
Source: MLS, Oliver Reports
Median Price
It may appear surprising, at first blush, that the median price of a condo in Massachusetts should show a 20% increase over the 2005 level. There is a one word explanation: Boston.
The first chart shows just the overall condo market, while the second breaks out Boston and shows Massachusetts ex Boston. Removing Boston from the calculation reduces the increase since 2005 to 10%, while the median price in Boston has increased more than 50% in the same period.
Source: MLS, Oliver Reports
Summary
The inclusion of Boston condos – the main market in the city – distorts the numbers for the State overall. Nevertheless, it is encouraging that the median condo price, excluding Boston, still reached a new paek level in 2015.
The Massachusetts economy remains strong – GE’s decision to relocate to Boston will only help – and mortgage rates are once again close to all-time lows.
Barring geopolitical disasters, the outlook for 2016 is for a gently improving market in Massachusetts.
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 [email protected].
Read Which broker should I hire to sell my home?
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. 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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