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…)
How much does parking add to the value of a home?
I often wonder how long our memories are. In mid-winter it seems to me the entire population of New England is thinking of moving to Florida, but I suspect that come next winter we will not find deserted cities.Don’t we just love having something to complain about?
After a winter like this one everybody wants to have a home with parking – in cities – or with a garage in the suburbs and outer towns. But how much is that convenience worth?
Here’s a Boston Herald article which describes the value of parking in Boston’s neighborhoods. (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 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…)
Is it too late to “flip” houses?
Trulia recently issued a report suggesting that house flipping is a declining activity because prices aren’t increasing enough to make it profitable.
As this excellent Huffington Post article points out there are two types of house flip: one based on price appreciation; and one based on creating value by rehabbing a property. (more…)
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…)
Mortgage rates: how low can they go?
Remember the forecasts of 5% mortgages? 6% mortgages?
Well here we are in January 2015 and the 30 year mortgage rate is well below 4%. In fact I was in a Bank of America branch this week and saw a sign for 30 year mortgages at 3.5% (with points), while the national average reported by Freddie Mac on Thursday was 3.66%.
The benchmark for the 30 year mortgage is the 10 year US Treasury yield. What does that mean? In general, banks sell the mortgages they issue to Fannie Mae or Freddie Mac who in turn package them into pools and sell them to investors. Because mortgages have higher risks than US Treasuries, investors demand a higher yield than they would accept from Treasuries. The difference in yield between mortgage securities and Treasuries is called the spread.
This chart shows the spread from 2005 to 2014. I have summarized the high and low spread for each year in the table below the chart. For most of the period the spread was between 1.50% and 2.00%. It was over 2.00% throughout the crisis year of 2008 and did not drop below 2.00% until April 2009, but has been below 2.00% almost the entire period since then. What does this mean for mortgage rates?
Sources: US Treasury, Freddie Mac
Source: US Treasury, Freddie Mac
The 10Y Treasury yield on Friday was 1.84%, so adding a spread of 1.50 – 2.00% would produce a 30 year FRM of 3.34 – 3.84%. And we are at 3.66%.
Where does the 10 Y Treasury yield go from here?
I think every expert forecaster has been wrong on US interest rates. The assumption was that once the Federal Reserve stopped buying mortgage backed securities and Treasuries (Quantitative Easing), interest rates throughout the economy would rise, driven by a strengthening economy and hence the demand for loans to finance business and mortgages. What has got in the way of that forecast, in simple terms, has been: geopolitical risk (Crimea, Ukraine, terrorism) which always leads to a flight to safe investments, and US Treasuries are regarded as the safest investment available worldwide; and grave concerns about deflation in many parts of the world, but especially in Europe, where a huge expansion of QE is expected to be announced next week.
The US is growing economically quite strongly and has stopped its QE program, while Europe is stagnating and about to ramp up its QE program. One of the consequences of this divergence has been a stronger US dollar which is one of the factors behind the collapse in commodity prices.
And on top of this, which in itself fuels the demand for US Treasuries as a safe haven in a strong currency, the yield on US Treasuries is higher than that available in many other countries.
Source: Bloomberg
Predictions
As I have said many times predicting the future is very difficult! Very few countries in Europe have even started on the structural changes necessary to get their economies moving, and many commentators fear that QE is seen as a free lunch, when the only thing that is certain is that it will lead to even greater debt in already over indebted countries. No wonder the US is seen as a safe haven!
It does seem that the biggest concern worldwide is avoiding deflation and it is hard to see how interest rates can rise against that background. In the beginning of 2015, buyers of homes in the US have been given an unexpected opportunity to finance their purchases at interest rates close to the lowest ever seen. Could mortgage rates go even lower in the coming weeks? Certainly, but with the time lag involved when buying a home, trying to time interest rates, like trying to time the stock market, is unlikely to be a successful strategy. Rates are very low: take advantage of them!
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
Mortgage Rates drop to 3.66%
The 30-year national average mortgage rate, as reported by Freddie Mac, started 2014 at 4.5% with forecasts that by year end the rate would reach over 5%. For a number of reasons, which I will go into again more fully in my post this coming Saturday, the rate in January 2014 was the highest for the year and ended 2014 at 3.87%.
This year the slide has continued with the rate reaching 3.66% this week, the lowest level since May 2013 and not far from the record low of 3.31%. The decline in rates seems likely to trigger renewed buying interest and may shorten the traditionally quiet winter market.
Source: Freddie Mac
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
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
Salem Housing Market 2014 Review
Here are the highlights for the Salem market for 2014. Note the difference between the SFH and condo markets when compared with the prior peak.
Single Family Homes (SFH)
– the median SFH price increased 7% to $346,750, less than 1% below the 2005 peak of $349,000.
– sales dropped 7% to 210, still the 3rd highest year this century
– the ASR* fell sharply from 92.5% to 82.9%, an indication of rising prices
Condos
– the median condo price also increased 7% to $247,000, but is still more than 11% below the peak of $279,000 in 2005
– sales were down slightly and are still well below the levels seen in the 2003-06 period
– the ASR* fell from 92.3% to 86.2%, an indication of rising prices
Tax rate
– the FY2015 tax rate is $16.41, a decrease from $16.73 in FY2014, but the average tax bill will increase nearly 5% or by $227 for SFHs.
I will publish a fuller market report in the near future.
* The ASR is the Assessed Value (AV) divided by the Sales Price (SP).If the ASR is below 100% it means that properties are selling for more than their AV. Conversely, properties selling below their AV will have an ASR above 100%.
– As we all hope our properties are worth more than the AV we look for an ASR below 100% as a positive sign. In a period of rising prices the ASR is likely to be falling. So what we, as homeowners, want is an ASR below 100% and falling
– Remember that AVs are a lagging indicator: the tax bills just announced for FY2015 are based on actual sales in 2013. Thus the 2014 sales data, reported in this review, will be the basis for FY2016 assessments. And remember, also, that falling tax rates rarely translate into falling tax bills!
– I will be publishing a report in the near future on the average tax bill per city and town in Essex County to go with my recent Essex County 2015 property tax rates report.
If you – or somebody you know – are considering buying or selling a home, or 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
Essex County Housing Market 2014 Review
Here are the highlights for the Essex County market for 2014. Note the difference between the SFH and condo markets when compared with the prior peak.
Single Family Homes (SFH)
– the median SFH price increased 3% to $380,000, which is 4% below the 2005 peak of $394,000.
– sales dipped very slightly, while non-distressed sales increased modestly
Condos
– the median condo price increased nearly 5% to $252,000, beating the prior peak of $246,000 in 2005
– sales were down slightly and are still well below the levels seen in the 2003-06 period
Tax rates
– for FY2015 23 cities and towns have announced a reduction in the tax rate while in 11 towns the rate has been increased. Note that a reduction in the tax rate does not imply a reduction in the tax bill. I will be publishing a report in the near future on the average tax bill per city and town in Essex County to go with my recent Essex County 2015 property tax rates report.
I will also publish a fuller market report in the near future.
If you – or somebody you know – are considering buying or selling a home, or 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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