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.

Sources: MLS, Oliver Reports

Median Prices
Note that for median price and ASR  (Assessed Value to Sales Price Ratio) calculations I exclude distressed sales. Most reports, from Case-Shiller to local real estate firms, take the numbers from MLS and use all sales. Since distressed sales generally take place at a significant discount to non-distressed sales, I exclude them to get a more accurate picture of underlying price trends.

While prices from 2010-12 were largely in the $325 – 355,000 range, the last three quarters of 2013 saw prices push above the top of that range.

Sources: MLS, Oliver Reports

The median price peaked in 2005 and saw a drop of 19% by 2009. We did not see the huge drops elsewhere in the country, which is one of the main reasons that the increases reported for 2013 are smaller than those for markets which suffered more.

In my reports on Beverly, Marblehead, Salem and Swamspcott (go to www.OliverReports.com to read these) I pointed out that the quarter with the highest price each year fluctuated from year to year. Looking at Essex County overall, however, the third quarter was the highest in all but three of the last 14 years.

Sources: MLS, Oliver Reports

ASR
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 SFHs in Essex County in recent years:

Sources: MS, Oliver Reports

In 2013 the ASR dropped from 98.5% to 90.7%, meaning that the median SFH in Essex County sold for 10% above Assessed Value in 2013, whereas in 2012 the median SFH sold for just 2% above Assessed Value. This data confirms that prices were rising in 2013.

2014 Outlook

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 for sale and comparing numbers with a year ago, which was also a cold month if not quite as brutal as this year. Bearing in mind that the median price last year was $370,000, it is noticeable that supply falls into three categories: down under $350,000, stable between $350,000 and $750,000, and up above $750,000.

Source: MLS, Oliver Reports

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.

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