Why have mortgage rates spiked?
(Click here to download a pdf of this report.)
While the Freddie Mac weekly survey for the 30 year Fixed Rate Mortgage (FRM) this week showed an increase of just 0.07% to 4.22%, that survey was based upon rates in the early part of a week which saw a major upward move in the yield on the US 10 year Treasury (10T). As regular readers of this blog know, the rate of the FRM is closely tied to the yield on 10T. Here is a recent chart of the 10T.
The yield on 10T started 2017 at 2.45% and ended it at 2.40%, but in 2018 it has jumped, in just five weeks, to 2.84%.
It is likely that the coming week will see Freddie Mac’s survey number come in close to 4.5%, after spending most of 2017 under 4%.
Why has the yield on 10T – and hence the rate of the FRM – suddenly spiked?
I’ll answer that with bullet points:
1. 10T reflects economic activity and expectations and the economy has been growing quite rapidly and now is being boosted by significant tax cuts.
2. Those tax cuts will add $1.5 trillion to the budget deficit, a sum that will need to be financed largely by selling Treasuries.
3. Historically low unemployment levels have not translated into higher wages – until now, with the annual increase reaching 3%.
4. The seeming lack of wage pressure led many to believe that inflation had been contained, and that the old economic belief that easy money would lead to higher inflation no longer held true. That complacency has been rudely shaken in the last few weeks.
5. After many years when the Federal Reserve was a major buyer of Treasuries, it is now a seller and increased its pace of sales in January.
6. In 2018 the Treasury will be increasing the amount it will be raising at a time when one of the major buyers – the Federal Reserve – has reversed direction.
7. For the first time in a long while, Europe is showing economic growth at the same time as the US, and the European Central Bank has also started to reduce its buying of Government Securities.
8. The dollar has been very weak in recent months, something which does not encourage foreign buying of US Treasuries.
The Federal Reserve has the twin mandates of maximizing employment and stabilizing prices, although recently the Fed has said it wants to see inflation of 2%. The Fed has already increased short-term rates 5 times and has forecast 3 more rate increases for 2018.
All in all, there is quite suddenly a lot of uncertainty and concern creeping into markets, as we saw with the sharp sell off in the stock market on Friday. In today’s world events can move very quickly, as we have seen with interest rates in 2018. Barring an unforeseen event which causes an economic slow down, it does seem that the era of easy and cheap money has ended.
For more detail about the impact of interest rates on mortgage rates read Why mortgage rates may be headed upwards – finally which I published last October.
Super Bowl Sunday Open Houses
Let’s hope the Patriots score more points tonight than the total of Open Houses in Marblehead, Swampscott, Salem, Beverly and Lynn:
Harborside Sotheby’s International Realty
Marblehead Open Houses
Swampscott Open Houses
Salem Open Houses
Beverly Open Houses
Lynn Open Houses
GO PATS!
Housing Inventory continues to shrink
The number of Single Family Homes (SFH) for sale in Essex County as of February 1 is down 23% from a year ago and down 42% compared with 2015.
The chart below shows the overall numbers for Essex County and Massachusetts, followed by tables for each city and town.
OliverReports.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, please contact Andrew Oliver on 617.834.8205 or Kathleen Murphy on 603.498.6817.
If you are looking to buy, we 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.
Are you thinking about selling? Read Which broker should I choose to sell my house?
Andrew Oliver and Kathleen Murphy are Realtors with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Lynn 2017 Housing Market Review
(Click here to download a pdf of this report.)
The median price of the SFHs sold in Lynn in 2017, after reaching $300,000 for the first time in 2016, increased by 11.7% to $335,000. This took the gain to over 40% since 2013. Sales continued their recent climb and were within a whisker of the record set in 2004.
There has been a dramatic change in the number of houses sold at lower prices, with the number under $200,000 dropping from 91 in 2015 to just 25 last year. There was also a big drop last year in sales under $300,000 and a jump in sales above that figure, all evidence of quite rapidly rising prices.
Condos
A 12.5% increase in the median price saw it break through $200,000 for the first time, finally eclipsing the 2006 peak. The gain occurred in the second half of the year. Sales maintained the 2016 pace but remain well below the 2004 level.
Sales under $200,000 have declined while there has been a sharp increase in sales over $400,000.
If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, please contact Andrew Oliver on 617.834.8205 or Kathleen Murphy on 603.498.6817.
If you are looking to buy, we 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.
Are you thinking about selling? Read Which broker should I choose to sell my house?
Andrew Oliver and Kathleen Murphy are Realtors with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
New Listings week ending February 2
Searching for a synonym for trickle I came up with dribble or drop. So this is the week’s dribble of new listings:
Harborside Sotheby’s International Realty
Marblehead new listings
Swampscott new listings
Salem new listings
Beverly new listings
Lynn new listings
Gloucester 2017 Housing Market Review
(Click here to download a copy of this report.)
The median price of the SFHs sold in Gloucester in 2017 increased 15.4% to a record $461,750. Sales, as in many communities in 2017, slipped from the 2016 peak.
Sales under $350,000 slumped from 85 in 2016 to 55 in 2017, while sales over $1 million jumped from 17 to 28.
Condos
The median price of the condos sold in Gloucester in 2017 increased 12.1% to a new record of $325,000, finally beating the previous high of $300,000 set back in 2003. Sales were up from the level of the last few years.
The biggest change in 2017 was the increase in sales over $300,000, from 41 in 2015 and 40 in 2016 to 63 in 2017, driven by several new construction projects.
Andrew Oliver
www.OliverReports.com
[email protected]
617.834.8205
New Listings as of January 31
The trickle of new listings continues:
Harborside Sotheby’s International Realty
Marblehead new listings
Swampscott new listings
Salem new listings
Beverly new listings
Lynn new listings
Boxford 2017 Housing Market Review
(Click here to download a copy of this report.)
The median price of the SFHs sold in Boxford in 2017 rose 2.1% to $638,000, still below the $655,000 recorded in both 2004 and 2005. Sales were only slightly down from 2016’s record total.
OliverReports.com
Andrew Oliver
www.OliverReports.com
[email protected]
617.834.8205
Beverly 2017 Housing Market Review
(Click here to download a copy of this report).
The price of the SFHs sold in Beverly in 2017 rose 6.9% to a new high of $470,000, taking the two-year gain to 16.5%. As with many markets, sales were down, reflecting the shortage of inventory.
OliverReports.com
The impact of rising prices can be seen in the huge drop in sales under $400,000 and increases above that price.
Condos
The median price of the condos sold in Beverly in 2017 increased nearly 15%, breaking through $300,000 for the first time. The biggest factor was that in late 2016 and the first 9 months of 2017 there were some 65 sales in MLS at Elliott Landing at a median price of just over $500,000.
Andrew Oliver
www.OliverReports.com
[email protected]
617.834.8205
Facebook vs Salem Old Town Hall
Facebook is up to its tricks again, choosing to display my home page photo rather than the rather nice one I selected of Salem Old Town Hall at night.
So here it is inside the actual blog post.
My preview says that Facebook will show this image. Let’s find out.
Salem 2017 Housing Market Review
(Click here to download a copy of this report
The median price of the SFHs sold in Salem in 2017 increased 4.1% to a new high of $385,000. Sales were down somewhat from 2016, reflecting the shortage of inventory. (Numbers in bold represent peak levels).
OliverReports.com
The breakdown of sales by price shows a drop in sales under $400,000, a reflection of gently rising prices.
OliverReports.com
Condos
The median price of the condos sold in Salem in 2017 rose 12.4% to a record $310,000, breaking through $300,000 for the first time. Shortage of inventory caused a sharp drop in sales.
OliverReports.com
Andrew Oliver
www.OliverReports.com
[email protected]
617.834.8205
Open Houses Sunday January 28
A mild, snow-free day to visit these Open Houses:
Harborside Sotheby’s International Realty
Marblehead Open Houses
Swampscott Open Houses
Salem Open Houses
Beverly Open Houses
Lynn Open Houses
Town by Town 2017 Median Prices in Essex County
The median price of the 6,000 plus Single Family Homes (SFH) sold in the 34 cities and towns of Essex County in 2017 increased by $31,000, or 7.6%, to a new record $440,000 compared with 2016. While the overall market reached a new high, in 14 of the towns the median price is still below the prior peak level.
This report lists the prices in four ways: alphabetically by town; by price highest to lowest; by the increase in 2017 over 2016; and by the increase in 2017 compared with 2013.
I also show sales for the last two years, because the greater the number of sales the more reliable the median price as a gauge of the market. Record price levels are shown in bold. If no figure in bold is shown in the table that means that the peak for that town was achieved in the 2005/06 period.
Median price alphabetically (click here to download a pdf of this table).
Median price highest to lowest (click here to download a pdf of this table)
The calculation for the median price for Essex County considers all 6,000 plus sales in one bucket and produces a median price of $440,000. But if one looks at the sales by town, the median price jumps to $520,750. The reason for this difference is that several of the towns with the highest number of sales have the lowest median prices.
2017 compared with 2016 (Click here to download a pdf pf this table)
12 towns saw a double digit increases in 2017, although the largest increases occurred in markets with a small number of sales.
2017 compared with 2013(click here to download a pdf of this table)
The median price in Essex County has increased by 19.2% since 2013, with 14 towns showing gains of more than 25%.
Comment
2017 was a strong year for property prices in Essex County. As always, there were variations from town to town, but overall demand exceeded supply and supply was generally very low, except at the higher end of the price range.
2018 starts with uncertainty over the impact of the tax changes as far as the limitation on the ability to deduct State and property taxes. This, however, will not impact the lower price levels, where a growing economy and rising demand will once again run into a shortage of supply.
At the higher end, where supply remains adequate, lower personal and corporate taxes and a booming stock market should give buyers the wherewithal to step up and take advantage of attractive prices.
If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, please contact Andrew Oliver on 617.834.8205 or Kathleen Murphy on 603.498.6817.
If you are looking to buy, we 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.
Are you thinking about selling? Read Which broker should I choose to sell my house?
Andrew Oliver and Kathleen Murphy are Realtors with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
New Listings week of January 26
A very quiet week for new listings:
Harborside Sotheby’s International Realty
Marblehead new listings
Swampscott new listings
Salem new listings
Beverly new listings
Lynn new listings
New Listings mid-week January 24
A very quiet week so far for new listings:
Harborside Sotheby’s International Realty
Marblehead new listing
Swampscott new listing
Salem new listings
Beverly new listings
Lynn new listings
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