Housing inventory remains tight heading into Spring
With Spring rumoured to be coming soon (please!) here’s a look at the inventory awaiting buyers.
First Single Family Homes (SFHs). Although supply is a little higher than a year ago in actual numbers, it is slightly lower in terms of months of supply because the rate of sales increased over the last year. For the whole of Essex County supply is just under 3 months, or half the level regarded as a market in equilibrium between buyers and sellers.
The cold winter not only kept buyers indoors but also made it more difficult for sellers to get their houses ready for sale. The economy is improving, albeit still slowly, economic confidence seems to be improving, the stock market is at a high, and the likelihood is that mortgage rates will increase. Coupled with growing awareness that home prices are improving, I believe that 2014 could be a strong year for home prices on the North Shore. (more…)
Two free Marblehead concerts: Sergey Schepkin and Brahms Requiem
For my 200th blog post, I would like to draw your attention to two extraordinary musical offerings coming up shortly. Both will take place at Old North Church, 35 Washington Street , on Saturday, April 5 and Sunday, April 13.
Saturday, April 5 at 8:00 p:m: International pianist Sergey Schepkin will perform works by Bach, Schumann, Debussy and others in a concert to celebrate the restoration of Old North’s Steinway B piano. 
Read Restoration of a Steinway in Marblehead from the Marblehead Reporter.
And on Palm Sunday, April 13 at 7 p.m., the Old North Festival Chorus will perform the rarely heard Brahms Requiem. Written by Brahms after his mother’s death, this Requiem is not the traditional Latin liturgy celebrating the dead, but a full-bodied and full-blooded German celebration of the living. It is a work of epic proportions and this is an incredible musical offering, also free to the public. 
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
Tom and Gisele selling their LA “fixer – upper”
With real estate investing back in the news and many people looking for a property they can buy cheaply, invest a small amount in finishing touches and flip for a quick profit, I can recommend this LA “fixer-upper”.
Source: American Luxury Magazine
Click here for more photos.
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
Marblehead sale over $4 million – guess where?
A house in Marblehead sold this week for $4.15 million in a private transaction, according to the Salem Registry of Deeds.
Where was this? The Neck? Fluen Point? Peach’s Point?
The answer: none of the above. It was at the end of Bartlett Street in an area of town, Clifton, that has a number of ocean front properties but is not on the radar screen of many buyers.
The Clifton area runs from the Swampscott town line down to Goldthwait but for the purpose of this article I am going to refer to the coast as far as Ocean Avenue, leading to the Neck. And here is the secret. There are a lot of small streets that lead to the water and have 1 or 2 or maybe 3 or 4 houses sitting directly on the ocean at the end.
And for the most part these houses sit on the rocky Atlantic coast and are high enough that flooding is not a concern, while many of them face South, have great views of Ram Island and down the coastline, and are well protected from the nor’ easters that can impact more exposed areas.
In all I have found 29 properties on this coast with Assessed Values between $2 and $5 million. Two are currently for sale: one on Spray Avenue and one on Crown Way , both under $4 million.
Here’s a map of the area in two sections. First, from Preston Beach to Coolidge Road; secondly, from Coolidge to Ocean Ave.
Source: Town of Marblehead GIS
Source: Town of Marblehead GIS
Disclosure: I am the owner and listing agent for the house on Crown Way. The house on Spray Avenue is listed by J.Barrett & Company
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
Why I ignore most articles about “the real estate market”
My mother always told me to focus on quality not quantity. I think of that every day as I read the slew of real estate market “commentaries” that come across my desk and am reminded of the saying that there are no bad statistics, but plenty of bad comments on those statistics.
Here’s a good example.
“Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for February showing weak sales with total home sales falling 0.4% since January dropping 7.1% below the level seen in February 2013. ”
What’s the message here? I’d say it was that sales were “weak”.
The next sentence is: “Single family home sales also weakened dropping 0.2% from January falling a notable 6.9% below the level seen in February 2013.”
I’m not quite sure why a 6.9% drop is “notable” whereas 7.1% in the first sentence was not, but again we have “weak” sales and a “notable” drop.
Not good news for the real estate market you are thinking.
But read on.
“The median selling price increased 9.0% above the level seen a year earlier.”
So let me ask you, madam or mister home owner, which part of this story is more significant to you: “weak” sales, or a 9% increase in price?
I thought so. Me too.
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
60 Groups at one Open House
I reported a couple of weeks ago that 160 groups went through a Danvers OH recently. Well, last weekend was mild and 60 groups went through a Swampscott OH in the $400s and an offer was made and accepted that day.
Do you think buyers are surfacing as the weather is improving? So do I.
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
Senate passes House Flood Insurance Bill: President expected to sign it into law
After the usual round of negotiations the Senate this week passed, on a 72-22 vote, the Bill the House passed last week. The White House said that President Obama would sign it into law.
Here are the details of the Bill from my post last week: Bipartisan Congress votes to roll back impact of 2012 legislation
Reform of the National Flood Insurance program is needed. Here are my suggestions:
1. Do not try to include small, frequent losses caused by flooding throughout the country, and catastrophic major disasters, in one program. The NFIP is well suited for the former, and ill-suited for the latter.
2. Enforce the current requirement that properties in flood zones with federally insured mortgages carry flood insurance. Estimates vary, but the lowest I have seen is that 40% of such properties do not have flood insurance. Why not?
3. Flood insurance should stay with the property rather than the owner so that a sale does not trigger a change in flood insurance premiums (this is in the new Act).
4. Spend the necessary money to ensure that the flood maps used are accurate (they are not in Massachusetts).
After writing several articles on this topic in recent months, I hope that this will be my last for the foreseeable future. It has taken a while but common sense has finally prevailed in Congress. Now there is the opportunity to come up with a lasting solution to the question of flood insurance.
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
Fannie Mae, Freddie Mac and the FHA: heroes or villains?
This week the Senate Finance Committee leaders issued new proposals for winding down Fannie Mae and Freddie Mac, while the Federal Housing Administration (FHA) announced that it would not need another bail-out this year.
FHA
With so much going on it is no surprise when we discover that we have missed a news item, but it was only while listening this week to a lecture from Yale Prof. Robert Shiller (of Case-Shiller fame and recent Nobel Prize recipient) that I discovered that the FHA did indeed receive a bail-out in September 2013 as anticipated in my article from late 2012: First Fannie and Freddie: next up FHA?
The FHA’s original role was to provide mortgage credit for low and moderate-income borrowers, but they joyfully joined the frat party that was housing in the early years of this century, including one program which allowed sellers to cover the down payment on behalf of buyers, often by inflating the price of the home.
And with the approval of Congress the FHA backed loans of as much as $729,750 in some areas. I guess it depends on your definition of low to moderate income. By the standards of members of Congress, as the chart below of their median net worth shows, I suppose somebody qualifying for a $700k mortgage would be considered low or moderate income:
Source: Center for Responsive Politics, US News
The Bloomberg article I quoted in 2012 included this wonderful passage: “The U.S. should also consider raising the minimum 3.5 percent down payment to 5 percent or more, because research shows that mortgages with larger down payments are less likely to default.” No kidding!
During the discussion period about the new rules for mortgages Federal banking authorities proposed that borrowers needed to put 20% down when buying a home in order for the mortgage to be considered qualifying. This was watered down in the end, but I cannot help but note that while these discussions were taking place the FHA was offering loans – and still is – with 3.5% down.
Anyway, in 2013 the FHA had to draw down $1.7 billion from the Treasury in order to maintain the mandated level of its reserve funds. One of the main factors quoted by the FHA was losses on low down payment mortgages written in 2007-09. In contrast, this week the FHA announced it would not need another draw down since its capital reserve was now up to $7.8 billion. One of the reasons for FHA’s recovery is the large increase in fees it has imposed.
Senate Banking Committee proposals for mortgage insurance
Also this week the Senate Banking Committee leaders issued a proposal calling for the replacement of Fannie and Freddie with a new system of federally insured mortgage securities in which private insurers would be required to take initial losses before any government guarantee would be triggered. It seems unlikely that any such proposal will pass Congress this year, but at least we are starting to get some proposals that show how the mortgage market may look in the future.
Fannie and Freddie “dividends” now exceed bail out funds received
Separately, the White House Budget Office said that Fannie and Freddie, which have already paid more than $185 billion in “dividend” payments on their $187.5 billion Treasury bail-out, could pay a further $181.5 billion over the next 10 years. And still owe the same $187.5 billion they started with.
This is how the Wall Street Journal described the situation this week:
“By the end of March, the two mortgage-finance companies that were seized by the U.S. in 2008 will have returned $202.9 billion in dividend payments, after receiving $187.5 billion in federal support between 2008 and 2011. The budget projections released Monday by the White House Office of Management and Budget show that the companies could return an additional $163.8 billion through the 2024 fiscal year if the bailout arrangement remains in place.
By that tally, Fannie and Freddie would return $179.2 billion more to taxpayers than they were required to borrow. Last year, the budget showed that taxpayers faced a net gain of $51 billion through 2023.
Even though both companies will have soon sent more in dividends to the Treasury than the amounts they borrow, those dividends don’t reduce the $187.5 billion in stock held by the Treasury. The terms of their government support don’t provide a clear mechanism for them to redeem those shares, and the companies are currently required to send all of their profits to the Treasury as dividend payments.
The Treasury faces lawsuits from nearly 20 investors challenging the dividend terms, which were modified in 2012. They say the government’s collection of the firms’ entire profits amounts to an unconstitutional appropriation of assets and that the Treasury and the firms’ federal regulator engaged in illegal self-dealing when it made those changes.”
Heroes or Villains?
Fannie Mae was established in 1938 as part of FDR’s New Deal to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing. Fannie Mae – and later Freddie Mac – bought mortgages from banks, thereby making it possible for banks and other loan originators to issue more housing loans.
After the housing crash of 2008-10 Fannie, Freddie and the FHA accounted for some 90% of new mortgages. Over a period of 75 years one or more of these entities has provided liquidity to the mortgage market, enabling among other things banks to issue 30 year fixed rate loans. Like many others all these entities got caught up in the housing boom and like others they suffered losses.
I remain unclear as to why the solution is to dismantle Fannie and Freddie, rather than take on board the lessons learned and put in place controls to make sure that they do not deviate again from their intended aims. I fear that the answer lies more in politics – they are an easy target to blame for the crash – than economics.
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
Million Dollar home sales also picking up in Essex County
Two weeks ago I wrote about Million Dollar Home Sales picking up in Marblehead.
My thesis has been that the slowness of sales hitherto at the higher end in Essex County was in part at least the usual delay in activity and price increases rippling out from the centre, starting in Boston, moving to the nearer areas such as Brookline and Newton, and then reaching further out.
This week I have been looking at million dollar plus sales throughout Essex County to see if the same trend I spotted in Marblehead is happening more widely. It is.
Here’s the chart and table for 2000 to 2013.
Sources: MLS, Oliver Reports
The number of sales above $3 million has been pretty constant, while in the $1-2 million range there was a sharp drop before a recovery last year. Sales in the $2-3 million range, however, remain well down on the numbers of 2004-06 (but see below.)
Now let’s look at 2014. So far there are 43 sales and pending sales in the $1-2 million, range, 6 in the $2-3 million range, and 1 above $3 million.
And in Marblehead, since my last report, two $1 million plus properties have had offers accepted after being on the market for less than two weeks.
This activity at the higher end despite the brutally cold weather augurs well for sales – and maybe pricing – in 2014.
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
Flood insurance: Bipartisan Congress votes to roll back impact of 2012 legislation
Both the Senate and House have passed bills on bipartisan votes (Senate 67-32, House 306-91) to reverse the impact of the 2012 Biggert-Waters Act. The Senate now has the option of either accepting the House Bill or seeking to negotiate the differences between the two Bills. Press reports on Friday indicated that Senate Majority Leader Harry Reid will schedule a vote next week on the House-passed legislation.
While I have heard no reports locally of sales affected by the threat of higher flood insurance premiums,the National Association of Realtors has estimated that some 40,000 sales nationally have been cancelled or delayed because of the confusion over the proposed changes under the 2012 Act. It is not possible to know, however, to what extent such confusion has contributed to buyers deciding not to make an offer on properties in flood zones.Certainly, questions have been asked.
Whereas the Senate Bill basically delays the impact of Biggert -Waters by up to 4 years, the House Bill deals directly with the most important issues.
The main features of the House Bill are:
– the sale of a property will no longer trigger the end of existing premium subsidies
– the restoration of grandfathering, which prevents a property’s rate from being increased if it is mapped into a higher risk zone
– mandating that the rate on any individual property cannot increase by more than 18% per annum.
The House Bill also levies a small fee ($25 for primary residences; $250 for secondary residences and businesses) on policyholders. According to the Congressional Budget Office the fee will make the House Bill revenue neutral, whereas the delays in the Senate Bill would result in the loss of $2 billion in revenues.
Another key feature for us in Massachusetts is that the House Bill requires FEMA to certify that its mapping process is technologically advanced and to notify and justify to communities that the mapping model it plans to use to create the community’s new flood map are appropriate.As I have previously reported, it has been alleged that FEMA has applied Pacific Coast mapping technology to Massachusetts.
The proposed legislation provides a stabilization while a longer-term solution to the finances of the national Flood Insurance Program is sought. The huge and widespread debate in recent months should ensure that the final solution comes after an informed and public process.
Here’s a good summary of the House vs Senate Bills from the Tampa Bay Times.
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
Housing inventory: spring is coming, right?
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 and condos for sale and comparing numbers with a year ago, which was also a cold month if not quite as brutal as this year.
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.
Here is the inventory by price for Marblehead, Beverly, Salem, Swamspcott and Essex County overall. (more…)
Fannie Mae and Freddie Mac continue to finance Government deficit
My goal in this post is just to report the facts. My opinions on the ethics of the change the Treasury imposed on the terms of the bail-out of Fannie and Freddie have been expressed in previous posts. The result of the change is that by the end of March 2014 Fannie and Freddie will have repaid more than they borrowed from the Treasury but, because these payments have been deemed by the Treasury to be dividends rather than capital payments (like interest rather than principal on our mortgages) the two companies still “owe” the Treasury as much as before they made payments.
The “dividends” from Fannie and Freddie in calendar 2013 totaled $134 billion which contributed to a reduction in the budget deficit as shown in the chart below. Bear in mind that the numbers relate to a September 30 year end but the basic argument is intact:Fannie and Freddie have been helping to reduce the deficit. (more…)
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.
(more…)
Essex County 2013 Condo Market Review and 2014 Outlook
The condo market in Essex County did not experience a big crash, with prices falling just 14% from their 2005 peak to 2009 low. Since then prices have recovered steadily and in 2013 were just 2% below peak levels. Sales, however, remain well below peak levels. (Click here to read my Essex County 2013 Single Family report.)
Sales
Sales numbers suggest that Essex County did enjoy some sort of condo boom in the middle years of the first decade of this century, before experiencing a very large slump. No doubt part of the reason that sales remain low is that the once popular small apartment conversions have become hard for buyers to finance, and that market shows very little sign of returning.
- Sources: MLS, Oliver Reports
Distressed sales – foreclosures and short sales – accounted for fully 26% of all condo sales in 2011, dropping back to just 10% in 2013. Non-distressed sales have shown a sharp increase in the last two years. (more…)
Million dollar home sales picking up in Marblehead
I commented several times last year that the higher end of the market, in Marblehead and throughout Essex County, was not enjoying the level of activity seen elsewhere, something which puzzled me. I wondered whether it was just a timing issue, as activity spread out from Boston and its nearer-by towns.
A few short and very cold weeks into 2014 there is evidence that activity is now picking up for houses priced $1 million and up.
First, a chart showing sales in recent years:
Source: MLS, Oliver Reports
Already in 2014 we have had 3 sales over $1 million, plus we now have a further 8 pending: 7 in the $1-2 million range and one in the $2-3 million range. That makes 10 sales or pending sales in the $1-2 million range already in 2014, suggesting that 2014 may well see sales at that price getting back to the numbers of 2004-07.
Sales at $3 million or more have not exceeded the 3 of the last two years except for the 4 in 2007.
It is the $2-3 million bracket has really been hit. Total sales in this range for the last three years combined are just 3, compared with 5-8 each year in the 2004-07 years.
One of the consequences of the Federal Reserve’s policy of keeping interest rates low has been a boom in the stock market, creating wealth for those who have been able to invest. Perhaps 2014 will be the year that some of these investors decide that higher-priced real estate is now a better investment than the stock market.
In a typical real estate market recovery activity and prices improve first at the lower end and then that activity moves up into higher price brackets as people trade up and buyers have more confidence in spending more on real estate. There are increasing signs that this is happening in Marblehead.
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
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