Salem 2013 Housing Review and 2014 Outlook
The Single Family (SFH) market in Salem had a very good year in 2013 with total sales within 2 of the peak year of 2004, median prices rising 16% to get back to within 7% of the all-time high, and the ASR (the ratio of Assessed Value to Sales Price) dropping to below 90%.
Let’s look in detail, starting with Sales and we can see the sharp recovery in the last two years:
Source: MLS, Oliver Reports
I include all sales in my numbers, but also break out distressed sales – foreclosures and short sales. Non-distressed SFH sales are just 10% below peak levels whereas condo sales are still down 31%.
Source: MLS, Oliver Reports
In all calculations relating to median prices I exclude distressed sales as multiple studies have shown that such sales occur at a significant discount and do not, in general, have an impact on the prices of non-distressed properties.
2013 saw a strong recovery after four years of more or less flat prices (Q3 in 2010 appears to be an anomaly caused by the price mix of sales ):
Source: MLS, Oliver Reports
The next table shows Quarterly prices since 2000. There is a different seasonality here from the condo market. In my Salem Condo Market review, I noted that sales were highest in Q1 in 5 years and in the other quarters each in 3 years. No real pattern.
For SFHs Q1 saw the highest price just once, Q4 6 times and Q2 and Q3 4 times each:
Source: MLS, Oliver Reports
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 out 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 that have just been sent out 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 Salem SFHS in recent years:
Source: MLS, Oliver Reports
As can be seen, the jump in the median price in 2013 was reflected in a drop in the ASR to under 90%, meaning that the median sale took place at 11% above Assessed Value. This also suggests that AVs will be increasing next year when 2013 sales are used to determine the values.
Clearly, the Salem SFH market had a very good year in 2013. Inventory remains tight with just 41 SFHs for sale today.
2014 looks to be a good year for Salem. The Power Plant will finally close in June; a new gas fired plant is proposed, but that will leave plenty of space for development for other uses sch as a cruise ship terminal; the new 715 parking garage at the train station is on schedule to open in October; and residents voted for new blood on the School Committee as Salem continues to work to improve its schools.
All the above leads to the conclusion that the SFH market in Salem in 2014 should continue to see improvement.
If you 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 andrew@HarborsideRealty.com.
Andrew Oliver is a Realtor with Harborside Realty in Marblehead
If you 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 andrew@HarborsideRealty.com.
Andrew Oliver is a Realtor with Harborside Realty in Marblehead