Swampscott 2013 Housing Review and 2014 Outlook

I will start with the Single Family Home (SFH) market and comment on the condo market at the end of this post.

2013 was a strong year for the Swampscott SFH market in terms of both sales and median price increase.

Sales jumped 38% to a level exceeded only once  – in 2004, and then by only 7 units – this millennium.

The median price increased for the second year in a row, by 11% to $442,000, although it is still below the 201o level and 15% below the peak level of 2005 which increasingly looks like an anomaly.

One gauge I use to measure prices is the ASR: the ratio of Assessed Value (AV) to Sales Price (SP). 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 in recent years:

These numbers suggest that Swampscott’s Assessed Values overall are likely to increase in 2014. That raises the prospect of a second consecutive year with a reduced tax rate. In 2014 it is $18.70, down from $18.84.

Here are some charts to illustrate the points above::

First, sales:

Source: MLS, Oliver Reports

The sharp fall in the median price in Q4 2011 and Q1 2012 reflected both a small number of sales and a larger proportion taking place at the lower end.

Source: MLS, Oliver Reports

The median price rose each quarter of the year for only the second time since 2000. 2013 was the second year of rising prices, after the drop in 2011, although the median price, on an annual basis, is still 15% below the peak of 2005:

Looking out into 2014, the outlook seems much the same as elsewhere, with low supply being the main restriction. As of this morning there are 44 SFHs for sale in Swampscott: just 10 are under $500,000; 20 are $500-700,000; and 14 are above $700,000.

Condos
The condo market in Swampscott is very different from that in Marblehead, with many more purpose built condos ranging from Vinnin Square to oceanfront. Marblehead does not have large, oceanfront condos nor new construction.

Sales in Swampscott in 2013 were 40 units, much the same as in recent years. The median price, however, jumped 35% to $257,500. This is not the new construction price range of buildings like Concordia, so we need to look a little further. Let’s start with the mix of sales:

Source: MLS, Oliver Reports

The big change from 2012 to 2013 was in sales from $250-350,000. In looking at sales in this price range I was struck by how many were either newly converted or updated. I would surmise that the increase in median prices overall was caused by the sales in this price range which did not occur in 2012.

Here’s a chart showing the jump in 2013:

Source: MLS, Oliver Reports

And here’s the history back to 2000:

Source: MLS, Oliver Reports

With the big jump in the median price it is perhaps not surprising that sales are taking place well above assessed value (AV). Caution is required here, however, as often a property is renovated and sold before the next assessment period, at which time the AV is likely to increase.

Souce: MLS, Oliver Reports

An ASR of under 100% means that sales are taking place above AV. At 80.9%, the median sale was 24% above AV. Clearly there will be some significant adjustments in AV to come!

While the number of condo sales in Swampscott does not differ much from the number in Marblehead, the make-up of those sales does differ. Swampscott has more purpose-built condos and more high end oceanfront condos. Demand for these seems to remain strong and sales take place quickly.

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