A New Inventory Measurement Tool
I am constantly on the look out for new ways to demonstrate the current market (that being what interests most of us) and I have added another calculation to my table: the ratio of pending sales to pending and active combined. For example, if there are currently 50 homes for sale of which 25 have received an offer, my stats will show pending 25 and active 25. The new calculation is the ratio of pending – 25 – to pending and active – 50 – or 50%. Thus the higher the ratio the greater number of houses for sale with an accepted offer and, conversely, the smallest percentage available for sale to a buyer. Note that this calculation should be more reflective of current market conditions than the usual supply figure shown, which is based on sales for the last 12 months. (more…)
Housing inventory remains tight at mid year
While there are about 10% more Single Family Homes (SFHs) currently available for sale than there were a year ago, the inventory as measured by the industry standard of months of supply remains quite tight at 4.4 months in Essex County as a whole, compared with 4.1 months a year ago. A market is generally regarded as being in equilibrium between buyers and sellers when there is 6 months of supply.
The table below shows the wide range of supply between 3 months or less in Beverly, Lynn, Middleton and Peabody, all the way to 12 months in Manchester and Wenham. (more…)
Do mortgage rates and sales volume really drive home prices?
Conventional wisdom is occasionally right, but I like to query it.
Let’s look at two widely quoted “facts” in real estate: that higher sales are a sign of a healthy market; and that mortgage rates drive prices.
First, I plotted the annual median price of SFHs in Essex County vs the annual level of sales. I think one can say that both sales and prices declined from 2005-2008, but from 2000-2003 prices went up sharply while sales were largely flat, and from 2011-2013 sales jumped but prices were up only modestly. Verdict: some correlation, but no consistent link between sales and prices.
Source: MLS, Oliver Reports
Next I turned to mortgage rates. I keep reading that the reason that sales are down a bit this year is because higher mortgage rates – coupled with higher prices – have made home buying less affordable.
Let’s look at history. I have plotted median prices of SFHs in Essex County against the 30 year mortgage rate.
What we see here is that falling mortgage rates have indeed coincided with periods of rising home prices, as in 2000-2004, but they also fell along with home prices from 2006-2009. And you will note that the absolute level of mortgage rates during the boom years of 2000-2005 ranged from 6-8%, compared with just over 4% today. Verdict: some correlation when mortgage rates dropped from very high levels, but no consistent link since.
Source: MLS, Freddie Mac, Oliver Reports
The decision to buy a home or scale up to a new home is complex. It is driven by a desire to have the security of owning one’s own home, and is influenced by a number of factors: confidence in one’s job and future prospects; confidence in the economy; confidence in the future of home prices.
I asked a respected and well-informed real estate professional yesterday where he thought mortgage rates were today compared with a year ago. He guessed 1/2% higher. The answer? Well according to Freddie Mac, the 30 year mortgage rate this week is 4.14%. A year ago it was 4.46%.
Next week I shall publish my mid-year reviews and these will show that in the first half of 2014 sales were down slightly, the mortgage rate was up, and prices were…….check back next Saturday to find out!
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 617.834.8205 or [email protected].
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty
Affiliates LLC. Each Office Is Independently Owned and Operated
Marblehead Oceanfront Open House at High Tide
Tomorrow promises to be a glorious day to be on or near the water in Marblehead.
This Open House will take place from 12:30 to 2:15 tomorrow – right on high tide.
Come and see the lifestyle offered by this restored 1850 shingle house with a spectacular carriage house right on the water’s edge.
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 617.834.8205 or [email protected].
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty
Affiliates LLC. Each Office Is Independently Owned and Operated
Which billionaire should buy Marblehead?
A recent Redfin article Which billionaire could buy your city? showed the cities that the wealthiest billionaires could buy. Bill Gates, for example, the world’s richest man (based on disclosed numbers, which rules out Putin and the like who do not disclose their billions), could afford to buy every one of the 114,212 homes in Boston.
The intriguing question is this: who would you like to buy Marblehead? Or more to the point, perhaps, who would you not want to buy Marblehead? (The total assessed value of Marblehead’s real estate is right on $5 bn.)
Rupert Murdoch ($14 bn) could afford it, but would he allow Kris Olson editorial freedom at the Marblehead Reporter?
We are the Birthplace of the American Navy, and have strong American Cup connections, but would Larry Ellison of Oracle ($52 bn) ban traditional sail boats from the harbor and replace them all with high tech vessels?
We don’t have to worry about the traffic nightmare if the Patriots were to relocate to Piper Field as Bob Kraft ($3bn) cannot afford Marblehead.
And surely the best news of all: there is no fear of Donald Trump ($4 bn) taking over and firing everybody.
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 617.834.8205 or [email protected].
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Pending home sales reach record in May
The Massachusetts Association of Realtors (MAR) issued a report this week Future Indicators showing that pending sales of single family homes (SF) in Massachusetts in May were the highest for any May since records started in 2004, while pending sales of condos were second only to those in May 2005.
After the brutal winter we endured, it is not surprising that buyers emerged with gusto when the weather finally broke.
I can imagine that one of the most frustrating things for a journalist must be seeing a headline for an article which conveys a misleading impression (in general journalists write the story while the headline is written by somebody else). Thus the headline on this article is, in part: Price and Market Confidence Index down.
On reading the article, the median price for SFHs increased in May by 7.4% in May while that for condos was up 8.6%. So to what does the headline apply?
“As more inventory starts to make its way to the market, REALTOR®-member confidence that prices will continue to go up isn’t as strong as it has been,” said Ruffini. “However, buyer demand is strong based on pending sales and hopefully that should start to push the REALTOR® Market Confidence Index up in the coming months.”
Note that this refers to those Realtors who responded to a survey. It does not say that those Realtors think prices are not going up; just that they are not as strongly convinced as they were at this time last year. Since Realtors in general are independent contractors working alone I always suspect that such surveys are more a reflection of that Realtor’s personal business pipeline than a considered, research- driven analysis of the economy and real estate trends.
We have seen a number of press headlines in recent months suggesting that prices are going up more slowly than they were a year or so ago. Suppose prices last year went up from $400,000 to $440,000. That’s a 10% increase. Now let’s assume they go up by $40,000 again this year. Because the denominator is now bigger ($440,000 rather than $400,000) the increase this year is “only” 9%. So the headline writer will say: “price increase slowing.”
A primary goal of my articles is to help buyers and sellers of real estate understand what is really happening. When you see articles about real estate, go past the headline and read the actual reports. And then use common sense. And then you will know “the rest of the story.” And you can always ask me!
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 617.834.8205 or [email protected].
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Salem Power Plant finally closes: cruise ships scheduled for October
The final transmission to the New England power grid is scheduled for 1 second before midnight tonight. The message, according to the Salem News article What next for Salem Power Plant?, will be, in effect: “closed for business.”
According to the Salem News, this is what we can expect to happen in the coming months:
– for about six weeks, the grounds will be made safe – draining oil from machines, disconnecting electricity – for the demolition contractor
– around mid-July sound-proofing fencing will be erected near Derby Street and the demolition of the plant, starting with the oil tanks, will start
– the smokestack that once served units 1-3 will come down, followed by the taller one
– the demolition crew will work roughly south to north along the harbor, and the main plant building will be one of the last things to be demolished
According to Kathy Winn of the Salem Planning department, the deep-water coal dock will be revamped to accommodate cruise ships, the first of which is scheduled to arrive in mid-October. (more…)
Are you following these trends in luxury homes?
On a(nother) dreary Saturday morning, let’s take ourselves away and look at trends in luxury home sale listings. This table shows the changes in terms used in listings of luxury homes (those listed at 4 or more times the median price for their area) from 2012 to 2013 according to Trulia.
Overall, the trend shows increased emphasis on “expansive windows, great views and fitness amenities” and away from “indoor cooking and eating.” (more…)
Here come the sellers – are you ready, buyers?
Each week in Marblehead – and in some other surrounding towns – there is a Broker Tour of new houses coming to the market. This is when selling brokers have the opportunity to show their listings to other agents so that they can recommend the property to their buyers.
It is also a gauge of how much new supply there is. As the spring selling season gears up one would expect the number of listings to increase. It has. And this week there were 18 new Single Family (SFH) and 5 new condo listings on the Tour.It was a hectic morning dashing round to see as many as possible! (more…)
Which property would you buy for $5 million and change?
With the news that a newly listed 3,000 sq ft Boston condo found a buyer in 8 days , I found myself wondering what one could buy in Essex County for that money.
Here are a few current listings: which one would you buy? (more…)
Luxury Home Sales Soar
The National Association of Realtors (NAR) published a report this week stating that Luxury Home Sales Soar Above Historical Average.
In a number of posts over the last year I have suggested that with the stock market at an all time high it made sense for wealthy investors to turn their attention to real estate. And that now seems to be happening. (more…)
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
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…)
Recent Comments