Housing Supply By Town By Price
I have written before about the difference in supply at different price points. This article examines the supply of Single Family Homes (SFH) by price as at November 1 for Marblehead, Swampscott, Beverly, Sale, Lynn, and for Essex County overall.
A market is generally considered to be in equilibrium between buyers and sellers when the number of properties for sale – the supply – is equivalent to 6 months of sales. When supply is under 6 months it is considered to be a sellers’ market; more than 6 months and it is a buyers’ market.
But the overall figure for a market can disguise a wide range between properties at different price points – as the following tables demonstrate.
Marblehead
The pattern is shown here, as the supply increases – dramatically – as prices rise.
Swampscott
The same story.
Beverly
And again.
Salem
Salem doesn’t really have a top end to the same extent as the other towns so this is effectively a strong sellers’ market at all price points.
Lynn
A very tight market.
Essex County
A simple rule of statistics is the bigger the number the more reliable the statistic. Thus, the numbers for Essex County as a whole are the most significant, and clearly underline the story from individual towns.
Comment
While there is truth in the cliche that “all real estate is local”, it is also true that broader trends, not just in terms just of home sales, but also of consumer confidence,economic outlook and mortgage rates, can give insight into where local markets are heading.
With the economy continuing to show steady growth, mortgage rates close to historic lows, and low inventories, the outlook for the North Shore market continues to be for steady, not spectacular, growth as we head into the election year, particularly if consumer confidence remains strong.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Housing Inventory declines yet again
Single Family Homes (SFH)
After years of decline, the number of Single Family Homes (SFH) for sale in Essex County on the first of the month compared with a year earlier (YOY) increased from August 2018 until June 2019. Since then the decline has resumed and, in fact, accelerated, as this table shows:
The next two charts (the first for January to June; the second July to December) show the number of SFHs for sale on the first of the month since 2016. The far right line in each column, representing 2019, shows the increase in the first half of the year followed by the resumption of the decline.
Condos
The number of condos for sale increased YOY from June 2018 until August 2019, but since then there has been a decline, which has also accelerated.
These two charts show numbers since 2016 for January to June, and July to December:
Comment
While the overall supply of SFHs in Essex County remains very low at just 2 months ( a market is considered to be in equilibrium between buyers and sellers when there is 6 months of supply) the position varies greatly by price, as shown in this table:
Thus, the conclusion is that the market remains in favour of sellers right up to $1.5 million, but above that dramaticallys swings in favour of buyers.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
Housing Supply Jumps Sharply
I have been reporting for some time the increase in the number of homes for sale, Year over Year (YOY) in Essex County (see charts below) but first I want to highlight the big jump in the numbers just this week as we head into the spring selling season.
Here are the numbers for the 34 cities and towns of Essex County:
That’s right, a 16% increase in the number of Single Family Homes(SFH) for sale and 8 % increase in the number of Condos in just 4 days!
More inventory means more choices for buyers at a time when mortgage rates are back near 4% after flirting with 5% as recently as last November.
Now, here are the charts for the last 3/4 years. The supply of SFHs in April increased, YOY, for the 10th consecutive month.
Condos
And the supply of condos for sale increased, YOY, for the 11th consecutive month.
Comment
In late December in Is a recession coming soon? I wrote: “the likelihood for 2019 is a slowing, but still growing, economy and a stable housing market.” Recent economic data confirms that the US economy remains on the path of steady growth. What has changed since December is that the 30 year Fixed Rate Mortgage is close to 4% vs 4.5% then.
Housing Inventory increases for 2nd month in a row
(Click here to download a PDF of this report.)
After 26 months of declining inventory year-over-year, August marked the second consecutive monthly increase for Single Family Homes (SFH) in the 34 cities and towns of Essex County. But read on to the section about supply which shows that inventory remains extremely low despite the modest recent increases.
Condo inventory declined for 44 consecutive months, year over year, until June and has now increased for 3 months in a row.
Supply
A market is normally regarded as being in equilibrium between buyers and sellers when the current supply is equivalent to 6 months of sales. Anything less than that is seen as a sellers’ market, meaning there are more buyers than sellers.Thus, while inventory has shown some modest year over year increases in the last couple of months, supply remains very tight in most markets in Essex County. Overall, the supply of SFHs is just 2.6 months,with only 6 towns showing supply of 6 months or more.
The Condo market is even tighter, with only 1.9 months of supply and no individual town recording 6 months.
Comment
While inventory has shown a welcome year over year increase recently, overall supply still strongly favours sellers – at the right price.
Sagan Harborside Sotheby’s International Realty
www.SaganHarborside.com
What this week’s storm told us about housing prices in 2017
During Tuesday’s storm a tree came down on the roof of my house (fortunately the fall was cushioned and there was no damage to the house), but on Wednesday I wanted the tree removed before any further excitement. I contacted tree removal companies – and guess what? Yep, they were inundated with calls. So what happened to their prices do you think? Right again – they sky-rocketed, like Uber surge pricing on New Year’s Eve.
Both the tree removal and Uber pricing are examples of a simple economic law: that of supply and demand. In both cases, demand far exceeded supply and when that happens economic theory suggests prices rise. And they sure did on Wednesday!
Trees and real estate prices
What does this mean for real estate prices in 2017?
Well look at this chart, produced by the National Association of Realtors (NAR). Inventory has dropped year over year for 20 months in a row
A mismatch between supply and demand can occur either through too much demand or too little supply – think of how OPEC used to keep oil prices high by reducing production – i.e. reducing supply.
Now look at the chart above. The dotted line represents 6 months of supply – the level at which house prices are regarded as being in equilibrium between buyers and sellers. If there is more than 6 months of supply, equilibrium swings in favor of buyers who they have plenty of choices and so can determine prices. But when, as for the last few years, supply is less than 6 months, equilibrium swings in favor of sellers. So what happens to prices? They go up.
Nationally, according to the Federal Housing Finance Agency, home prices in the last 5 years have increased by 5%, 7%, 5%, 6% and 6% – pretty consistent and steady gains.
Should I wait for a better time to buy?
I don’t think the issue is one of timing as much as finding the right house, as I expect house prices to continue to rise (supply and demand) while mortgage rates are also likely to head higher as the year progresses.
A lot of buyers are hoping that there will be new inventory come the spring. That should indeed happen and when it does there is likely to be a lot of competition, which is why it is important for buyers to put themselves in the best position to be able to buy. And that means using a buyer agent to work on your behalf.
If you are looking to buy, I 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
If you are planning to sell read Which broker should I choose to sell my house?
Please contact me on 617.834.8205 or [email protected] for a free market analysis and explanation of the outstanding marketing program I offer
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
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