How do home prices compare with the 2005 peak?
The stock market may have reached new highs this year but the housing market, despite occasional cries of alarm about “unsustainable” double digit price increases, remains in general well below peak levels reached in 2005.
But not everywhere.
The Boston Business Journal analyzed data from The Warren Group and published a list of 27 Eastern Massachusetts communities where median prices for the first nine months of 2013 exceeded those for 2005. Which, of course, got me wondering how Marblehead and other North Shore communities compared.
First, the BBJ/Warren Group data:
Sources: The Warren Group; Boston Business Journal
How does the North Shore compare? Not so well:
Source: MLS, Oliver Reports
I also looked at sales at different prices and the median price overall for some of the communities:
Source: MLS, Oliver Reports
What do these numbers tell us?
In Marblehead, sales overall were at a similar level, but there were more below $500,000 and fewer in the $500- 750,000 range, so the median price slipped 8%.
In Manchester there was a substantial increase in sales under $500,000, leading to a 12% drop in the median price.
Wenham showed the biggest decline in median price at 29%. Sales overall increased sharply, with the number under $500,000 more than doubling.
Finally, Middleton showed the smallest decline at just 3%. Here there was a small increase in sales under $500,000, largely offset by an increase in the $500-750,000 range.
For Essex County overall sales were down 14% with the under $500,000 market showing the smallest decline (apart from $3,000,000 plus but the numbers there are tiny in comparison).
At present the market seems to be one of its pause phases, which with all the shenanigans going on in Washington is hardly surprising. If Congress lets the debate drag on for several more weeks it seems quite likely that the market may stay quiet and we will find ourselves in a winter market. On the other hand, a speedy agreement to fix the budget and deficit and get a grip on spending could cause a rush of buyers to get in before the end of the year. A speedy agreement? In Congress? Yeah right.
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.
Andrew, your post this week is exactly what I have been wondering about for the past two weeks. I have a lot of clients who are asking this question and you really provided the data I needed to see. It will be telling indeed to see if there is a trend in our GenX’s to return to urban areas or if this is a short stage in our overall housing stats. I was particularly interested to see how our North Shore fared in the comparison between 2005 and 2013 and it was surprising to me to see the numbers. I intuitively felt that we were not quite where we had been in SF values on the North Shore back in 2005 but your graph painted the picture accurately and it showed how far we are still from that older benchmark. Thank you for this amazingly insightful view of the market conditions and we will have to see if urbanization is going to continue in 2014.
These numbers certainly reflect what we have been seeing.
A speedy and intelligent resolution from our government? That’s where you lost me.
A pious hope indeed
Oliver,
Do you think these data reflect the demographic and preference shift of Gen Y and Baby boomers for living in urban places and not places like Marblehead?
Do you have a lot of anecdotal evidence on boomers moving to urban areas. If true is this permanent trend?
bests,
Ray
Good point Ray. I heard Sam Zoll this week talking of the reurbanization of America, with more people wanting to live in cities, and the data here does not refute that hypothesis, but in answer to your question I do not have anectdotal evidence.
Another answer could be that it is a cycle and at present more people want to live in cities. I know from my own life that there have been times when I have wanted to live in a city and times when I have wanted to be away from cities.
A lot of young people choose to live in cities until they have children. And some return to cities after their children have grown up. I cannot believe that we will run short of people who want to raise their children in beautiful, safe towns like Marblehead.
Since markets normally start at the centre – in our case Boston – and then move out, I think we will learn a lot from the behavior of the market here in 2014. While activity has dropped off in recent weeks, that could be in large part because we have basically run out of inventory at the lower end. Not to mention Washington – in fact let’s not mention Washington.
Dear Oliver,
The data you present is startling in contrast to historic record. It says clearly to me that the location premium for suburban living is less today than 20-30 years ago.
Also, Gen Y is having children later in life or not having children!
Some are arguing that less dense urban living together with good schools could shift the location premium permanently in favor of urban places over suburban places.
I am not moving, but it is an interesting question for real estate investors!
cheers..
Ray
Ray: how are you defining suburban? Arlington, Somerville? What about Brookline and Newton?
If urban is inner city then I am not sure I see less dense living or good schools!
Is access to the city an issue? The suburbs mentioned above are doing well, possibly because of that easy access.
I agree that these are important questions for investors. Conversely, there may be an outstanding opportunity to acquire a home (as against an investment) in a great area at a great price. I still think 2014 will tell us a lot about whether we are seeing a secular or cyclical pattern.