massachusetts real estate market

The State of the Massachusetts Real Estate Market: Winter 2013 and Into 2014 Spring Market

by Rich Vetstein on November 5, 2013

in Massachusetts Property Values, Real Estate Marketing, Realtors

We had a great turnout today for our Massachusetts Real Estate Market Report, again presented and moderated by veteran real estate reporter Scott Van Voorhis of Banker & Tradesman and Boston.com. Scott writes for the well-known Boston.com Real Estate Now Blog which is an invaluable resource.

For this installment, we added a little twist, holding a panel discussion and interactive Q&A with Ali Corton of Real Estate Executives Boston West, Chuck Silverston of Prudential Unlimited in Brookline and Dee Reddington of Bank of Canton. Ali was representing the ‘burbs. Chuck was representing the urban, Boston-Brookline market, and Dee was giving the lender perspective. We were live tweeting the event at Twitter #marealestate where you can check out the live stream.

Some take-aways from the presentation and discussion were as follows:

  • As reported just about everywhere, the Massachusetts real estate market remains very strong
  • Year over year, 16% increase in both sales volume and sales prices
  • The government shutdown has had no demonstrative effect on the market, nor on the lending environment
  • Lack of buildable land, desirability of the Greater Boston market (as always) has resulted in high demand, low inventory environment.
  • Inventory is down 30% over 2012 (which was down over 2011), putting upward pressure on prices and demand. Bidding wars common for well-priced, good quality homes in desirable communities. This is creating a frenzied dis-equilibirum in certain markets which isn’t necessarily healthy.
  • The low inventory is the “new normal.” Get used to it.
  • Interest rates are forecast to dip down a bit heading into spring market 2014, with eventual rise through the remainder of 2014 and 2015.  Overall, the interest rate environment remains very favorable to buyers and the market as a whole.
  • First time home buyers must be open to fixer-uppers and not updated homes. Otherwise, they will be in very tough competition for move-in condition homes in the good towns.
  • Lenders are doing loans for low credit (FICO 620 range) borrowers. ARMs making comeback.
  • Chuck pointed out the “Patriot Effect” for open houses on Sundays. People are staying home to watch the game. Advises trying open houses on Saturdays.
  • Ali Corton says that Metrowest sellers are routinely getting asking price or very close to that right now, and will continue to do so while inventory remains low

We are interested in hearing your thoughts on today’s market. Feel free to post your comments below!

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Early Impact Of First Time Home Buyer Tax Credit Appears Strong

by Rich Vetstein on May 2, 2010

in Massachusetts Property Values, Realtors, Tax Credit

The deadline for getting under contract for the First Time Home Buyer Tax Credit was last Friday, and some preliminary statistics are already coming out demonstrating how popular the program was.

  • The Boston Herald reports that almost 30,000 Massachusetts buyers have taken advantage of the credit already, and that doesn’t include the most recent weeks of frenzied activity in April.
  • The National Association of Realtors estimates that 4.4 million Americans will ultimately receive tax credits. That includes 900,000 buyers that NAR projects wouldn’t have purchased homes otherwise.
  • Massachusetts sales of single-family homes for March leading up to the credit were up about 28% over last March — the largest March year-over-year increase on record. Once the statistics for April come out, we should see some very strong numbers. Realtors were reporting very heavy activity last week, leading up to the tax credit deadline. This week was our busiest of 2010, by far, for new purchases.

The Other Foot…

But…all good things must come to the end, and the biggest question looms. How will the real estate market fair in a post-tax credit world? One school of thought is that the tax credit created an artificial demand which will ultimately hurt the natural equilibrium of the market. Others believe that the stimulus was just what the doctor ordered, and expect the housing market to stay strong and on track. It’s probably going to be a bit of both, and the proof will be after the data comes in through June 30 when all tax credit sale must close.

Congratulations to all those new home buyers who were able to find a home! Lastly, I believe that folks who buy in 2010 can claim the credit on their 2009 returns by amending their 2009 return. Click here for the IRS website. Talk to your CPA for more guidance.

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Massachusetts Property Values: An Appraiser’s Outlook And Predictions On Future Massachusetts Property Values

by Rich Vetstein on July 31, 2009

in Appraisals, Massachusetts Property Values, Mortgage Crisis, Rental Housing

I’m pleased to have Donald J. Griffin, MAI, SRA, an experienced appraiser with Don Griffin Appraisals, Inc., who is here to guest blog about a topic very much on the mind of Massachusetts homeowners, buyers and sellers:  Massachusetts property values.

Don Giffin, MAI Appraiser

What Happened?  The Last Three Years

The Massachusetts real estate market was artificially stimulated by forces outside the normal supply demand model. This led to artificially increased values, mostly at the lower end of the value range in communities at the lower end of the income range. Once the stimulation was terminated, around 2006, and market forces returned to normal, the correction process began. The Massachusetts market has to absorb all of the artificially induced value, before it can start to act in a normal supply demand model.  Any particular property will be affected by the market that it is in, therefore to answer the question, “How much has my property value declined?”, look at the community it is in, and the location of its value in the community’s range of value, i.e. low medium and high. In general a high end valued home in a community with high incomes will see little to no loss, while a low end valued home in a community with low income will see high declining value. Most communities will continue an upward trend in average value. The upper end in both markets will continue to feel the pressure of the recession and tight credit for 12-18 months until the recession’s negative effects are mostly dissipated and we have moved into a strong growth mode. Properties at the low end of the value range in all communities will wait a long time to attain the values seen in 2006.

The Broad Strokes

In general, decline in real estate value is a result of an imbalance in supply and demand.  More sellers than buyers, cause reduced prices. If possible sellers wait, hoping the market will improve.

The Impact of the Sub-Prime And Credit Crisis On Massachusetts Property Values

There have been many articles written describing the sub prime mortgage market in relation to the collateralized mortgaged backed security market. For our purposes I will simply state that the effect was to increase demand for real estate, mostly at the low end of the value range. I say the low end because the goal was to bring marginal buyers into the market by lowering the bar for qualification for a mortgage.

This did not affect the middle and upper income value ranges in Massachusetts as much, since high income earners were already in the market.

However, there was an “upsurge effect.” When a low value owner sold for a profit, they moved up to the middle market, creating a secondary effect on the middle and upper markets.

From 2003 to about 2006 we can document an upsurge in Massachusetts property values, which we attribute to the excess demand entering the market during this period.

Case Study, Arlington, MA:  The Middle Market

I’ll use Arlington, Massachusetts as a sample middle market community. I’ve tracked the average sales prices of single family homes from 2003 through 2009 Year to Date, shown here:

arlington graph

Case Study, Wellesley, MA:  The High End Market

I’ll use Wellesley, Massachusetts as a sample upper market community where I’ve tracked the average sales prices of single family homes from 2003 through 2009 Year to Date, shown here:wellesley graph

What Markets Have Been Affected?

In general, middle market Massachusetts communities, such as Arlington, have seen declines at the low end, with recent increases at the middle value ranges, mostly correcting the effects of the oversupply caused by the subprime mortgages. The upper value range in a middle market community has mostly seen steady growth in value, but is now starting to feel the impact of the recession.

High income communities, such as Wellesley have seen similar changes. The YTD value declines at the upper level are more pronounced and reflect not only the recession but also the lack of ready loans for jumbo mortgages.

Property Value Predictions:  What Does The Trend Tell Us?

Following the trend lines we would predict that the lower and middle value ranges in most Massachusetts communities will continue an upward trend in average value. The upper end in both markets will continue to feel the pressure of the recession and tight credit for 12-18 months until the recession’s negative effects are mostly dissipated and we have moved into a strong growth mode.

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Thanks so much for the informative post, Don.  We look forward to your future contributions to the Massachusetts Real Estate Blog. As you can see, Donald J. Griffin, MAI, SRA really knows his stuff. So please contact him for your appraisal needs.

Richard D. Vetstein

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