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Massachusetts July Home Sales Hit 7 Year High

Boston Business Journal by Lisa van der Pool, Broadcast/Social Media Editor

Date: Wednesday, August 29, 2012, 2:07pm EDT
Broadcast/Social Media Editor-Boston Business Journal

Massachusetts single-family home sales rose nearly 27 percent on a year-over-year basis in July, according to The Warren Group.

A total of 4,979 single-family homes were sold in the state in July, up from 3,922 during the same month last year, marking the highest level of sales volume in July since 2005.

Between Jan. 1 and July 31, 26,596 homes were sold in Massachusetts, a 24.8 percent increase over the same period in 2011.

“There are a lot of good signs pointing toward a real estate recovery,” said Cory S. Hopkins, editorial director of the Warren Group. “But we are comparing sales to a very depressed market last summer, so it’s important to step back and realign expectations.”

Condo sales also increased in July, rising 34 percent over the same month last year. A total of 1,994 condos were sold in July, up from 1,487 from July 2011, the Warren Group reported.

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Cape Cod More Affordable

 

There was an interesting article in the Sunday Globe speaking to the fact that retirement housing, and housing in general on Cape Cod is more affordable after “seven down years in the real estate market have lowered prices to the point where owning a retirement home on Cape Cod is again an achievable dream for some baby boomers.”.

 

We are seeing variations of this in Provincetown as many  buyers are taking a solid look at their buying options after being on the fence for several years.  They feel better about the economic outlook. They feel that prices have moderated enough to warrant a second look, and they are seeing the benefits both financially and personally of buying a second home or transition to retirement home, and most of all buyers are honestly enjoying the personal adventure of looking for the home of their dreams in Provincetown and the Cape in general.

Below is the article by Globe correspondent Sarah Shemkus.

Massachusetts native Judy Watkins left the state more than 30 years ago, moving to Florida to escape the harsh New England winters.

Over the past few years, however, her thoughts have again turned northward. Approaching retirement, Watkins, now 67, started thinking about buying property on Cape Cod, where she could spend half the year enjoying the beaches, natural beauty, and people of her home state.

So she kept an eye on the market, watching as prices fell and options multiplied. Then, last month, she made her move, buying a two-bedroom, three-bath ranch home on a tree-ringed lot in East Falmouth for $185,000. The moment, she said, was right.

“This is absolutely, definitely the time to buy, for sure,” Watkins said

Cape Cod, with its relatively mild weather, low property taxes, and laid-back lifestyle, has long been a desirable destination for retirees.

During the real estate boom, however, even the coziest of cottages soared in price, effectively shutting many middle-income would-be buyers out of the market. Then, the economy crashed, leaving many people worried about their jobs and their investments, and disinclined to make a major real estate purchase.

Now however, seven down years in the real estate market have lowered prices to the point where owning a retirement home on Cape Cod is again an achievable dream for some baby boomers, according to financial planners and real estate agents.

“We see prices on the Cape are low and properties are starting to move again,” said Walter Herlihy, a financial planner with Beacon Financial Planning, which has offices and Centerville and Easton.

The median price for a single-family home in Barnstable county is now down to $320,000, from a high of $390,000 at the market peak, according to real estate data firm Warren Group. Prices in middle-market communities can be much lower, such as $239,000 in Bourne and $235,500 in Yarmouth, while the high-end communities remain more expensive. The median home price in Truro, for example, is $638,000, and in Chatham is $550,000.

A surge in homes for sale has helped bring prices down considerably. During the recession, many second-home owners concerned about their finances decided to sell their vacation properties. At the same time, rising foreclosure numbers meant more distressed and bank-owned homes were up for sale at depressed prices.

Furthermore, low interest rates have made it much easier for boomers to buy real estate. As recently as 2006, mortgage rates hovered near 6 percent; now a 30-year fixed rate is down to 3.55 percent. On a 30-year $300,000 mortgage, that’s a savings of about $450 a month.

“A lot of folks in that age bracket can remember the 12 to 18 percent rates of the late ’80s,” said Russ Pelletier, an agent with William Raveis Real Estate in Falmouth. “So a 3 percent mortgage now is almost looking like free.”

Potential buyers are, for the most part, also feeling more secure about their finances than they were a few years ago, during Wall Street’s more tumultuous period, financial planners report. Many experienced temporary losses during the worst of the Great Recession, but most have recovered and even made modest gains, Herlihy said.

“They’ve held on through the downturn and come out ahead of the game,” said Herlihy. “People are more confident than they were.”

However, while investors may be feeling more secure, they have not returned to the abandon that marked the peak of the real estate market, said David McPherson of Four Ponds Financial Planning in Falmouth and Hingham.

“Overall, many people are more cautious than they were five or six years ago,” he said.

Nonetheless, the combination of falling prices, low interest rates, and improving financial confidence has translated into a surge of sales activity, real estate agents report. Sales of single-family homes are up nearly 30 percent over last year, according to the Cape Cod and Islands Association of Realtors.

“People who have been on the fence, waiting to make that decision, they’ve become more active because they’ve realized prices have hit bottom,” Pelletier said

And most of those buyers, agents said, are people planning to turn a second home into a permanent residence once they retire.

“Three-quarters of the sales I’ve been involved in this year are people planning for their retirement,” said Marie Kelly, an agent with Realty Executives Cape Cod in Brewster. “They’re jumping in now on their retirement home.”

For Watkins, the buyer’s market helped convince her to commit to a property in her home state, rather than in Tennessee, the other destination she had considered. Though homes in Tennessee are less expensive than those on Cape Cod, falling prices and growing inventories made East Falmouth a viable choice, she said.

“There’s more for your money right now,” she said. “The Cape is just a great place to be.”

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Provincetown And Boston Gains Compared To Top 10 Metros

I always find it interesting to see the differences in home values across the country. In Boston and Provincetown we are in solid real estate markets with values substantially above the national average. In Boston, including all neighborhoods the median price of single family homes sold through Q2 was $364K, up 3% from last years $353K. In Provincetown the median sales price for a single family homes sold year to date through Q2 was $675K, up 15% from $586K  last year. (I don’t always use median prices for comparison but since this report does I wanted to compare apples to apples.) The post below illustrates pretty mediocre northeast performance compared to these gains we have seen in Boston and Provincetown.

See Inman post below.

Top 10 metros for median price gains

 

NAR: Prices up from a year ago in 110 of 147 metros

BY INMAN NEWS, THURSDAY, AUGUST 9, 2012.

Inman News

Median home prices for single-family homes posted year-over-year gains in 110 out of 147 markets tracked by the National Association of Realtors during the second quarter, compared with 74 markets that saw annual appreciation during the first quarter. Some of the improvement in prices is due to a smaller share of sales in low price ranges where inventory is tight said NAR Chief Economist Lawrence Yun.

But Yun predicted even more markets would post gains in the quarters ahead, which will improve the equity position of existing homeowners, many of whom owe more on their mortgages than their home is worth.

At the national level, the median sale price of existing single-family homes during the second quarter was up 7.3 percent from a year ago, to $181,500. That’s the biggest annual increase in six years, but still left the national median home price down 20.1 percent from the 2006 peak.

Nearly 1 in 4 markets tracked by NAR (34) saw annual price declines. Seven of the 10 markets experiencing the biggest declines were in the Northeast.

The Northeast region saw median home prices fall 1.6 percent from a year ago, to $241,300.

Metropolitan area Median price, Q2 2011 Median price, Q2 2012 Change from year ago
Bridgeport-Stamford-Norwalk, Conn.
$430,500
$374,900
-12.9%
Edison, N.J.
$328,600
$297,500
-9.5%
Gulfport-Biloxi, Miss.
$111,000
$100,600
-9.4%
Elmira, N.Y.
$115,200
$105,700
-8.2%
Atlantic City, N.J.
$237,000
$218,700
-7.7%
Pittsfield, Mass.
$197,100
$182,200
-7.6%
Charleston, W.Va.
$134,700
$126,700
-5.9%
Green Bay, Wis.
$137,800
$129,800
-5.8%
Manchester-Nashua, N.H.
$225,700
$212,700
-5.8%
Hartford-West Hartford-East Hartford, Conn.
$236,800
$226,300
-4.4%

 

Source: National Association of Realtors

Among markets seeing the strongest annual price appreciation, many experienced sharp declines at the beginning of the downturn, including Detroit, Phoenix and Fort Myers, Fla. In all but one of the 10 markets showing the biggest year-over-year gains, the median sales price was well below the national median.

Top 10 markets for median price gains

 

Metropolitan area Median price, Q2 2011 Median price, Q2 2012 Change from year ago
Detroit-Warren-Livonia, Mich
$46,600
$60,200
29.2%
Phoenix-Mesa-Scottsdale, Ariz.
$115,000
$148,400
29.0%
Boise City-Nampa, Idaho
$113,600
$138,200
21.7%
Florence, S.C.
$112,900
$136,100
20.5%
Akron, Ohio
$100,200
$116,700
16.5%
Buffalo-Niagara Falls, N.Y.
$113,000
$131,600
16.5%
Bismarck, N.D.
$169,000
$194,000
14.8%
Cumberland, Md.-W.Va.
$89,500
$102,700
14.7%
Cape Coral-Fort Myers, Fla.
$114,200
$130,700
14.4%
Peoria, Ill.
$114,800
$128,900
12.3%

 

Source: National Association of Realtors

Total existing-home sales including single-family and condos were down 0.7 percent from the first quarter to a seasonally adjusted annual rate of 4.54 million, with distressed homes (foreclosures and short sales) accounting for 26 percent of transactions, down from 33 percent a year ago.

NAR estimates that first-time buyers, who historically have accounted for 40 percent of home purchases, purchased 34 percent of all homes in the second quarter, up from 33 percent during the first quarter but down from 35 percent a year ago.

Investors, who often pay cash and compete with first-time buyers, accounted for 19 percent of all purchases in the second quarter, down from 22 percent in the first quarter but about the same as a year ago. Some 29 percent of sales were “all cash,” down from 32 percent in the first quarter and 30 percent a year ago.

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analytics

Call It A Comeback?

Tara Steele is the News Director at AgentGenius, a terrific real estate blog, covering real estate news, technology news and everything in between. Below are excerpts of  one of her recent posts asking the questions:  Are lowering inventory levels good or bad for housing? Are reduced sales a good sign or not? Is housing recovering, or are these just signs of life? I have posted about the shrinking inventory levels and how this is pushing up demand and prices. It’s a great question to ask. While it is a positive development that inventory is being absorbed, especially foreclosures, the lack of good inventory which is required to to fuel a recovery is an issue.

Is it time to call it a comeback?

Housing has had some recent signs of health, causing a frenzy in traditional media outlets who are calling a comeback for housing, but is it too soon? When a coma patient who has been nearly beat to death opens one eye, no doctor would call the patient recovered, rather showing signs of hope for a potential recovery some day. As housing has been beaten to a pulp and opens one eye and two or three indicators show improvement, many are desperate to cling to hope that everything is recovered, but that just is not the case, and pushing that idea that everything has recovered is unhealthy for those looking for the recovery. Let’s just say that the moment anything backslides, the overly enthusiastic commentators and their following will feel slighted.

At AG, we are not calling it a comeback, in fact, you’ll see with the positive reports coming out of housing recently, we say as much in the first few lines, so that when good news is delivered, there is a huge “but” on the delivery.

Economist, Dr. Kolko weighs in

We have noted that while some economists are allowing themselves to get worked up by tiny signs of life, Dr. Jed Kolko, Chief Economist at Trulia.com agrees with us that the good news should be taken as part of the whole picture, not independently as a sign of recovery.

Yesterday, the National Association of Realtors (NAR) reported that home prices have risen, but inventory is tight, explaining the lowered sales numbers.

Dr. Kolko agreed that the sales data reflects the tightening inventory, as it fell 24.4 percent year-over-year, telling AGBeat that “Although sales increased year-over-year, they’re only 35% of the way back to normal. The June sales level of 4.37m is much closer to the worst of the recession (3.77m in Nov 2008) than to its long-term normal level (5.5m).”

“The shrinking supply of foreclosed homes drives the drop in inventory and sales,” added Dr. Kolko. “The share of distressed-home sales fell from 30% one year ago to 25% in June. Sales of homes priced under $100,000 in the West – which includes lots of distressed homes — fell 36% year-over-year.”

Low inventory levels: good or bad?

Dr. Kolko notes that while inventory feels tight when compared to recent years, “it’s actually only slightly below normal levels. ‘Normal’ inventory is 2.5m, which is roughly 5-6 months of supply when sales are at their normal rate of 5.5m. Now, inventory is 2.39m, which is very near ‘normal’ but way below the elevated level of the past few years.”

Many are enthusiastic about inventory levels, but who does it benefit, and does it hurt anyone? Dr. Kolko said, “Tight inventory is good for some and bad for others. Tight inventory hurts buyers, helps sellers, and hurts real estate agents and others in the industry who depend on sales for their income.”

“Tight inventory is a necessary step on the road to recovery,” said Dr. Kolko. “As prices start to rise, buyers get impatient but sellers want to hold off. Longer-term, rising prices will encourage new construction and lift homeowners above water, both of which will bring more homes onto the market and increase inventory. But inventory has to shrink first before it expands.”

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Provincetown Core Condo Market Facts

23 Captain Berties Way, #3, sold for $437

I was doing a report for one of our sellers in the $400K to $600K range, the core of the condo market here in Provincetown and came up with an interesting fact.

I found that in the last twelve months 45 condos sold (3.75 per month) in this range and that there are currently 45 condos for sale in this price range. This illustrates a 12 month supply of inventory if properties sell at the same speed in the next twelve months as they did in the last twelve months. Just  a little coincidence to share with you along with a handful of properties that sold in this segment over the last 12 months.

23 Captain Berties Way, #3, sold for $43
4 Holway St #4, sold for $510K

 

 

 

 

 

 

 

 

 

12 Brewster St sold for $575K
22 Pearl St #1, sold for $466K.

 

 

 

 

 

 

 

 

 

56 West Vine St, #C, sold for $565K
18 Miller Hill Road #10, sold for $450
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Boston Condo Prices Set Record… And A Scarcity Of Units Ensues!

Yesterdays Boston Globe article follows for those who didn’t see it. It is all the buzz!… and for good reason.

Globe Staff / July 24, 2012
Condominium values in Boston’s core reached a record high during the second quarter of this year as eager buyers drove up sales, according to data­ scheduled to be released Tuesday.
The median price in a dozen downtown neighborhoods — they include Beacon Hill, the Fenway, the North End, and South Boston — climbed to $515,000 during the three months that ended June 30, according to LINK, meaning half sold for more than that price and half for less. That topped the previous peak of $498,500 in 2008, just prior to the nation’s financial crisis. LINK, a Boston company, tracks the downtown condominium market.
The increase adds to mounting evidence that the state’s housing market is on the mend, housing specialists said.

“The feeling out there is prices are not going to soften anymore,” said Barry ­Bluestone, the director of the Dukakis Center for Urban and Regional Policy at Northeastern University. “We are seeing the real signs of a recovery in the housing market.”

Even during the worst years of the real estate industry’s decline, condominium prices in some of Boston’s more desirable areas fell only modestly, putting the local market in a better position to rebound. Prices and sales were propped up by higher-income homeowners who were hurt less during the recession, as well as by the increasing popularity of urban living coupled with limited inventory, housing specialists said.

“The city attracts young and old by providing fun and beauty, art and restaurants, all without needing a car,” said a Harvard University economist, Edward­ Glaeser, author of the book “Triumph of the City.”

Trisha Collins McCarthy, president of the Massachusetts Association of Realtors, said many condominium buyers like the idea of trading long, congested commutes for city conveniences. “We have more of a population that has said, ‘I want to be near the train,’ ’’ she said.

After dropping for a couple of years, downtown condo prices started to climb in 2010. This year, that growth has been bolstered by continued low interest rates and improving consumer confidence, according to housing specialists.

Condominium sales volume was up sharply during the second quarter of this year, to 1,051, or nearly 36 percent more than during the same three months of last year.

The median sale price of condominiums in luxury buildings — those that offer amenities such as concierge and valet services — also climbed.

The $779,000 median closing price for the luxury condos was 7.8 percent higher than during the second quarter of 2011, LINK said, compared with 7.5 percent higher for the all of the Boston neighborhoods measured by the company.

The number of luxury condo sales during the past three months increased by 22.2 percent to 198, the company said.

Statewide, single-family home values remained essentially flat in June, at $331,000, compared with June 2011, while the number of sales increased by 18 percent to 5,099, according to William Raveis Real Estate, Mortgage & Insurance. It is based in Shelton, Conn., but also does business in Massachusetts.

Even though more people are signaling they are ready to buy a condominium in Boston, real estate agents say they struggle to find enough units to show. Only 531 properties were available in the downtown area on the last day of June, about half the number up for sale on that day in 2011, LINK reported.

Eddy Foley, 45, said he has spent six months looking for a South End condominium priced in the $500,000 range. He found one he wanted, but lost out when someone else bid $34,000 over the asking price.

“It’s torture out there,” Foley said. “There’s really nothing available.”

Carmela Laurella, president of the Boston-based real estate company CL Waterfront Properties LLC, said condominiums priced reasonably are selling quickly.

Indeed, sales on the Boston waterfront jumped by 72.7 percent in the second quarter, compared with the second quarter of 2011. The median price for a waterfront condominium increased by 21.2 percent, to $827,000, LINK found.

“We have more demand than we have property to sell,’’ Laurella said. “We can barely list anything without it going under [a purchase agreement] within a couple of weeks.”

John Ranco, a senior sales associate with Hammond Residential Real Estate in the South End, said times have changed so drastically that real estate agents are now searching to locate interested sellers rather than wary buyers.

“The supply side is really hurting,” Ranco said. “There is a tremendous amount of pent-up demand.”

Jenifer B. McKim can be reached at [email protected]. 

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The Goode and Farmer Report – Boston Q2 Update

The Big Number is 16%. That’s the increase in condo sales in Boston as of June 30. Combined, all Boston neighborhoods saw a 16% increase in the number of condo sales year to date, a 2% increase in the average price of a condominium sold, and a 5% increase in the median sales price. Put together all this good news is more evidence that while not necessarily out of the woods, this real estate market is healthier than most. The one downside to this exceptional sales activity is that inventory levels of available condo’s for sale have fallen 38% to 1,177 properties for sale versus 1,903 at th is time last year.

Boston’s most expensive neighborhood the Back Bay,  saw a 30% increase in sales while the average price  of a condo sold dropped by 11% to $1.162M. The inventory level of properties for sale dropped 31% to 168 condos for sale vs 242 last year.

The South End saw a 24% increase in the number of condo sales to 264 properties and  the average price of a condo sold increased 1% to $684K. The inventory of condos for sale decreased 45% from 208 to 114. Unless this condition corrects itself this will be a factor in market performance going forward.

South Boston, the darling of the my last market report moderated somewhat with a 4% increase in the average sales price to $408K and a 12% increase in sales to 235 properties sold through the second quarter. South Boston has the largest drop in inventory of all downtown n’hoods down 56% from 225 properties for sale last year to 99 available for sale today.

Every downtown neighborhood has it’s own story and most are positive excepting the inventory numbers. Total Boston numbers highlight the good news. Sales volume is up 19% to $1.080B… One Billion, 80 million dollars! Average days on market are down 12% and the inventory of properties for sale is down 38%.  These numbers highlight incredible short term performance but portend serious issues going forward.

 

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The Goode and Farmer Report – Provincetown Q2 Update

Sales through the 2Q in Provincetown continue to be strong! Growing economic optimism and continued low interest rate have kept buyers and sellers in the market, and almost more importantly, there is a great assortment of properties for sale.

Year-to-date condominium sales through the second quarter surged 28% from 54 sales last year to 69 sales this year. The average sales price of condos sold increased 11% to an average of $400K vs. $361K last year.

Single Family sales did more than surge – they exploded! We went from 14 sales last year to 27 sales through the second quarter. Even with this relatively small sampling, these represent very positive increases. The average sales price of single-family properties sold was $731K. The total sales volume of single-family homes sold was close to $20M – up 67% from last year’s volume of $11.8M.

These figures are evidence that the market has improved markedly year-over-year. More evidence of the market improvement can be seen in both the condo and single-family segments where the average days on market has decreased by 33% and 9% respectively. While we don’t look at days on market with quite the same importance as we do in Boston, DOM’s are a good indication that properties are selling faster and that the inventory of properties for sale is becoming leaner.

Speaking of inventory, as of July 14 there are 157 condominiums for sale in Provincetown, with an average price of $466K and an average price per square foot of $583. And the average days these remain on market is 246.

There are 77 single-family properties for sale with an average price of $1.441M with an average of 2,398 square feet.

We are in the midst of an incredible summer season here in town and this will surely add to the positive real estate news. The number of buyers and of sellers looking to market their properties for sale is up, indicating continued strength and excitement for real estate in our little fishing village.

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Low Inventory Pushing Prices Up In Boston?

Scott Van Voorhis  did a great post on declining inventory levels finally driving up prices in Boston.  I have excerpted the post below. The numbers are staggering in many of the markets shown.

Boston has landed near the top of a list of major metro markets across the country where low inventory appears to finally driving up home prices.

Boston comes in No. 11 on the report, having seen the number of homes on the market drop 37 percent over the past year, as of June 19, according to a new report by Movoto Real Estate. (Movoto is an national on-line brokerage whom I am certainly not endorsing but who did an interesting report). During the same period prices of homes on the market in the Hub have risen 11 percent to nearly $300,000.

Here’s an excerpt from Movoto’s report.

We are seeing a gradual increase in the prices of homes in areas that have been most affected by low inventory. This could be an indicator the housing market has finally pulled out of its slump. We’d like to think so.

Here are the two relevant sets of stats taken from the Movoto report. The first shows declining inventory levels in Boston and other major metro markets across country.

  • Las Vegas, down 66 percent
  • San Francisco, down 65 percent
  • Miami, down 62 percent
  • Fresno, down 52 percent
  • Oakland, down 50 percent
  • Long Beach, down 49 percent
  • Seattle, down 42 percent
  • Mesa, down 41 percent
  • Phoenix, down 41 percent
  • Portland, down 41 percent
  • Boston, down 37 percent

The second set of stats, also from Movoto, shows the rise in list prices in these same cities.

  • Las Vegas, up 52 percent
  • Phoenix, up 30 percent
  • Mesa, up 25 percent
  • Miami, up 23 percent
  • San Francisco, up 23 percent
  • Austin, up 22 percent
  • Oakland, up 17 percent
  • Seattle, up 14 percent
  • Fresno, up 13 percent
  • Long Beach, up 12 percent
  • Boston, up 11 percent

Combine more buyers with fewer sellers and prices start to go up.

That tried and true  economic law of supply and demand is always the reason why prices go up or down. As I say repeatedly… Empirical data does not lie.

 

 

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analytics

We All Knew It – Home Sales Are Back

The comeback in home sales that many of us have been seeing hints of is now backed up with solid numbers. All reports are showing sales increases as well as declining inventory levels. Second quarter sales reports will show terrific numbers especially in downtown Boston neighborhoods. Sales of single-family homes in Massachusetts have bounced back to levels not seen since the Great Recession sent an already declining market into a tailspin. The Massachusetts Association of Realtors reported this week that May home sales were up more than 27 percent over the same month last year, while  The Warren Group pegs the jump at 35 percent.

The best news is that after hints of recovery for months, and most importantly our experience on the streets, the long-suffering real estate market finally appears to be living up to expectations and is finally in a recovery and coming out of the the deep trough it plunged into after the near global economic collapse of September 2008.

The 4,445 homes sold in May surpassed both May 2007 and May 2006 as well, when 3,884 and 4,200 homes were sold, respectively, in those months, according to a comparison of numbers from past monthly reports on the MAR website.

Look for articles and reports touting these terrific results and for the resulting positive effect on buyer and seller confidence.