Losses of last fall and winter erased

At 155.95, the S&P/Case Shiller Boston index now has recouped all the losses it experienced during  Massachusetts’ seasonal home price lull last fall and winter.  The Boston index for May stands exactly at its 18 month high set in August 2009.

Seasonal MA home price swings

Boston home prices have risen nearly 3% since March, continuing a pronounced pattern of seasonal swings in metro Boston home prices.

Throughout the last decade, every fall/winter has seen Boston area home prices recede, while during every spring/summer, home prices in Greater Boston have rebounded.

Boston home prices bottomed in 2009?

Beginning in 2005 through 2008, the overall trend in Boston home prices had been downward.

But in a notable break in the downward bias, the 2009-2010 fall/winter home price slump was very mild.

In fact, the bottom of the last seasonal market slump in Greater Boston was higher than the prior year’s low.

Uncertain outlook for home prices

Like metro Boston, many of the US metro markets tracked by S&P showed home price gains in May.

But many housing analysts pin May’s strength on a spring home buying surge amplified by a rush by buyers to qualify for the now-expired Federal home buyer tax credits.

The expert consensus seems to be that home prices across the US face an uncertain future now that the tax credits and spring home buying season are history.

Many housing prognosticators are sounding warnings of a potential second dip in home prices:

Home Prices May Soon Slide

Home Price Gains May Not Last

Experts have been wrong before

There’s a great deal of uncertainty predicting the behavior of any financial or asset market.

Some forecasts are way off target.

For example, mortgage interest rates were pretty universally forecast last winter to soar in 2010.

And those predictions were shown to be totally wrong when mortgage rates proceeded to fall to record lows in 2010 instead.

So no one knows for sure what the future will bring for home prices in Massachusetts and the US.  But you can count on us to keep reporting on this for you in coming months!

Copyright ©2010 02038.com

New video

Here’s a new YouTube video recapping MA real estate market stats and trends so far in 2010:

Future challenges to the market

The most obvious issue facing real estate across the US is whether the national economy will head into another recession in 2011.

At least the MA economy appears to be much stronger than in many other regions of the country, so there are grounds for optimism in the Commonwealth that we will do fine if the national economy muddles through any upcoming economic lulls and downdrafts.

The end of the Federal home buyer tax credit has removed an important prop to the real estate market.  We need more time so how the market handles this loss of stimulation.

Advice for home buyers

Home buyers thinking about entering the market should focus on taking advantage of today’s historically low mortgage interest rates.

And you can buy a home in Massachusetts at quite a discount from what you would have paid back in 2005.

Tips for home sellers

Now is the best time to sell a home in MA in the last three years.  Economic conditions are more stable and there has been some strengthening in home prices and market activity.

You’d be well advised to price your property to market and treat any and all buyer interest seriously.

What lies ahead

No one knows what the future will bring.  These certainly are unsettled financial times.

However, it is all too easy to let fear prevent you from making beneficial investment decisions (on both the selling and buying ends).

The only certainly I can leave you with is this: all market cycles, both up and down, end at some point.

We are now 5 years into the current down cycle so a real estate upswing should be well underway sometime over the next 3 – 5 years!

Copyright ©2010 02038.com

Boston real estate market forming bottom?

April’s home price rise is significant because it may mark the formation of a home price bottom in the Greater Boston, Massachusetts real estate market.

The price increase was a bit overdue based on past years’ price patterns and may have been delayed because of March’s protracted bad weather.

As you can see in the chart below, Boston home prices have shown a strikingly consistent seasonal pattern of home price slumps and recoveries since 2001.

Ever higher Boston home prices during boom

When the market was on the upswing in the first half of the last decade, metro Boston, MA home prices peaked every spring/summer at ever-higher levels.

Each year, the fall/winter slumps were minor and each trough was higher than the prior years’ low point.

Ever lower prices during bust

During the real estate bust that took place in the second half of the last decade, the exact opposite behavior was exhibited by the Boston regional market: the annual spring/summer price increases were anemic and short-lived, while severe fall/winter price slumps kept Greater Boston home prices trending markedly lower every year.

Encouraging market performance 2009 – 2010

The chart below shows a clear improvement in the performance of the Boston, Massachusetts real estate market over the past year.

The seasonal home price slump of 2009 – 2010 was much less severe than during the worst of the market decline.

And for the first time in 4 years, the low point of the most recent seasonal market slump was HIGHER than the low reached the prior year.

This may mean that the metro Boston, MA real estate market is finding a bottom.

Caution is needed

Caution is called for; it is way too early to definitively call the bottom of the current real estate market cycle in Massachusetts.

The recently expired Federal home buyer tax credits had a beneficial impact on the April 2010 market.

It may take a full year or even two before MA home prices are clearly on the mend.

At least we have more evidence pointing to the beginning of the formation of that much-looked for home price bottom in Massachusetts.

Keep tuned for future updates!

Copyright ©2010 02038.com

Improvement over June 2009

June’s absorption rate figures for MA indicate better conditions now in Massachusetts real estate than at this time last year.

Three markets tracked

This blog tracks three markets in MA: the broadest measure of the Massachusetts housing market as represented by all listings carried on MLSPIN; the local market in the Town of Franklin; and the regional housing market comprised of communities in the Franklin vicinity.

The overall Massachusetts real estate market is carrying 9.5 months of inventory in June 2010 (as compared to 11.2 months last June).

The regional market around Franklin is showing similar improvement: 9.2 months worth of homes in June 2010 versus 11.7 months in June 2009.

The Town of Franklin, MA is maintaining less housing inventory than the other two markets tracked by this blog.

Franklin currently has 7.1 months worth of homes for sale, a notable reduction from the 9 month supply in Franklin last year at this time.

Numbers reflect Federal home buyer tax credits

Note that absorption rate calculations used by this blog look at home sales over the prior six months.  So current absorption figures reflect home sales during the market stimulation supplied by the recently-expired Federal home buyer tax credits.

It may take several additional months of sales data before we’ll start to get a reading on how MA is absorbing housing supply without the beneficial support of those Federal tax credits.

Click to access more reports about the health and direction of the MA real estate market.

Copyright ©2010 02038.com

However, the Boston Index was basically unchanged in March 2010, perhaps signaling the end to the recent downtrend.

The Boston Index is published with a 2 month lag; the March 2010 Index is the most current reading available.

March Boston home prices stable

At 151.42, the Boston Index was down a minuscule 0.01% for the month.

This is stability is impressive since home sales across Massachusetts during March were very likely adversely affected by March’s widespread flooding in MA.

7 straight months of home price declines in Boston

After topping out at 155.95 last August, the Boston Index has fallen 2.9% during the succeeding seven months.

That’s a pretty unnerving statistic. 

This decline would seem to reinforce the recent doom and gloom headlines in the media about the supposedly poor outlook for US real estate after April’s end to the home buyer tax credits:

Experts see underlying weakness in housing

Think housing is recovering? Think again.  

Encouraging news in the new Index numbers?

However, there’s reason for optimism about MA home prices lurking in the Boston Index.

Looking at the Boston Index over the last several years, a pattern becomes apparent: home prices have had a pronounced seasonal swing in the Greater Boston area. 

For the last four years, home prices have dipped in the Metro Boston area each winter. 

Every spring for last three years, there has been a recovery in Greater Boston home prices.

Admittedly, each year has seen an overall decline in Greater Boston home prices.

But note that the 2008-2009 winter slump in Boston home prices was greatly exacerbated by the world-wide financial panic and resulting Great Recession that reached its depths during that time period.

2009 – 2010 seasonal home price slump much less severe

What is encouraging about the most recent 2009–2010 seasonal slump is that the decline was relatively modest compared to prior years. 

This amelioration in the downtrend may be a sign that the Massachusetts real estate market is seeking a bottom.

See the video I made last year on how the Massachusetts housing market slowly found its bottom after the last down cycle in 1989-1994:

Will MA home prices trend upwards?

We should see some home price increases being reflected in the Boston Index over the next three or four months, if the seasonal spring/summer up pattern of prior years is maintained. 

The big question is whether Boston home prices will rebound this spring and summer only to fall again next winter.

If the pattern of seasonal slumps fails to reassert itself next fall and winter that would be a clear sign of the start of a real estate up-cycle in MA.

If the seasonal slump does return, look to see if it is less severe than past years; that might be a sign of a developing market bottom in Massachusetts real estate.

Copyright ©2010 02038.com

Broader markets in Massachusetts also showed a similar improvement in absorption of housing supply for May.

What May’s figures mean

As of mid-May 2010, there’s a lower standing inventory of homes for sale in Franklin, MA and in the regional market surrounding Franklin compared to last year; the real estate market’s “absorption rate” in 2010 is accelerating.  Housing inventory across Massachusetts is also being absorbed at a faster pace.

Ask ‘What’s the absorption rate?’

Absorption rate analysis is a commonly used way to gauge the health and direction of a real estate market.

A variety of absorption rate formulae exist. Most seek to ascertain the current rate of home sales in a community or broader regional market to calculate how long it would take all properties currently for sale in that market to be sold (or “absorbed”).

The calculations produce a “months’ worth of housing inventory” figure and this often is compared to supply levels carried during earlier time periods.  The  comparison gives you a good reading of whether the local market likely is headed up or down.

Inverse relationship

There’s an inverse relationship between home for sale inventory and the direction of the real estate market.

When there is a declining trend in the months of housing supply, that’s good news! 

Less inventory means the real estate market is stronger and home prices might rise in the future. 

However, when the supply of homes for sale is increasing, that’s generally a bad thing. 

With more months’ worth of homes sitting on the market, conditions may be softening and there may be a bias towards declining home values.

Future indicator?

May’s housing inventory figures for Massachusetts may be significant for both prospective home buyers and sellers.

They might be foreshadowing where MA home prices may be heading!

(Data used in this post is from MLSPIN and is deemed reliable but not guaranteed.)

Copyright ©2010 02038.com

Franklin, MA real estate has best April since 2003

The 29 single family homes sold in Franklin last month was the highest sale total achieved in Franklin for any April since 2003 when 30 Franklin, Massachusetts single family homes changed hands.

Pending home sales in Franklin, MA also rose in April, but not at such a sharp rate as for completed sales.

April home sales up despite March’s bad weather

April’s MLS home sale data confirms the rebound in Massachusetts real estate sales reported recently by MA real estate tracking firm The Warren Group.

April’s performance was all the more impressive coming on the heels of March’s heavy rain and flooding events in Massachusetts. 

Home showing and selling activities in March were negatively impacted by all the rain.  (Since home sales in MA take approximately 4 – 8 weeks to “close”, the majority of home sales that went of record last month likely resulted from sale agreements struck between mid-February through the end of last March.)

Top and bottom home sales in Franklin, MA

Below are the four highest and four lowest MLS home sales in Franklin that went of record last month.

You’ll note that the highest priced home sales in Franklin, Massachusetts last month were all below $700,000.  This makes Franklin an oasis of relative affordability among communities with such excellent public school systems in suburban MA.  

Eligibility deadline for home buyer tax credits has passed

Home buyers needed to get a binding home sale agreement signed by April 30, 2010 to be able to qualify for either of the Federal home buyer tax credits.

As the local economy continues to improve, we’ll have to wait for home sale results over the coming few months to see what effect the end of the federal home buyer tax credits will have on the Franklin, MA real estate market.

There still appear to be some attractive offerings in Franklin and surrounding towns; click the hot link to view homes for sale in the greater Franklin region.

Happy house-hunting!

Copyright ©2010 02038.com

But the apparent muddle in MA real estate stats may derive from the different data sets being reported on by the two organizations.  Hopefully the data will present a clearer, more uniform picture by the end of the spring Massachusetts home selling season later this year.

The bad news from the Case-Shiller Boston Index

The S&P/Case-Shiller Index for the Boston metro area has now fallen for the sixth month in a row after staging an encouraging 6.9% rallyduring the spring and summer months of 2009.  (Index results for February 2010 are the most recent released by Standard and Poors.)  

Metro Boston home sale price slump

As tracked by Standard and Poors, MA home sale prices in the metro-Boston region for February are now up only 3.8% from their March 2009 lows and are a paltry 1.8% higher compared to one year ago.

Upbeat view from The Warren Group

One day after the release of the rather gloomy S&P/Case-Shiller Index for Boston, The Warren Group, publisher of the influential MA real estate trade publication Banker & Tradesman, trumpeted some new, upbeat Massachusetts real estate market stats.

The Warren Group reported that the median sale price for single-family homes in Massachusetts rose a healthy 7.8 percent in March 2010 (to $275,000) from $255,000 in March 2009. The Warren Group noted that it was the fourth consecutive month that median home sale prices had risen over prior year levels.

The Warren Group also reported that the median single family home sale price for the first quarter of 2010 was $276,750, an 8.5 percent increase compared to the first quarter 2009’s $255,000 median price figure.

MA home sale volume soars

The Warren Group also released very bullish Massachusetts home sale figures for March 2010.

Massachusetts single-family home sales rose 27.6 percent to 3,162 in March from 2,477 in March 2009. Home sales in the first quarter jumped 17.5 percent to 7,310 from 6,223 in last year’s first quarter. It was the first increase in first-quarter home sales since 2004, according to The Warren Group.

“We’ve seen a significant turnaround in the local housing market. Monthly home sales have been increasing year-over-year since last July and that has propped up the median selling price statewide,” said Timothy M. Warren Jr., CEO of The Warren Group, publisher of Banker & Tradesman. “The homebuyer tax credit has been a wonderful impetus for the housing market. We hope that it has been a strong enough factor that consumers will continue entering the housing market.”

Clearer picture coming?

As we’ve seen, the S&P/Case-Shiller Index publishes with a two month lag.  We may see the Boston Index show an uptick in prices once the Index readings for March and April are published. 

If that happens, then there will be some much-needed congruity in the real estate data being published by Standard and Poors and The Warren Group.

In the meantime, if you’d to know what your home is worth in today’s market, please click the hot link to get a Home Value Report  . . . it’s free, no charge, no obligation!

Copyright ©2010 02038.com

Bad weather, flooded basements slow sales and delay closings?

A series of massive storms during March 2010 created record rainfall in Massachusetts.  All the bad weather made road travel difficult and likely reduced March home selling activity in the state.

Because the majority of real estate closings come at the end of each month, the March 28 – March 30 storm that flooded basements across Massachusetts very likely triggered the postponement of a significant number of home sale closings that would otherwise have been reflected in the first quarter 2010 real estate results.

First quarter 2010 video recap of the MA real estate market

You can view a special video recap of the MA real estate market for the first quarter of 2010 by clicking the embedded video above or by clicking this link. This video was created to give you useful insights into the current state of the housing market in MA.

The video also places particular emphasis on Franklin, MA real estate activity for the quarter just ended.

So watch the video and click to find out what the current value of your home is in today’s improving real estate market.

Massachusetts real estate in 2010

This blog post will highlight four important developments in the overall Massachusetts real estate market so far this year.

15% rise in MA home sales

Despite the bad weather in March, home sales recorded on the Massachusetts MLS (MLSPIN) rose over 15% for the first quarter of 2010. This was the first increase in MA home sales during the initial three months of any year since a modest 4.5% uptick back in 2007.

Note that we’d need to see MA homes sales continue to go up for several more quarters before declaring a pronounced real estate rebound in the Commonwealth.

Lower inventory levels

Another stat to look at when analyzing real estate activity is the amount of housing inventory; taken together with home sale volume, movement up or down in inventory levels can present an accurate picture of the current health of any real estate market.

The standing inventory of homes for sale across Massachusetts has been declining for the last two years.

The decline has been steady and consistent:  there were 10.7 months of housing inventory in Massachusetts during March 2008; that declined to 9.1. months of inventory for March 2009; and there was another decline to 7.7 months’ worth by March 2010.

It’s an encouraging sign that first quarter home sale volume was up in Massachusetts along with the continuing absorption of housing inventory.

Days on market (DOM)

A third useful gauge of the health of a real estate market is days on market.  (“DOM” is the average number of days homes are on the market before finding a buyer.)

DOM in Massachusetts had risen sharply after the real estate market topped back in 2005; this meant that asking prices were meeting pronounced resistance from home buyers.

Succeeding years had seen first quarter DOM in MA plateau at approximately 150 days. That it was taking five months to sell a home was a sign of a buyer’s market in Massachusetts.

This year we finally saw improvement in DOM in Massachusetts. 

First quarter DOM for all of Massachusetts fell to 128; let’s hope that becomes a continuing trend for the rest of 2010.

Mixed picture on home prices

The median sale price of single family homes in Massachusetts went up in the first quarter of 2010 for the first time in years.

According to data maintained by MLSPIN, Massachusetts’ median sale price rose 9.8% to $280,000 for the first quarter of 2010 (up from $255,000 the prior year).

You’ll note that median prices for Franklin and the regional market around Franklin declined, so the price picture was mixed during the first three months of 2010.

Home prices tend to be a lagging market indicator, so perhaps you get a more accurate reading on the 2010 MA real estate market by focusing more on the past quarter’s increased home sale volume and lower home inventory and DOM figures.

More reasons for optimism

The Boston Globe recently announced the end of the recession in Massachusetts. 

Recent economic reports indicate that the national economy also is swinging into recovery mode.

Job creation and a growing economy are keys to the long term health of any real estate market.

So while the Massachusetts real estate market is not yet fully out of the woods, there are enough signs of recovery and rebirth to justify belief in better times ahead for us all!

Copyright ©2010 02038.com

End of Federal housing support a concern

This optimism about US real estate comes despite widespread concern about the scheduled end of two important Federal initiatives currently supporting the US housing market.

BusinessWeek.com recently published an article discounting worries about the coming expiration of the two Federal home buyer tax credits and the announced end of the Federal Reserve’s massive $1.25 trillion purchase program bolstering the US mortgage-backed securities market.

Stronger economy and affordable homes reasons for confidence

The BusinessWeek article cites housing analysts who point to a brighter job outlook, low mortgage rates, and more affordable home prices across the nation as the main reasons for optimism about the outlook for housing. 

The article speculates that the US housing market may keep improving despite the April 30 wind-down of the home buyer tax credits and the end of the Fed’s extraordinary purchases of mortgage-backed securities.

Quoting from the article:

“A growing number of economists believe that a pickup in employment this spring, cheap credit, and a glut of affordable homes will allow housing not only to withstand the removal of government help in 2010 but also to contribute to U.S. annual economic growth for the first time since 2006.”

Worst over for housing because of jobs growth?

Citing improving employment figures in Massachusetts, the Boston Globe recently called the end of the recession in MA. 

The stronger local jobs market should greatly help real estate in Massachusetts.

The nationwide employment outlook is also improving, albeit at a much slower pace than in Massachusetts.

BusinessWeek cited a forecast by Morgan Stanley economist David Greenlaw calling for as many as 300,000 new U.S. jobs in March, the biggest monthly increase in four years.

The BusinessWeek.com article does detail continued risks of a national real estate “double dip” but concludes with the speculation that while the improving national job market “doesn’t portend a robust (real estate) rebound, it suggests the worst may be over for housing.”

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