11 Crown Way, Marblehead (click here for details) has an open House Sunday 12:00 – 2:00.
New price and spectacular new 10 ft window in butler’s pantry.
In the first half of 2013 there were 55 condo sales in Boston at $2 million and above. There were also 22 SFH sales at that level, making 77 total sales of SFHs and Condos $2 million and above in H1 2013.
In Marblehead, there was just 1 sale above $2 million during that time frame.
I have commented before about how puzzling it is to me that the higher end in Marblehead and indeed the North Shore generally has not seen the increased activity enjoyed elsewhere.
This video has encouraged me to look at what has been happening throughout Massachusetts in the higher end, with particular emphasis on the Counties surrounding Boston: Middlesex, Norfolk and Essex. I have detected a clear anomaly in the last year or so but want to go back and check the date before I publish the results. Stay tuned.
The market for Single Family Homes (SFHs) has been strong in the first half (H1) of the year at the lower and middle price levels, while the upper end continues to see an abundance of supply.
First, let’s look at prices. Here is a chart of the last 7 years. The numbers in the box are the median price in $thousands.
Bear in mind that in late 2011 and the first part of 2012 there was a shift in the proportion of homes sold at lower levels, resulting in a decline in the median price overall. What we have seen in 2013, with a 6% increase in Q1 and a 11% increase in Q2, combining for an 9% increase in H1, is a continuation of the recovery in the SFH market as prices have returned to roughly 2010/11 levels.
After suffering declines year on year (YOY) for three consecutive quarters from Q4 2011 to Q2 2o12, the median price has now increased YOY for four consecutive quarters.
The median price in the second half of 2012 was $549,000. Were 2013 to match that number then the year’s median price would be the highest since the $544,000 of 2007. The all-time high in Marblehead was $585,000 in 2006 so we are less than 10% below peak levels overall.
Sales in the first half were in line with last year’s numbers. 2004 remains an anomaly in this century.
There is little doubt that sales in 2013 would have been higher had there been more homes available for sale.
I have made reference before to the stock market. When a market overall or just an individual stock suffers a decline and then reaches a level at which it is widely considered to be cheap, sellers frequently decide that they do not want to sell at that level. If buyers want to own the stock they have little alternative but to bid the price up until sellers are willing again to sell.
I think what is happening currently in the housing market is similar. The word is out that prices have bottomed and are rising. There is still activity, of course, as people move, trade up or trade down, etc. But an awful lot of people, having seen their largest personal asset decline in value in recent years, are happy to sit tight for now.
In recent weeks the 30 year mortgage rate has jumped from under 3.5% to over 4.5%, as the increasing evidence of a strengthening economy has encouraged the Federal Reserve to talk of slowing its policy of quantitative easing (note “slowing” does NOT mean tightening or increasing rates). This sharp move, together with the traditional post July 4 slowdown, may combine to produce a pause in the market locally, but all the fundamentals still point to prices heading higher in due course.
Another measure I use to gauge the market is the Ratio (ASR) of Assessed Value (AV) to Sales Price (SP). If the AV is higher than the SP then the ASR will be over 100%. Conversely, when houses sell for more than AV the ASR will be less than 100%. Put simply, the lower the ASR the greater the premium to assessed value.
Here are the numbers for the first half of 2013. I have broken out the numbers at different price levels.
Key points are:
1. The overall ASR improved from 101.5% to 93.5%.
2. In the 0-499k price bracket the ASR improved from 105.6% to 99.3%. This is the price bracket that saw the most pressure and it has now been recovering since Q4 2012.
3. All houses $500k and above improved from 93.5% to 87.4%.
4. These ASR numbers support and explain the 9% improvement in the median price.
Here’s a simple view of the housing market over the last couple of years.
This is what has happened to sales (demand):
While this is what has happened to inventory (supply):
And, following the laws of supply and demand, this is what has happened to prices:
Pretty simple, really.
The current market repeats the situation seen all year: inventory (supply) remains tight at the lower end while there is plenty of supply at higher prices. Thus, in addition to the overall market numbers shown in my last post I am also showing the breakdown by price in the 17 North Shore cities and towns I follow.
As always, I can provide details of any individual city or town on request.
The tables below shows sales for the Last 12 Months (LTM), Pending Sales (Under Agreement and Contingent offers), and the number Available for sale.
First, Single Family Homes (SFHs):
It is generally accepted that a market is in equilibrium between buyers and sellers when there is 6 months’ supply, which means the number of houses for sale equals the number that has sold in a 6 month period.
At the beginning of July the inventory of Single Family Homes (SFHs) in the 17 North Shore cities and towns I follow represented just 4 months of supply, a figure that has crept up a little since the 3 months at the beginning of April. This is not surprising as spring and early summer sees the largest number of homes being listed for sale.
Within the overall figure of 4 months’ supply there is a wide variation, with under 3 months in Beverly, Georgetown, Peabody and Salem; and over 7 months in Boxford, Ipswich, Middleton and Nahant.
Remember that these numbers are for the total market, while we know that the supply situation is much tighter at the lower end than at the upper end where there is a glut of property for sale. In my next post I will show the breakdown by different price levels but here are the raw numbers
First, SFHs over the last 4 months:
Here are the detailed numbers for each town:
And now for condos, first the totals:
And now the detail: