2015 Marblehead housing market review

This  2015 Marblehead housing market review focuses on the Single Family Home (SFH) market. I have published a separate Marblehead 2015 condo market review.

In summary, sales were down modestly from last year – at 239 vs 245 – and the median price was up slightly at a new record $596,500, compared with $590,000 in 2014.

It is important to bear in mind that only around 4% of Marblehead’s SFHs change hands publicly in any year, but 4% is a reasonable sample, with sales taking place from $267,000 to $4.6 million.

And there is seasonality in the market, as you will see from looking at the quarterly median price numbers which ranged from $535,000 to $660,000.

Median price
The first chart, with the numbers below, shows the median price for the two halves of the year and for the full year. The $614,500 median price in the second half of 2015 was a new record, beating the $600,000 in 2014, which was the first time Marblehead recorded a median price of $600,000 in any half-year.

MHD_SFH_Median_5965

MHD_SFH_H_2005_15_R

 

 

The quarterly numbers show how the market can vary. After 9 months it looked as though we were going to see a median price for the year well over $600,000, but sales in the last quarter were skewed to the lower end. In Q3 the median price finally broke the old record for any quarter, the $645,000 recorded in Q3 2006. Ironically, that quarter was followed by a quarter with a median price of $539,950, a difference of 16%, while in 2015 the change from Q3 to Q4 was 17%.

Source: MLS, Oliver Reports

Source: MLS, Oliver Reports

 

 

Sales
Sales were modestly down from last year, but were still the second highest total since 2004:

MHD_SFH_Sales_239

 

 

 

 

The tables show the breakdown in sales by price for the last three years. First overall sales.

MHD_SFH_Sales_price_2013_15_R

 

The next tables break down sales in more detail. First, sales under $600,000. In 2014 and 2015, 51% of sales were under $600,000, evidence confirming that the median price (that at which 50% are higher and 50% lower) was also just under $600,000. Note that in 2013, 63% were under $600,000, indicating that the median price was well below $600,000 (it was $535,000).

MHD_SFH_600k_R

 

As prices ( and buyers) moved up so the percentage in the next brackets increased. As in the lower bracket, the main change occurred in 2014 (when the median price increased 10%), while there was little change from 2014 to 2015:

MHD_Sales_999_2013_15_rev

That pattern – the big change from 2013 to 2014, with 2015 being pretty stable, was also seen in sales at $1 million and above. Perhaps the biggest surprise of 2015 was that the top end did not see more sales. There was, however, increased activity towards the end of the year, and I will write a separate report on that segment of the market;

Source: MLS, Oliver Reports

Assessed Value to Sales Ratio (ASR)
One way I measure prices is by the ratio (ASR) of Assessed Value (AV) to Sales Price (SP). Properties selling above their AV will have an ASR below 100%.

As we all hope out properties are worth more than the AV we look for an ASR below 100% as a positive sign. Remember that AVs are a lagging indicator: the tax bills that have just been sent out for FY2016 are based on actual sales in 2014. Thus the 2015 sales data, reported in this review, will be the basis for FY2017 assessments.

What this means is that in a period of rising prices the ASR is likely to be falling. The ASR is the AV divided by the SP: if the SP is rising (prices going up), the ASR will fall.  So what we, as homeowners, want is an ASR below 100% and falling.

Let’s look at the ASR in recent years:

MHD_SFH_ASR_H_2011_15

Source: MLS, Oliver Reports

The ASR has fallen steadily since 2009. At 87.4% in 2015, the median house in Marblehead sold for 14% (100/87.4 – 1) above its Assessed Value. I was surprised that AVs did not increase more for the FY2016 tax bills that have just gone out, but I am confident that AVs will increase in FY2017 by more than they did in FY2016, but that’s a subject for another report.

Outlook for 2016
I am, of course, an optimist, but there are several reasons to expect a strong market in 2016:
– historically, when mortgage rates start to move up, buyers are active, fearing they may miss the low rates
– the winter is unlikely to be as harsh as the last two, so there may not be the same economic slowdown in the first quarter
– the Massachusetts economy continues to do well
– with the boom in Boston, prices here look even more attractive
– and finally, supply, of which there is very little. Currently, there are just 42 SFHs for sale in Marblehead, and only 6 of them (!) are under the 2015 median price!

 If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com.

Read How should I choose the broker to sell my home?

Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated

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