Real estate market remains red hot

Perhaps more important than the actual numbers – which show a continuing recovery in home prices and sales – is the tone of commentary on the announcements.

The headline above was the Associated Press’s headline of a story about this week’s data for existing home sales.
Read Article to see the data

The New York Times, referring to single family housing starts, used “Housing, ailing for years, start to recuperate”
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The Wharton Public Policy Initiative pointed out that “Housing starts to Give Promising News for Economic Recovery”
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How much will home prices increase in the next decade?

According to a Bloomberg report, JPMorgan Chase & Co. (JPM) more than doubled its forecast for U.S. home price gains in 2013 to 7 percent this week, and predicts a more than 14 percent increase through 2015. Bank of America Corp. (BAC) said last week property values will jump 8 percent this year, up from a prior estimate of 4.7 percent in a report titled “Someone say house party?”

I have previously written that I expect any surprise in 2013 to be on the upside. I also reported a recent open house in Marblehead on a snowy and blustery day when 30 people showed up and multiple offers were received. Then last week before a new property came on the open market it received several offers above the asking price.
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What every oceanfront property buyer should do NOW

Some oceanfront houses get battered by storms time and time again, while others remain unscathed.

What is the difference?

Largely, it is a question of the direction the house faces and the protection – or lack of it – from the elements, mainly water and wind.

If you are looking for an oceanfront property, what you should do this weekend is get in your car and drive around the areas in which you are interested. And take a compass with you (I find the compass on my iPhone unreliable).
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Is this why the housing market is heating up?

The stock market hit an all-time high this week, unemployment dropped to 7.7%, and the Federal Reserve reported that Americans have regained the $16 trillion in wealth lost during the Great Recession.

In contrast, home prices nationally remain, depending on the index, up to 30% below peak levels, while mortgage rates are at all-time lows.

Plus, as I reported last week, home ownership between 2004 and 0212 declined by 3.6% or some 4 million households.

Add to that an historically low level of houses for sale, and what do you get?

In classical economic theory, the relation between supply and demand determines the price of a commodity. As demand for an item increases, prices rise. When manufacturers respond to the price increase by producing a larger supply of that item, this increases competition and drives the price down

Demand is up and increasing
Supply is at historic lows
New housing starts remain well below “normal” levels and can’t be increased quickly

Based on the above, where do you think prices are headed in 2013?

Associated Press; March 7, 2013

WASHINGTON — It took five years, but surging stock prices and steady home-price increases have finally allowed Americans to regain the $16 trillion in wealth they lost to the Great Recession.
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The most important website for first time and Veteran homebuyers

For many first time home buyers the process can seem intimidating, but information available on the internet can help the buyer become well informed and able to be in control of the process.

This website North Shore Home Programs provides a remarkable amount of information, ranging from a step-by-step guide to home buying, to a list of programs available to help with down payments.

The greatest gift of the internet is the way it empowers the consumer through knowledge. Spending a little time on this website, and then googling “first time home buyer”, will go a long way to giving power to you, the buyer.

Knowledge helps to remove intimidation from the process of buying your first home.

Foreclosure activity in Massachusetts continues to drop

Foreclosure petitions down 30%
Foreclosure deeds down 63%
Foreclosure auction announcements down 80%

The Warren Group; March 5, 2013

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“Local housing market, packed with eager buyers, is desperately seeking home sellers”

If you have been reading my articles in the last couple of months it will come as no surprise to read today’s front page article in the Boston Globe about the severe shortage of homes for sale. While this article is written about Boston it applies just as much to our North Shore communities.

The message is clear: if you have been waiting to sell, wait no longer! And if you have been thinking of buying or trading up, wait no longer! (more…)

Home ownership in MA exceeds national average for first time ever in 2012

It came as a shock to me to discover that home ownership in MA had trailed overall numbers for the US ever since 1900 – until 2012 that is.

First look at this table from 1900 to 2010:

Home Ownership_1900_2010Source: US Census Bureau (more…)

There is no housing bubble. Really?

When I saw this headline I wondered if I had done a mini Rip van Winkle and fallen asleep for a few years. But no, it was a headline this week in an article read here referring to Southern California.

As America appears to be ready to go on a national diet after many years of super-sizing I found myself wondering if housing terminology were going through a similar metamorphosis. (more…)

Is it time to trade up?

Last Sunday, as you may recall, was a cold, snowy, stormy day. Harborside had a new listing and planned an open house, but the broker wondered whether anybody would venture out in the snow. Should he cancel the open house? He decided to go ahead and see if anybody would show up.

Um. Some 30 people “showed up” and the result was multiple offers for the property. (more…)

January Pending Home Sales up again in Massachusetts

Properties under agreement in January increased 18% from a year ago for SFHs and 22% for condos. In both cases January was the 21st straight month of year over year increases.

Massachusetts Association of Realtors; February 12, 2013
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Why numbers do matter – but so does a good agent

In my new career as a Realtor I recently attended a class on using the data in the MLS (Multiple Listing Service). Two comments struck me. The first came from an agent of more than 20 years’ experience who said:  “I know my market; I don’t need data to tell me what a house is worth.”

The second came when the agents present were asked what they had been taught to say in response to the question: “how’s the market?” I was almost deafened as those present (this was a continuing education class) shouted out words like “great” and “terrific”. To which the instructor wryly commented that that was how Realtors got a bad name. (more…)

Where have all the sellers gone?

Buyers are out there, but sales are being held back because of a shortage of supply. If you are thinking of selling you don’t have to wait until the traditional spring market.

Conventional wisdom is that a market is in balance when the inventory represents about 6 months of sales.Currently, for the North Shore as a whole, supply is just 3.2 months for SFHs and 3.7 months for condos. What does this mean? (more…)

Boston Condo Market Soars

According to LINK, a firm that analyzes Boston real estate, sales rose 29% in 2012 while the median price reached a record high.

Boston Globe February 2, 2013
Bston condo market soars

National Year End Housing Data

Last week’s publication of year end confirmed that 2012 was the year of recovery in the nation’s housing market. Here are the key data:

Existing home sales reached 4.65 million, up 9.2% from 2011, and the highest volume since 2007

Total inventory, or houses for sale, fell to 1.82 million, or 4.4 months of supply, the lowest since May 2005. Inventory is down 21.6% from a year ago, when the supply was 6.4 months.

The median price was $180,800 in December, up 11.5% from a year ago: 10.9% for SFHs and 16% for condos. For the year overall the median price increased 6.3%.

Distressed sales – foreclosures and short sales – accounted for 24% of sales in December, down from 32% a year ago. Foreclosures sold at an average discount of 17% and short sales 16%, according to NAR.

New homes sales: 367,000, up 19.9% from 2011.

The median new home price was $243,600, up 7.2% from 2011.

30 year mortgage rate: 3.35% in December, down from 3.96% a year ago.

Sources: National Association of Realtors; Commerce Department; Freddie Mac