Swampscott 2016 housing market: prices up, supply really low
In 2016 the median price of a Single Family Home (SFH) in Swampscott increased by $28,000, or 6%, to $488,000, a sharp recovery from the Great Recession lows but still 6% below the exceptional peak of $517,300 in 2005 (read What happened in Swampscott in 2005?). Sales dropped back, largely in the second half of the year, but the big story was the continuing shrinking of the number of homes for sale, which averaged only half the level of 2014.
The first chart, with the numbers below, shows the median price for the two halves of the year and for the full year. But for 2005, 2016 would have represented a new high.
The quarterly numbers show how the market can vary from quarter to quarter.The law of small numbers urges caution, but it is interesting to note that in the last 6 years the highest quarterly median price has been recorded twice in Q2, once in Q3 and and three times in Q4.
After soaring to a new 21st Century high in 2015, sales dropped back in 2016 closer to the level seen in 2013 and 2014, with most of the drop occurring in the second half of the year. There is no doubt that lack of supply has been holding back sales.
Sales by price
The table shows the breakdown in sales by price for the last four years.
Not surprisingly, in a rising market, sales under $400,000 have dropped sharply and the most significant increase has come in the $400-600,000 bracket. While the higher price ranges have also seen increases, the small numbers make the percentage increases less meaningful.
Houses For Sale
The chart below demonstrates two things: the seasonality of supply, and the sharp drop in SFHs for sale in 2015 and 2016 compared with 2014. The average monthly number of SFHs for sale dropped from 65 in 2014 to 43 in 2015 and to just 33 in 2016. No wonder sales were down.
Assessed Value to Sales Ratio (ASR)
One way I measure prices is by the ratio (ASR) of Assessed Value (AV) to Sales Price (SP). The ASR is the AV divided by the SP: if the SP is rising (prices going up), the ASR will fall. In a period of rising prices the ASR is likely to be below 100%.
As we hope out properties are worth more than the AV 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 FY2017 are based on actual sales in 2015. Thus the 2016 sales data, reported in this review, will be the basis for FY2018 assessments. And my data compares 2016 sales with AVs based upon 2015 prices.
Let’s look at the ASR in recent years:
The ASR of 89.1% in 2016 suggests that the median SFH sold for about 12% more than its prior year Assessed Value.
Outlook for 2017
Immediately after the Election I published What does the Election mean for real estate markets? in which I made the case:”The removal of a lot of strangling regulations and the end of gridlock in Congress will produce stronger economic growth. Major infrastructure spending will boost jobs and wages at the lower end, while lower corporate tax rates and lower personal tax rates will produce increased personal wealth. Interest rates will rise, reflecting the stronger economy, and the demand for housing will increase. Greater wealth and confidence will provide a boost to the higher end of the market.”
I have no doubt that 2017 will provide many surprises along the way, but with a stronger economy and low supply of houses for sale, there seems little reason for home prices in Swampscott not to continue their steady, but modest, upward movement.
*In all my reports, I use total sales when reporting on sales, but exclude distressed sales – foreclosures and short sales – when computing median prices and ASRs.
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Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated