Midyear Housing Report Shows Signs of Recovery
According to data provided by the Warren Group, there were 38,345 home sales for all of Massachusetts from January 1 to June 30 this year compared to 31,941 in 2011, an increase of 20%.
June 2012 marks the sixth month in a row Massachusetts home sales have increased compared to the same period in 2011. This increase in sales this year compared to the same period last year indicates this is not an anomaly but a legitimate upward trend in home sales. It strongly suggests we have hit the bottom.
Watch John and Anthony Discuss the Report on FOX25 Morning News:
Signs the Housing Market is Improving
There are three indications that the housing market is on pace for recovery: a decrease in the available supply of homes for sale, a stabilization of the average selling prices for homes, and a reduction in shadow inventory.
The first indication that the housing market is starting to recover is the decrease in the amount of homes available for sale, known as the housing inventory. In July 2006 at beginning of the housing crisis there was a flood of over 54,000 homes that were on the market in Massachusetts. That number has dropped nearly 36% to just 34,739 as of this month, which is also a 15% decrease from last year at this time when there were 41,068 homes on the market. The inventory of homes available for sale is at its lowest point since 2005. This means increased competition for homes which affects both the demand for homes as well as selling prices.
This gives us a 5 month housing supply. (Housing supply is defined by the amount of homes available for sale divided by the amount sold per month. The amount of homes currently on the market is 34,739; on average, 6,390 homes are selling per month, which leaves us a 5 month supply of homes for sale.)
Data for the first 6 months of 2012 show average home sale prices in Massachusetts are starting to stabilize. As you can see in this chart below, average selling prices for condos increased almost 2%, and average selling prices for multi-family properties increased 6%. Average selling prices for single-family homes dropped just 1.8%, and average selling prices for all three types of homes together stayed about the same compared to the first 6 months of 2011.
And finally, according to data provided by the MLS Property Network, sales of foreclosed homes for the first 6 months are up compared to the same period in 2011. In 2011, there were 3,066 foreclosure sales in Massachusetts. This year, there were 3,486 foreclosure sales, an increase of almost 14%. The so-called “shadow inventory” of houses—those in foreclosure or at risk for foreclosure—have been sold, meaning they are no longer on the banks’ books and are now occupied by new homeowners. A reduction in shadow inventory is good for the market because it helps stabilize prices and reduce uncertainty.
Many Towns Saw Large Increases in Sales
Many towns in Massachusetts saw large increases in the amount of homes sold from January to June this year compared to the same period last year.
Belmont, for instance, had a 36% increase in total home sales this year, 177 compared to 130 in the first 6 months of 2011. Framingham had a 32.6% increase in the amount of homes sold, 248 in 2011 compared to 329 so far this year.
Saugus home sales increased from a total of 77 last year to 95 this year, a 23% increase. Average home prices in Saugus increased as well, from $240,389 to $268,061, an 11.5% increase.
Boston home sales increased nearly 18%, with 962 homes sold this year compared to 816 last year.
The increased competition for homes, stabilization of selling prices, and clearing of shadow inventory are definite signs of recovery in the housing market.
We expect this trend continue for the rest of the year, and the market to stay fairly flat for the next 3 to 5 years.
Lamacchia Realty Housing Report, Copyright ©2012 The Warren Group. All Rights Reserved.
Massachusetts Foreclosure Sales, 2011 and 2012, MLS Property Information Network.