Home sales in Massachusetts and New Hampshire in 2012 showed strong gains, according to our year end housing report*. The limited housing supply, low mortgage rates, and the improving economy all contributed to a year of increased home sales in the region. In Massachusetts, total home sales increased 20% in 2012 compared to 2011. In 2012 there were 72,820 home sales of all property types (single-family, condo, and multi-family) compared to 60,429 in 2011. Southern New Hampshire total home sales increased 29% in 2012 with 9,581 home sales compared to 7,391 sales in 2011.
December home sales in Massachusetts increased 9% in 2012 compared to 2011. 5,707 homes sold in 2012 compared to 5,239 in 2011. Average prices for homes in December increased as well. The average price for a home in Massachusetts for December was $348,173 in 2012 compared to $313,819 in 2011, an increase of 11%.
Condo sales in Massachusetts saw the largest increase in sales volume of 25% year over year, with 19,027 condo sales in 2012 compared to 15,171 for 2011. In New Hampshire, single-family homes saw the largest increase of 31% year over year, with 6,603 single-family home sales compared to 5,034 in 2011.
The average price for all home types in Massachusetts was $321,327, a slight decrease of 1.3% from the average price for a home in 2011, at $325,712. The average selling price for all home types in New Hampshire decreased as well, from $235,500 in 2011 to $232,729 in 2012, a decrease of 1.2%.
The rise in the number of rental households due to stricter credit standards and increased competition for multi-family home sales affected the average prices for this property type. Average prices for multi-family homes increased 1.2% in Massachusetts and 33% in New Hampshire.
Some towns in both Massachusetts and New Hampshire saw double digit average price increases year over year. In Massachusetts, Gardner home prices increased 27% with an average price of $134,055 in 2012 compared to $105,646 in 2011. In Cape Cod, the town of Dennis saw home prices rise 24% from $261,225 in 2011 to $325,085 last year. Westwood, which topped our list of 3 Hottest Towns in Massachusetts, saw an increase of 12% in average home prices for the year. The average price for a home in Westwood was $647,408 in 2012 compared to $578,736 in 2011.
In New Hampshire, Derry average home prices increased 21% in 2012, from $136,072 in 2011 to $165,184 in 2012. Manchester saw an 11% increase in home prices, from $161,888 in 2011 to $179,476 in 2012. And in the town of Stratham, home prices rose 18% from $275,218 in 2011 to $325,023 in 2012.
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Home Sales by County
The Massachusetts County with the largest increase in home sales was Nantucket County, with an increase of 43% in home sales. Bristol County was the only county in the state that saw a decrease in homes sales. Bristol County had a 1% decrease in home sales.
Bristol, Barnstable, Essex, Nantucket, Norfolk, Hampden, and Suffolk counties all saw increases in average home prices, with Norfolk County showing the biggest increase of 5%. The average home price in Norfolk was at $418,586 compared to $398,010 in 2011. Hillsborough, Cheshire, and Rockingham counties in New Hampshire all showed increases in home sales: 36% in Rockingham, 26% in Hillsborough, and 19% in Cheshire County. Hillsborough County also showed an increase in the average price for a home, which was $203,161, an increase of 1.8% over 2011.
Where the Housing Market is Headed
Nationally, total home sales in 2012 reached 4.65 million, the highest in five years when it reached 5.03 million**. Home sales in the U.S. increased 9% up from 4.25 million in 2011. The median existing-home price was up 6% from $166,100 in 2011 to $176,600 in 2012, the strongest annual price gain since 2005.
One factor in the housing market is the low inventory of homes available for sale. This month in Massachusetts there are just 22,458 homes for sale, a 22% drop in the amount of homes on the market compared to the same time last January. We expect the low housing inventory to continue for a couple of reasons. Housing starts are up but are still below historical averages. And some homeowners are reluctant to put their homes on the market because they are waiting for their homes to build equity or build more of the existing equity.
Home sellers should be excited that the home sales are improving, but don’t overprice your homes. Instead price the home based on what similar homes in the neighborhood have recently sold for.
Home buyers should keep two things in mind when you find the right home: be ready to make an offer on the house immediately; don’t wait because you could lose the home to another buyer. Home buyers shouldn’t try to negotiate a rock bottom price for a home, either. Home sales are on the rise so be ready to pay market price for a home you want.
According to the National Association of Realtors (NAR), home sales across the U.S. will continue to see growth through 2013 and 2014. National median home prices are expected to rise as well. Existing-home sales and new-home sales will grow even with an expected rise in interest rates. NAR expects existing-home sales to reach 5,050,000 in 2013 and 5,300,000 in 2014. New-home sales will increase to 575,000 in 2013 and 650,000 in 2014.
The so-called “shadow inventory”—homes in the process or at risk of foreclosure—has been steadily declining since its peak in 2009 when there were nearly 4.3 million shadow inventory homes. Distressed home sales will continue to drop from 25% of total home sales in 2012 to an expected 15% in 2013 and just 8% in 2014.
NAR forecasts housing starts to increase from 776,000 in 2012 to 1,128,000 in 2013 to 1,300,000 in 2014. Housing inventory is still low and will continue to affect increases in home prices.
Overall home sales are expected to stay on an upward trend.
*Our housing report shows sales data for all counties in Massachusetts as well as Southern New Hampshire (including Barnstable, Bristol, Dukes, Essex, Middlesex, Nantucket, Norfolk, Plymouth, Suffolk, Worcester, Franklin, Hampden, Hampshire, Berkshire in MA and Cheshire, Hillsborough, and Rockingham counties in New Hampshire) For the period January 1 to December 31, 2012 compared to same period for 2011. Copyright ©2013 The Warren Group. All Rights Reserved