Boston Area Real Estate News – December 2013

Boston Area Real Estate News - December 2013

In our Boston Area Real Estate News for December 2013:

2014 Real Estate Predictions

Biggest Challenge This Winter: Lack of Inventory!

How Long Should Selling a Boston Area Home Take?

 

2014 Real Estate Predictions

2014 Real Estate PredictionsNational Association of Realtors (NAR) chief economist Lawrence Yun gave some 2014 real estate predictions recently when speaking to the 2013 Realtors Conference and Expo, predicting steadiness in existing-home sales over the next year as prices continue to rise.

Looking over the past year, Yun said he expects existing home sales to be up about 10 percent in 2013 to 5.13 million. Sales in 2014 are expected to hold fairly even at about 5.12 million.

Reviewing price movements, he said the national median existing home price should end this year about 11 percent higher than 2012, climbing to $197,000. Next year's growth is expected to be cut nearly in half at about 6 percent.

Over the past two years, Yun says existing home sales have shown a 20 percent cumulative increase, while prices have gained 18 percent. Meanwhile, incomes have only barely risen, coming up somewhere between 2-4 percent.

Aside from affordability, ongoing headwinds include limited inventory conditions and stringent mortgage standards, both of which are expected to continue as housing starts struggle and business costs remain elevated for lenders.

Sales of new homes are expected to total 429,000 in 2013 and 508,000 next year.

Meanwhile, Freddie Mac has weighed in on 2014 real estate predictions as well, and predicts next year to likely be the first year since 2000 that home purchases outpace refinances.

Predicting exact outcomes for any market is nearly impossible. Uncertain Fed policy and government negotiations over the budget and debt ceiling could disrupt economic activity and throw all these predictions right out the perverbial window in the first part of the year.

Stay tuned to this website and we'll keep you up to date throughout 2014 on Boston Area real estate trends and news that may affect the industry.

 

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Biggest Challenge This Winter: Lack of Inventory

Lack of Inventory the Biggest Problem This WinterProspective homebuyers hoping to buy a Boston Area home in the next four months say the lack of inventory is their biggest challenge, but many believe winter is a good time to buy because sellers are motivated to sell and more willing to negotiate.

That's according to a survey of more than 1,300 visitors to realtor.com conducted from Nov. 7-16, which found 45 percent of buyers in the market said there's not enough inventory in their price range.

The survey also found that a surprising number of prospective homebuyers — 19 percent — are planning to do all-cash deals.

Of those planning to buy without taking out a mortgage:

  • 29 percent said they are downsizing to a smaller or less expensive home.
  • 26 percent are relocating buyers.
  • 11 percent are moving up to a bigger or more expensive home.
  • 11 percent are buying a vacation home.

While 28 percent said they were planning to buy because they are relocating, 19 percent were existing homewoners downsizing to a smaller or less expensive home, and 15 percent were move-up buyers. Nearly 1 in 5 of those surveyed (19 percent) said they were first-time homebuyers.

There were 2.13 million existing homes for sale at the end of October, NAR said, down 1.8 percent from September. But at October's slower pace of sales, it would take five months for all those homes to sell, up from 4.9 months in September.

Housing analysts generally consider a six-month supply of existing homes for sale as an even matchup of supply and demand — anything less can indicate that demand has outstripped supply.

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How Long Should Selling a Boston Area Home Take?

How Long Should Selling a Home Take?If you're considering selling a Boston Area home, probably one of the questions you're already asking is, "how long should it take?"

In September, the average home took 86 days to sell, down from an average of 116 days one year ago. That's a pretty significant improvement, and the market seems to be getting even better as each month goes by.

Time on the market will vary, of course, depending on many factors. Condition of your Boston Area home, neighboring homes, the job market in the immediate area where your home is located, and many others. But generally speaking, time on the market is down almost everywhere in the country.

The declining inventory of Boston Area homes for sale over the past year naturally creates pressure for buyers to more quickly snap up the inventory that is on the market. This demand has been fueled by huge price changes since the market tanked, historically low mortgage rates, and a slowly improving economic climate.

Many homeowners are still "underwater," unable to sell because, despite rising prices, their Boston Area home is still worth less than they owe on the mortgage. The sluggish job market means fewer homeowners are selling to relocate for work. And tight credit prevents would-be sellers from getting the mortgage they'd need for their next home, trapping them where they are.

As for buyers, they should resist the urge to get into a bidding war or pay prices they're not comfortable with. And most of all, buyers should not feel desperate. More homes will eventually come on the market. On the other hand, prices of those homes and mortgage rates could be a good deal higher in a year or two.

Boston Area Real Estate News – November 2013

Boston Area Real Estate News - November 2013

In our Boston Area Real Estate News for November 2013:

No Mortgage Limit Changes Before Spring

Housing Inventory Fell In September

IRS Delays Start of Tax Filing Season (Again)

 

No Mortgage Limit Changes Before Spring

No Mortgage Limit Changes Before SpringMortgage lenders will get at least six months' notice before the government reduces the limit on the size of loans that taxpayer-owned Fannie Mae and Freddie Mac can back.

The Federal Housing Finance Agency, which has already said it was considering lowering the cap to wean the housing finance system off its dependence on the government, said any change would be phased in to avoid economic disruptions.

The housing finance industry had expected officials to lower the limits on Fannie Mae and Freddie Mac-backed loans on January 1, 2014. While it will get more time to prepare for any changes, a decision on whether to lower the limits, and by how much, would still be made later this month (November).

Currently, Fannie and Freddie cannot back loans of more than $417,000 in most markets, although the cap ranges as high as $625,500 in some pricier areas – and up to $721,050 in Hawaii.

Lowering the caps, which were raised in 2008 to help keep the mortgage market liquid during the financial crisis, could make it harder for Americans to obtain home loans and drive up mortgage costs, unless the private market steps in to fill the void.

The two firms do not directly make loans. They purchase mortgages from lenders, which they either keep on their books or bundle into securities that they offer to investors with a guarantee. Those investors pay Fannie and Freddie a "guarantee fee" when they buy the securities.

Some in the industry and lawmakers have tried to challenge the FHFA's legal authority to reduce the loan limits. In addition, a bipartisan group of lawmakers in the House of Representatives have called on the agency to drop its plans to change them altogether. We'll keep you posted on any changes, whatever they may be, right here at this website. Stay tuned!

 

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Housing Inventory Fell in September

Housing Inventory Fell in SeptemberThe number of homes listed for sale dropped slightly in September but a growing number of housing markets are witnessing higher levels of for-sale inventory compared with one year ago.

Nationwide, there were 1.94 million homes listed for sale in September, down by 1.7% from August but still the third highest level this year, according to a report from Realtor.com. Listings were down by 2% from one year earlier, but nine of the top 30 metro areas saw year-over-year increases in the number of homes for sale.

The housing market has seen brisk sales through the third quarter of this year, but there are signs that severe inventory crunches from earlier this year are slowly beginning to ease as rising prices give more sellers the incentive to test the market.

Home listings tend to slow in September as the school year begins, and the drop in listings last month was lower than normal.

The National Association of Realtors estimated recently that housing inventory stood at 2.21 million units in September, which was unchanged from August but up by 1.8% from last year's levels. That marks the first time in more than 2 and 1/2 years that the Realtors group has reported year-over-year gains in unsold home inventories.

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IRS Delays Start of Tax-Filing Season (Again)

IRS Delays Start of Tax-Filing Season (Again)The IRS announced recently that it will delay the start of tax-filing season by up to two weeks because of the government shutdown. However, taxpayers will still be responsible for turning in their 2013 returns by April 15. (Did you really expect a delay there too?)

This will be the second year that the IRS has delayed accepting tax returns due to legislative matters. Just after Jan. 1 this year, Congress approved a fiscal deal that adjusted tax rates and caused the IRS to push the start of tax-filing season from January 22nd to January 30th. Some taxpayers even had to wait until February or March to file.

The IRS says it will begin accepting tax returns between January 28th and February 4th. The agency plans to announce in December a final date for when the filing season will officially kick off. We'll update you here when that final date is announced.

Boston Area Housing Inventory Down

Boston area housing is down, as is much of the nation. According to deptofnumbers.com for 54 metro areas, inventory is down 24.2% compared to the same week a year ago. Unfortunately, these stats have only been kept since April 2006.

The graph below shows the NAR estimate of existing home inventory through May and the HousingTracker data for the 54 metro areas through early July.

Boston housing inventory estimates from NAR

 

 

 

 

 

 

 

 

 

 

 

 

 

Since the NAR released their revisions for sales and inventory last year, the NAR and HousingTracker inventory numbers have tracked pretty well.

Boston Area Housing Inventory May Have Peaked For This Year!

Boston area housing inventory usually bottoms in December and January and then starts to increase again through the summer. So inventory might still increase a little over the next month or two, but the forecasts for a “surge” in inventory this summer were incorrect. In fact inventory might have already peaked for this year!

The graph below shows the year-over-year change in inventory for both the NAR and HousingTracker. HousingTracker reported that the early July listings, for the 54 metro areas, declined 24.2% from the same period last year. So far in 2012, the NAR has reported only a small seasonal increase in inventory – and the housing tracker numbers are lower in early July than for January!

Boston housing year over year inventory change estimates

 

 

 

 

 

 

 

 

 

 

 

 

 

This decline in active inventory remains a huge story, and the lower level of inventory is helping stabilize house prices.

If you’re thinking about jumping into the Boston area housing hunt, you’d best not wait much longer. Inventory is only expected to go down, not up, and that means prices will increase. Supply and demand drives everything, and housing is no exception.

Contact us about the current Boston area housing inventory that matches your price range, and we’ll be happy to supply you with an available list of inventory to match your search criteria.

Sellers Drop Asking Prices on Fewer Homes in December

The number of price-reduced homes on the market in December 2010 fell by 7.7 percent from the previous month, according to a survey of 26 major U.S. markets conducted by the national real estate brokerage ZipRealty.

Despite the month-to-month decline, the company says the number of homes with a reduced asking price remained high compared to a year earlier, rising 23.4 percent from December 2009.

ZipRealty’s report shows that in nine of the 26 markets included in its study, more than half of the homes for sale in December 2010 included at least one price reduction.

The report also found that in the markets surveyed, the median list price in December was down 3.9 percent at

$225,434, compared to November when the median list price was over $9,000 higher at $234,484.

According to ZipRealty’s 26-market analysis, the percentage of total housing inventory that has experienced at least one price reduction dropped for the first time in months, decreasing to 47.2 percent in December. That’s down from 48.4 percent in November and 48.3 percent in October of 2010.

December is traditionally a slow month for home sales, and this could be a contributing factor to the decline over the previous two months in inventory as well as the drop in median list price.