Housing Market: Reviewing April 2020
Time is still flying by... It's May already, and that means it's finally time for another market update. Let's look back at some market stats for April shall we?This time around, we pulled numbers that are more focused on the towns we typically service. On that note, if you ever want stats for a particular area, just reach out to us and we will put them together for you.
We analyzed Single-family and Condo sales in: Canton, Easton, Franklin, Foxboro, Mansfield, Norton, N. Attleboro, Sharon and Wrentham
Total Inventory
April 2019: 593
April 2020: 280 (-52.8%)
Listings Gone Pending
April 2019: 458
April 2020: 247 (-46.1%)
Average Price
April 2019: $461,315
April 2020: $448,325 (-2.8%)
As you can see, the Total Inventory is quite low right now, there are over 50% less homes on the market than in April 2019. Total Listings Gone Pending are also lower, but proportionately so. Interestingly, a higher percentage of the listings in 2020 have gone pending. Finally, the average prices are down, but only by 2.8%.
It's probably safe to attribute this small decline in value to the state of consumer confidence at the moment. Mentally, most buyers are looking for a deal, even if it's a small concession on the price of the home. In reality, the sellers are still in the driver's seat for most deals. With inventory this low, many deals still involve multiple offers, or at the very least a decent amount of buyer interest. In fact, Days on Market are incredibly low right now at an average of 20, compared to an average of 64 in 2019.
Ultimately, if a home is priced right and marketed well, there should be no problem finding a buyer.If you're curious about what that means for you in terms of your home's value and your family's future, please contact us. We'd love to chat.
Easy Quarantine Home Improvement Projects to Preserve or Improve Your Home's Value
Spring is here and warm weather should be right around the corner - thank goodness! Since we're all spending quite a lot of time at home, now is a great opportunity to do some simple home improvement projects that can help pass the time and preserve or even increase your home's value!
Paint the Front Door
First impressions are everything and a faded, dirty and peeling front door isn't the right way to start things off.
Declutter and Organize
Life just seems to pile up doesn't it? This is the perfect time to declutter, box up that stuff you don't use so it's ready to donate, and get organized. Install those closet organizers you've been putting off, or invest in a modular shelving unit - they can turn clutter in to decor!
Accent Walls and Art
Have some art pieces that you've been meaning to hang (or do you known any local artists who could use some money right now)? Perhaps you want to create a collage wall? You could also spruce up a room with an accent wall! Materials like shiplap, natural wood, or wall paper (it's trendy again) make for great decor that can really transform a room.
Create an Outdoor Entertainment Space
With beautiful days ahead, why not make the most out of our homes and create an enjoyable backyard space? With relatively short money and basic DIY skills, it's amazing what we can create! Here's a few ideas to get you started:
Start Your Garden
Talk about timing! This is the perfect time of year to start prepping your garden to enjoy a full season of fresh veggie. Here's a guide to beginning.
Don't forget the basics!
And then there's the bare necessities. Make sure to do the big 3:
- Replace your HVAC filters
- Check your smoke alarms
- Clean your dryer vents
Could the COVID pandemic cause a housing crash?
With all of the volatility in the stock market and uncertainty about the Coronavirus (COVID-19), some are concerned we may be headed for another housing crash like the one we experienced from 2006-2008. The feeling is understandable. Ali Wolf, Director of Economic Research at the real estate consulting firm Meyers Research, addressed this point in a recent interview:
“With people having PTSD from the last time, they’re still afraid of buying at the wrong time.”
There are many reasons, however, indicating this real estate market is nothing like 2008. Here are five visuals to show the dramatic differences.
1. Mortgage standards are nothing like they were back then.
During the housing bubble, it was difficult NOT to get a mortgage. Today, it is tough to qualify. The Mortgage Bankers’ Association releases a Mortgage Credit Availability Index which is “a summary measure which indicates the availability of mortgage credit at a point in time.” The higher the index, the easier it is to get a mortgage. As shown below, during the housing bubble, the index skyrocketed. Currently, the index shows how getting a mortgage is even more difficult than it was before the bubble.
2. Prices are not soaring out of control.
Below is a graph showing annual house appreciation over the past six years, compared to the six years leading up to the height of the housing bubble. Though price appreciation has been quite strong recently, it is nowhere near the rise in prices that preceded the crash.
There’s a stark difference between these two periods of time. Normal appreciation is 3.6%, so while current appreciation is higher than the historic norm, it’s certainly not accelerating beyond control as it did in the early 2000s.
3. We don’t have a surplus of homes on the market. We have a shortage.
The months’ supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued appreciation. As the next graph shows, there were too many homes for sale in 2007, and that caused prices to tumble. Today, there’s a shortage of inventory which is causing an acceleration in home values.
4. Houses became too expensive to buy.
The affordability formula has three components: the price of the home, the wages earned by the purchaser, and the mortgage rate available at the time. Fourteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased and the mortgage rate is about 3.5%. That means the average family pays less of their monthly income toward their mortgage payment than they did back then. Here’s a graph showing that difference:
5. People are equity rich, not tapped out.
In the run-up to the housing bubble, homeowners were using their homes as a personal ATM machine. Many immediately withdrew their equity once it built up, and they learned their lesson in the process. Prices have risen nicely over the last few years, leading to over fifty percent of homes in the country having greater than 50% equity. But owners have not been tapping into it like the last time. Here is a table comparing the equity withdrawal over the last three years compared to 2005, 2006, and 2007. Homeowners have cashed out over $500 billion dollars less than before:
During the crash, home values began to fall, and sellers found themselves in a negative equity situation (where the amount of the mortgage they owned was greater than the value of their home). Some decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area. That can’t happen today.
2019 Mid-Summer Market Update
It's August already... slow down summer! Let's take a quick look at how the market performing, shall we? For this analysis we will be focusing on closed sales. Closings typically take 30-45 days, so July's closings reflect June's market activity, but nonetheless this will give you a market snapshot with the most up-to-date info we have available. Take a gander below, and if you're curious about your home's value, contact us for a free, no-pressure market study.
Closed Sales
June 2019: 8,055 total salesJuly 2019: 7,914June to July (i.e. May's accepted offers vs June), saw total closed sales across the state drop about 1.7%. This is a fairly negligible change considering the market was transitioning from the typical spring sales rush into the summer, which tends to slow just a tad. In our opinion, a small decline like this is nothing to be concerned with, if anything we would've expected a bit more of a drop. The market is still chugging in terms of properties changing hands.
Average Days on Market
June 2019: 47July 2019: 46A very, very small drop in Days on Market. Homes are still selling at a consistently, quick pace.
Median Sale Price
June 2019: $440,000July 2019: $433,000The most important part... home values. July saw a small decrease of 1.6% in the Median Sale Price for homes and condos. Again, a minor blip. I'd expect that next month we could see a similar decrease as the summer progresses and some homes sit on the market for various reasons. Ultimately, most markets, especially ours south of Boston, are still very strong and home values are holding steady.
2019 Spring Market Update
A rainy April has come and gone, and now we’re half way through May. Let’s take a quick look at the spring real estate market for the state of Massachusetts...
Pricing
Single-family: Median prices for single family homes have risen 2% since last year to $395,000.Condominiums: Median prices for condos have decreased by less than 1% to $375,000.
Sales
Single-family: Pending single-family sales are up 14% from last year to over 6,400 homes in the month of April.Condominiums: Pending condo sales have risen 11% to 2,500 for the month of April.
What does this all mean?
The Spring market is strong once again, but it's a bit more reasonable. Homes are selling relatively quick, with an average of just over 30 days to offer. Multiple offers are common, but 25% of realtors are reporting that their listings did not have multiple offers. Overall pricing is steady. This signals that the market is strong, but not irrational as it has been in the past, which is great for buyers and still good for sellers.In summary, it's a typical busy Spring market! Curious to chat about what this means for you and your home's value? We're always here to help!