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With Temperatures on the Rise, so is the Local Housing Market
June 06, 2011, by RE/MAX InsightBy RE/MAX of New England - Last updated: Monday, June 6, 2011
By Jay Hummer, EVP and Regional Director, RE/MAX of New England
Don’t let the fact that the Bruins are still on TV fool you – after one of the toughest New England winters in memory, summer is upon us. And with temperatures on the rise, so too are some signs in the local housing market.
Our May report provided us with some encouraging news: there is real momentum in home sales throughout New England. Across the region, month-over-month sales have increased 10.9%. Perhaps even more encouraging, median prices increased in five of six New England states (Connecticut being the exception, where prices were down 0.9%). The increases were modest – ranging from 1.5 to 5.4%. But as I’ve long maintained in this space, the more homes that move, the more likely we’d see values begin to climb. This may be what we’re experiencing now.
This weekend, the Wall Street Journal made a compelling case that this is an optimum time to buy. A particularly interesting passage:
“So what might the next five years look like? Once the foreclosure mess begins to clear up, say housing economists, the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over.
Here is a glimmer of what the future may hold: While overall home prices fell by 7.5% in April over the same period a year earlier, according to CoreLogic, a Santa Ana, Calif., provider of real-estate data and analytics, if you exclude distressed sales, prices were off just 0.5%. So if you are in a market that isn’t battered by foreclosures, you may be close to a bottom already.”
“The regular marketplace is hanging tough,” says CoreLogic chief economist Mark Fleming.
The same article points out that Moody’s Analytics expects home prices nationwide to increase in 2013. Of course most of New England may well precede the rest of the nation. Moody’s also reports that “the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average.” Mortgage rates also remain historically low.
These all lead to a potentially best case scenario here in New England: favorable conditions for both home buyers and sellers. In the last decade, we’ve seen extremes on both ends – from homes moving seemingly as soon as they went on market, exceeding even aggressive pricing, to what felt at times like a complete standstill. The fact is, neither of those scenarios is good for the housing market. And neither is sustainable.
So if you’ve been waiting on the sidelines, either as a buyer or a seller, I’m here to tell you – the big freeze is over in New England. Time to step into the sun.
