Between October of last year and May 2013, the seasonally adjusted Boston Home Price Index shot up 5.9%, propelled by enthusiastic demand from home buyers and extremely low mortgage interest rates.

Rates rise, home prices stall – a cause or coincidence?

The pause in Greater Boston home prices in June comes on the heels of a significant rise in mortgage interest rates.  Despite speculation to the contrary in the Boston Globe, this may have been a more of a coincidence than a cause-and-effect, given how low mortgage rates remain.

From an absurdly low 3.35% in April, 30 year fixed mortgage rates rose to 4.46% by the end of June according to Freddie Mac.

While this amounts to a large 33% percentage increase in the average rate, 30 year mortgage rates today remain a bargain.

Mortgage rates have bounced around since June, and at current levels are extremely attractive on a historical basis.  Accurately forecasting the future is very problematic.  But you might not want to bet the farm on any significant tapering-off  of home buyer demand due current mortgage interest rates as we enter the prime fall home selling season in Massachusetts.  In fact, rate spikes such as we have had this summer often spur more home sales as buyers rush to lock in rates out of a fear that rates may rise further in coming months.

Fall market will tell

We’ll have to wait to see how MA home prices fare this fall before we know for sure whether the rise in mortgage rates caused (or just coincided with) the June’s leveling off of the Boston Home Price Index.  If rates were to jump sharply again this fall, all bets would be off.  Otherwise, June’s down tick in home prices may become in hindsight a mere blip on the radar screen. Keep checking back with 02038.com for updates – it promises to be very interesting!

Copyright ©2013 02038.com

4.2% rise from March’s lows

The 157.83 June reading represents a 4.2% rise in Boston home prices from the recent Index low set last March.

The Boston index now stands 1.2% higher than its prior spring/summer seasonal high set in back in August 2009.

June data outdated?

June home sale prices are the most recent reported on by Standard and Poors.

And because many home purchases take about 2 months to close, June price data mainly reflect purchase agreements entered into during April 2010, the last month that the two Federal home buyer tax credits were in existence.

Market slowed after tax credits expired

As widely reported in the news media, the US housing market took a pronounced turn for the worse after the expiration of those two tax credits.

July was an especially bad month for US real estate, including Massachusetts.

Some call for return of home buyer tax credit

July’s performance was so bad that it is causing some policy advisers and politicians to call for a new Federal home buyer tax credit to help support the US housing market.

The need for such a return to active stimulation will be debated over coming weeks.

Proponents and opponents alike will be looking hard at August’s housing data; early reads on August will be rolling out late this week.

Check back at 02038.com to see how MA fared in August – I’ll be posting soon!

Copyright ©2010 02038.com

Losses of last fall and winter erased

At 155.95, the S&P/Case Shiller Boston index now has recouped all the losses it experienced during  Massachusetts’ seasonal home price lull last fall and winter.  The Boston index for May stands exactly at its 18 month high set in August 2009.

Seasonal MA home price swings

Boston home prices have risen nearly 3% since March, continuing a pronounced pattern of seasonal swings in metro Boston home prices.

Throughout the last decade, every fall/winter has seen Boston area home prices recede, while during every spring/summer, home prices in Greater Boston have rebounded.

Boston home prices bottomed in 2009?

Beginning in 2005 through 2008, the overall trend in Boston home prices had been downward.

But in a notable break in the downward bias, the 2009-2010 fall/winter home price slump was very mild.

In fact, the bottom of the last seasonal market slump in Greater Boston was higher than the prior year’s low.

Uncertain outlook for home prices

Like metro Boston, many of the US metro markets tracked by S&P showed home price gains in May.

But many housing analysts pin May’s strength on a spring home buying surge amplified by a rush by buyers to qualify for the now-expired Federal home buyer tax credits.

The expert consensus seems to be that home prices across the US face an uncertain future now that the tax credits and spring home buying season are history.

Many housing prognosticators are sounding warnings of a potential second dip in home prices:

Home Prices May Soon Slide

Home Price Gains May Not Last

Experts have been wrong before

There’s a great deal of uncertainty predicting the behavior of any financial or asset market.

Some forecasts are way off target.

For example, mortgage interest rates were pretty universally forecast last winter to soar in 2010.

And those predictions were shown to be totally wrong when mortgage rates proceeded to fall to record lows in 2010 instead.

So no one knows for sure what the future will bring for home prices in Massachusetts and the US.  But you can count on us to keep reporting on this for you in coming months!

Copyright ©2010 02038.com

2009 MA home sale volume up

The Warren Group, publisher of the influential real estate trade publication Banker & Tradesman, released annual home sale figures Tuesday showing a three percent rise in MA home sale volume for 2009 compared to 2008.  The rise marks the first time annual single family home sales in Massachusetts have risen in the past five years.

Boston home sale prices slump modestly

In another report also issued last Tuesday, Standard and Poors posted its November 2009 reading of the S&P/Case-Shiller Home Price Index for Boston. (There is a 2 month lag in Index reporting).

The Index showed only a slight 0.7% drop in Boston area home prices over the last 12 months (from December 2008 – November 2009.)  

Greater Boston home prices rise from 2009 lows

From its low set back in March 2009, the Index has risen 5.6%, peaking in August 2009 before settling back down a bit in following months.

Seasonal home price slumps

We have seen such home price slumps occur over the last several years, following a fairly regular pattern.

As you can see from the above graph, Boston metro home prices over the past several years as tracked by the S&P/Case-Shiller Home Price Index have peaked during the summer months and have fallen back during the cold, dark winter months.

We will watch the S&P/Case-Shiller Home Price Index very closely over the upcoming several months to see if MA home prices resume their recovery as the spring home selling season gets underway.

Keep checking back for updates!

Copyright ©2010 02038.com

4 months of Metro Boston  home price increases

July’s Boston Index reading marks the fourth straight month that Boston metro-area home values have risen.  How Massachusetts home sale prices perform over the next several months will tell whether the current rise in home sale prices is only a seasonal uptick or marks a true real estate market bottom in MA.

Boston real estate market one of 4 most healthy in US

On a 12 month basis, single family home values in Greater Boston are still down 4.9% according the Standard and Poor’s.

However, that 4.9% decline over the last 12 months ranks Greater Boston as the 4^thmost healthy of all US regional markets tracked by Standard and Poor’s.  Only Cleveland (-1.3%), Dallas (-1.6%) and Denver (-2.9%) have experienced smaller home value declines than Boston in the last 12 months.

 And compared to the large double-digit declines in home values seen over the last 12 months in many other metropolitan markets tracked by Standard and Poor’s,  Greater Boston real estate almost seems healthy. 

The relatively benign decline of home values in Greater Boston over the last 12 months is consistent with a recent report that the Massachusetts economy is poised to rebound from the recession earlier than most other US states and published speculation that home values in MA may jump over 20% in the next 5 years.

Caution called for

There is still quite a lot of weakness in the national economy.  No one can predict the future with confidence so caution with home sale price predictions is certainly called for.

The following was noted by David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s in a press release accompanying the publication of the July Case-Shiller data:

“These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer’s Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures.”

Copyright ©2009 02038.com

From 2009’s market bottom last March (145.83 on the Index), single family home values in Greater Boston are up 4.7% as of June 2009. (June 2009 is the most recent month for which data is available from Standard and Poor’s.)

For the first six months of the 2009, single family home prices in the greater Boston area have climbed 1.3% (from 150.73 on the Index in January).  That might not seem like much to cheer about, but please remember the widespread fears of an economic depression that were so prevalent earlier in the year.

To pour a bit of cold water on any celebration, however, I have to note that at 152.7 in June, 2009, the Boston Index is still 5.9% lower than its 162.31 reading back in June 2008.

The big question for the next 6 to 12 months is whether we will successfully break the repeated stair-step pattern of partial home price rebounds followed by further home price declines that we in Massachusetts have been experiencing annually since 2006?

As this post is written in August 2009, another round of significant home value declines for Greater Boston in 2009 – 2010 appears unlikely. 

Given the building evidence that the national economy is stabilizing and consumer sentiment is rising, we may be at a real estate market bottom in Massachusetts.  If we are, we may see some up and down price “bumps” over the next 12 months in Massachusetts as the market finds and solidifies a bottom. 

Once a bottom is firmly established, sustained increases in MA home prices may be very possible over the next 3 to 5 years.  That’s a prospect sure to encourage everyone who’s lived through our painful real estate recession!

Copyright ©2009 02038.com

First Rise in 8 Months

April’s home price rise breaks what was up until now an 8 month stretch of home price declines in the Boston area.  April’s Index data is the most current available from Standard and Poor’s. The S&P/Case-Shiller Home Price Index is published each month with a two month lag.

The upturn is consistent with improved consumer confidence on the national level and the markedly stronger home buyer activity noted by local real estate agents starting back in March 2009.

Home prices rose in April in several other metro markets reported on by Standard and Poor’s.  Participating in the modest home price upturn were Washington DC,  Atlanta , Cleveland, Dallas and Seattle.  Home prices continued to decline in other US markets tracked by the Index.

Market Bottom?

April’s home price increase in the Boston region may signify the bottom of the Massachusetts real estate market. 

Or it may prove to be a short-lived seasonal price bounce, similar to what happened in 2006, 2007 and 2008 where prices rose modestly for a few months early in the year only to fall back further as each year progressed.  (See the rises and falls in Boston home values over the past few years in the chart above). 

Time Will Tell

We’ll need to see several more months of Boston home price performance in 2009 before we’ll know if we are finally at the end of what has been the worst real estate market in MA since the severe New England real estate recession of 1989 – 1991.  But any price increase is very welcome news!

Copyright ©2009 02038.com