This spring, FNC published a look at the rate of price increases in cities throughout the country. Real estate is appreciating at a healthy rate, nationally. It seems that Boston MSA (Metropolitan Statistical Area) was too big for its britches last year and had a slowdown in growth. The headline is scary, for those who don’t know how to read market statistics.
FNC Index: February Home Prices Up 0.1% – Yearly Growth at 12-Month Highs in Nashville but 12-Month Lows in Boston
Look at the chart on the FNC website by going here, then choosing the green “compare” button. The red line is Boston, the blue line is New York. You can see that prices in New York have not reached their 2007 peak yet; they are climbing at a steady rate. Boston, however, has nosed over its 2007 prices, even when housing stock improvement is accounted for.* There was a drop in price increases last winter, according to the statistics. You can see that drop on the chart.
Prices are obviously rising again, especially in the greater Camberville/Somerbridge metro area. That’s right. Prices fell in the winter, but rose again come spring. It is the rate of price increase that slowed significantly; at least over last winter. If you skimmed the press release just for information on Boston, you’d get the wrong impression from the damning last line: “In Boston, to the contrary, the price growth experienced one of the largest decelerations during the same period, down to 2.0% as of February 2016 from 10.4% a year ago.” It’s rate of growth, not prices that was measured.
What is significant is that there was slowed growth last winter. If you follow the chart, you see a general seasonal pattern (lower in the winter.) In the winters of 2013 and 2014 there was no such dip. This led to two disappointing years of winter house hunting for the exclusive buyer’s agents in my office. But last winter (end of 2015 into 2016) was great for us. We negotiated price off of original asking prices for every transaction that closed in the first quarter of 2016. Although we did not have the statistical information, we saw the softness of the market on a house-by-house basis. This bodes well for a more normal market, which adjusts seasonally here in Massachusetts.
Read carefully to see what the statistics are measuring.
Next winter may be good house hunting.
This blog entry is based on the work of my very favorite valuation system, FNC. Other valuation systems are giving overall higher numbers. Be aware that any national number is irrelevant to your search. Even the local numbers are done in too broad an area to really matter. What will help you to decide what to pay for your house or condo is a full comparative market analysis on the specific property along with watching the local sales, generally, before you make any offer.
*FNC looks at all non-distressed (non-foreclosing) properties. FNC includes information about house improvements (or lack thereof.) Here around Boston, where house condition is a key factor in valuation, FNC gives me the best information.