I am pleased to share this Somerville Patch article about the real estate statistics for the first half of 2013. Chris Orchard summarizes the facts and figures for you. Here is a summary of his summary:
- Sales volume is down.
- Sales prices are up.
- This is true of both single family houses and condos. The data does not include two-family or three-family houses, which comprise about half the housing stock in town.
- I really like this presentation for a number of reasons.
First, it covers a half year time period. I get impatient with people who try to see a pattern for the housing market based on a month (or even a week, as some of the sites do!) It’s like trying to see if you are losing weight by weighing yourself twice daily. I think that any period less than a quarter and any data that doesn’t look at year-over-year trends will not provide a valid picture. You cannot see the pattern until it has had some time to develop.
Second, the article separates sales volume (how many units have traded hands) from sales price. I have a pet peeve about real estate journalists who mix volume and price data. It is confusing and misleading.
The next step — which he did not state directly – is why sales volume is low. The reality in Somerville is that supply is low and demand is high. That is the reason for the higher prices. Just a couple of years ago, the supply was higher (although not really high), but demand was very low and prices were declining. Sales volume was low then, too.
Third, the article explained the Warren Group data and its limitations regarding the Somerville market. The Warren Group focuses on single family houses and condos; Somerville is still the land of the small multi-family house. Mr. Orchard explained that clearly.
What I have been seeing in 2013 is a continuation of the high-demand market that started sometime last summer. As some pundit said, “a magic whistle went off that only buyers could hear and everyone came out to buy because it was the bottom of the market.” Only the very first wave of buyers actually purchased at the bottom of the market. The prices have been rising ever since.
Interest rates are still very low. But the bottom of the interest rate decline seems to have been this spring.
The rates started to tip upward, by about one percent, as soon as the real estate market started to pick up steam. Higher interest rates lower buying power by about $10,000 per every half of a percent increase in rates. Whether the interest rate jump will affect the demand is yet to be seen in my practice.
I don’t believe that it is possible to “time the market” perfectly. I generally advise my clients to buy when they have a personal reason to do so, and to choose the best property they can get. My ongoing advice is to choose carefully and plan on staying for more than seven years. Nothing in today’s half-year news changes that.