At first blush, this news could have the “echo chamber” effect of turning the purported downturn into a self-fulfilling prophecy, discourage consumer confidence, and sidelining a number of prospective Massachusetts home buyers from the fall housing market. Here are 5 reasons why the national housing report won’t impact the Massachusetts real estate market.
1. Massachusetts Has a Strong Housing Market.
Massachusetts has bucked the national trend as its housing market has remained strong. Indeed, parts of the Massachusetts housing market actually saw a surge in activity in July 2010:
- From July ’09 to July ’10, these towns had an increase in sales:
- Norwood (+117%)
- Bedford (+78%)
- Easton (+27%)
- Brookline (+20%)
- Melrose (+20%)
- Several towns saw an increase in year-to-date median home prices in July, including:
- Cohasset (+25%)
- Marblehead (+12%)
- Dennis (+6%)
- Norwood (+5.9%)
- Melrose (+4%)
The government stimulus program brought out the seasonal first time buyer’s in full force during June. Thus, the normal sales cycle was altered which skewed the July numbers
3. Massachusetts Is Always Out In Front Of The National Numbers
The national housing report gives equal weight to markets blighted with foreclosures and economically hard hit areas like Detroit, Las Vegas, Florida, Arizona and parts of Southern California. Greater Boston has historically been a unique “inelastic” market along the lines of Washington, D.C. and San Francisco. Negative national trends do not necessarily correlate to the Massachusetts real estate market.
4. “It’s the Economy, Stupid.”
Massachusetts has a strong and diverse economy, a number of high paying jobs (no, I’m not running for governor), a very limited number of new housing starts, and several industries that have constant employment turnover- a tried and true recipe for a hot housing market.
5. Historically Low Interest Rates
The average rate for a 30 year mortgage has fallen to 4.5%, a 50 year low! Prospective borrowers who pass on this- caveat emptor “buyer beware.” A number of economists predict that the Fed will gradually ease rates back up to counter inflation.
Reprinted with permission from The Massachusetts Real Estate Blog