DO YOU WANT TO SELL YOUR HOME?

    The last few years were a rough time in the real estate market, especially if you wanted to sell your home. Over the last year things have been slowly getting better, with 2012 home prices in Salem increasing about 3.5% over 2011.  However, no one predicted the turnaround that happened during the late winter and spring of this year.

    Potential home buyers who have been waiting on the sidelines are finally realizing that prices are rising, and mortgage interest rates, although still at record lows, are bound to start rising. The number of homes on the market have been steadily decreasing during the last two years, to the point where it can be very difficult for a buyer to find exactly what they are looking for in a home. There have been numerous bidding wars on homes that were priced right and in a good location.
    What that means to the home owner who has been waiting to move is that now is the perfect time to sell your home. This spring we are seeing homes selling for more than 10% over what they would have sold for last year, and in half the time!

You may want to ask: "If prices are going up, why don't I just wait until next year and then I can get more money for my home, right?"

    There are a couple of things to think about if you want to "wait & see what happens". First, the market right now is very unusual. Low inventory combined with high demand equals higher prices. It's basic economics. But all it takes to change this "perfect storm" we are currently experiencing is for a lot more people to place their homes on the market. If the market gets flooded with homes for sale it can even drive prices down again.

Also, there is the misconception that if you wait a year or two until prices increase then you will have more money (home equity) to put down on a new home. Let's look at this situation - the difference between selling your home now and selling your home in a year if prices have gone up 10%.

	2013	2014
Your Home's Sale Price	$300,000	$330,000
Cost of Your New Home	$400,000	$440,000
Difference	$100,000	$110,000

    What you see in the above example is that your new home will actually cost you $10,000 if you wait for prices to go up. Yes, you will get more money for your home, but remember that the home you buy next year is also going to be higher in price. If you can buy your new home now and wait to sell your current home by renting it out to cover all your costs  (mortgage, taxes, insurance, water, sewer, etc.) then it might make sense. Otherwise, you are better off selling now while the market is hot.
    Mortgage interest rates will almost certainly rise by next year and add even more to your costs if you wait to sell. You could actually end up paying hundreds of dollars more each month for your new home next year than if you had purchased it this year at the current record low interest rates. Let's take the above example and see what our mortgage payment would be in each scenario based upon interest rates going up just 1% over the next year.

	2013	2014
Cost of Your New Home	$400,000	$440,000
20% Down Payment	$80,000	$88,000
Mortgage Amount	$320,000	$352,000
Interest Rate	3.75%	4.75%
Monthly Mortgage Payment	$1482	$1836

   As you can see you could be paying over $350 more per month for the same home in 2014 over 2013. Of course, all these examples are based upon speculation of what is going to be happening with the real estate and financial markets. Though we deal with both these markets on a daily basis, we do not claim to be able to predict whether they will go up or down, but can only give our best guess based upon all the stats available to us.
We would love to sit down with you and talk about whether it makes sense for you to sell your home now, or maybe wait awhile. We have been serving the North Shore community for a long time, and pride ourselves on the no obligation, no pressure information we provide. Contact Jim Armstrong - 978-394-6736 or fill out this contact form 

5 Reasons Why Massachusetts Home Sales Will Continue To Rise

 Debunking The July 2010 Housing Report: 5 Reasons Why Massachusetts Home Sales Will Continue To Rise

by Marc Canner on August 27, 2010

in Massachusetts Property Values

A National Association of Realtor’s report released Wednesday indicated that home purchases fell 27% in July, a drop that jolted the real estate industry, according to the Wall Street Journal, and sent shock waves through the broader economy. As a result, a number of economists provided dire warnings of a continued down slide in real estate prices.
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:

1. Norwood (+117%)
2. Bedford  (+78%)
3. Easton (+27%)
4. Brookline (+20%)
5. Melrose (+20%)

• Several towns saw an  increase in year-to-date median home prices in July, including:

1. Cohasset (+25%)
2. Marblehead (+12%)
3. Dennis (+6%)
4. Norwood (+5.9%)
5. Melrose (+4%)

2.  The June 1^st Time Tax Buyer Credit Caused An Artificial Decrease in July Purchases.
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

BUYER POWER!

For the 11^th consecutive week Freddie Mac's Primary Mortgage Market Survey showed that the average interest rate for the 30-year fixed-rate mortgage (FRM) broke another record in the 37-year history of the survey. During the week ended January 15 the rate averaged 4.96 percent with 0.7 point, down from last week's average of 5.01 percent with 0.6 point.

This is the 11th week in a row that mortgage interest rates have dropped, due in part to a slowing economy, and also to the actions that the Federal Government has been taking. Some (healthy) local banks have been receiving funds from the Feds specifically for the purpose of supplying money for mortgages to local consumers.

We have had clients close on homes with mortgage rates even lower - 4.5%! This equates to a mortgage payment of only $1721.00 per month on a $350,000 home with just 3% down.

You could buy a $200,000 condo (or even single family) with 3% down ($6,000) and have a mortgage payment less than $1000! It's got to be cheaper than what you are currently paying for rent. Plus, unlike rent, your mortgage payment is mostly tax deductible, giving you a larger tax refund. Add on the $7500 first time homebuyer tax credit, and you would have to be crazy not to buy a home right now!

I know what you are thinking - "But you are a Realtor. Of course you want me to buy a home now. That's how you make your money and you have lots of Christmas bills to pay off!"

True, selling real estate is how a earn a living. But I earn clients for life by giving them what I believe to be good, accurate information that is going to help them in their decisions when buying or selling a home. I just recently purchased a home myself because of these ideal buying conditions. Though I had owned property before, most recently I had been renting - and waiting for the right time to buy.

This IS the right time.

Jim Armstrong

What's Really Happening with Real Estate Market

I'll be the first one to tell you that I'm no expert on the national real estate market. All I am concerned about is what is happening in the local market and how it will affect my clients, my agents, and ultimately...my business. Keep in mind that real estate is local. What is happening in California, Florida or Texas has no bearing on what is happening in the real estate market on the north shore of Massachusetts.

During the first 2 quarters of this year (2008), things were looking dismal, with a continued downward slide in prices, number of units sold, and traffic (number of inquiries received, open house attendees, web site visits, etc.). But something happened in the third quarter beginning in July. Buyers started making offers...and suddenly our business is up 85% year to date over 2007, and over 200% for the quarter. The fourth quarter has started off with the same gusto.

THE PERFECT (BUYING) STORM

What has caused this complete change? I believe it is the result of several ideal buying factors all occurring at once:

• Home prices have come down to a point where they haven't been in years. Add in the bank owned and short sale properties that are on the market and there are literally hundreds of bargains out there. The price that homes are selling at are equal to 2002.

• The inventory of homes on the market is still high. Though the number has come down compared to last year, it is still considered historically high, giving the home buyer plenty to choose from.

• Home sellers (including banks) have come to realize that if they want to sell their property, not only will they need to price it aggressively, they need to give some concessions to the buyer. You can get pretty much ANY seller to pay your closing costs, and even prepay your mortgage insurance to reduce your monthly payment!

• Banks and Mortgage companies have money to loan...still at historically low interest rates. (under 6% just a couple of weeks ago) And you do not have to have perfect credit! You do have to come up with 3% down, but this can come from a gift (from a relative, etc.) or your retirement account (401K, etc). There are several government programs that will also match your down payment, so you only have to come up with 1.5% down.

The local real estate stats show that the number of units sold during the last 3 months is about equal to last year, with the average price down from last year (single family) but up from the previous 3 month period this year.

The smart home buyers are going out and looking at potential properties, and jumping on the ones that meet their needs and budget. You could wait another year to see if prices will drop any further, but in the meantime you continue to pay rent and will not be reaping the tax benefits of home ownership.

Jim Armstrong

Salem MA Real Estate

This is the first of what I hope to be semi-daily updates, comments and general ramblings about the real estate market in Salem Massachusetts and the surrounding north shore area. Please feel free to leave your comments.