The Real Estate Market is Trending Up! (Just don't let anyone know)

It's just amazing to me that there is still gloom & doom appearing everyday in the news about the real estate market despite the encouraging statistics that have been coming in since earlier this year. The National Association of Realtors® has now reported four straight months of rising housing prices, but it seems the media and Wall Street are ignoring it.

According to NAR statistics, the median home price has fallen 15% from a high in July 2006 to a low in February 2008. Since February, however, it has risen steadily every month. By May the index has risen a full 6.6%. Another indicator, the mean home price (otherwise known as the average home price), has also shown strength and has risen 4.5%. It, too, has risen every month since February of this year. "I just don't know where Wall Street's brains are today," said David Michonski, CEO of Coldwell Banker Hunt Kennedy in New York City. "Everyone on the Street is wringing their hands over housing when in fact the average American has been out this spring buying homes and pushing the median price higher.

This has got to go down as one of Wall Street and Main Street's biggest disconnects in history." In addition, on an annualized basis the volume of home sales has also risen somewhat from a low of 4,890,000 homes in January to 4,990,000 in May. "Rising prices on expanding volume should not a crisis make on Wall Street," says Michonski.

So why the crisis? "They say that there are bulls and bears on Wall Street but there are also pigs. Pigs try not just to profit from a crisis but create one to profit from. Today there are just so many people who have positioned themselves to profit from a crisis that they refuse to admit the reality of what is happening on Main Street. It might hurt their positions."

Is this the bottom? "No one can know for sure, but the hard data is clear. The median price has risen four straight months. The average American is out there taking advantage of bargains in their local real estate market. They are not listening to Wall Street but following their own belief that the best time to buy is when no one else is, and they are out there buying. If this keeps up, February may prove to have been the low in prices." "It is possible that it will not be Hank Paulson or Ben Bernanke who will pull this country out of a housing recession, but the good common sense of the average American whose affordability to buy a home is at a five year high and is acting on it."

(Reprinted in part from RISMedia. http//www.rismedia.com)

Massachusetts Home Sales Experience Biggest April-to-May Increase in Past 10 Years

The Massachusetts Association of REALTORS® (MAR) reported that both single-family home sales and condominium sales experienced their biggest April-to-May percentage increase in the past 10 years. While year-over-year single-family home sales were down 10.1 percent in May, this is the smallest decrease since September 2007. May median single-family home prices were also down 9.2 percent compared to last year. The number of condominiums sold in May was down 24.5 percent, with median sales prices down 2.6 percent. On a month-to-month basis, median prices for both single-family homes and condominiums increased by 2.4 percent and 2.7 percent respectively from last month.

“While the number of sales for both single-family homes and condos were down in May, these decreases continue to narrow since the start of the year, which is definitely a move in the right direction,” said MAR President, Susan M. Renfrew, broker/co-owner of Renfrew Real Estate in Greenfield. “It is also a positive sign that median prices on a month-to-month basis continue to move up. However, the 9.2 percent year-to-year median price drop indicates that the growing number of distressed sales continues to have an impact.”

See the rest of the original article at the Massachusetts Association of REALTORS' web site.

Feedback from my weekly newsletter

Question:
Aren't all agents in a real estate transaction are ultimately paid by the buyer. Granted no "extra" money needs to come out of the buyer's pocket at the beginning of a house search, but in the end we are paying for it. Right? - Rachel

Answer:
Rachel, Thank you for your feedback.

You could look at it that way, but then you would have to say that a person who buys an automobile pays the salesperson's salary, or that you are paying the toll booth worker's salary when you cross the Tobin bridge.

Whenever you buy something, you are ultimately paying for (or at least part of) someone's salary.

A buyer's agent does not get paid directly from the Seller. They are paid by the Listing broker. In most cases the Seller pays the same amount whether there is 1 or 4 agents involved in the sale (and yes, there are many times when there are more than 2 agents invloved in a transaction).

I think what you are inferring to is that if there were no agents involved, a buyer would pay less for a home. A good buyer's agent can actually save you money, whether it is on the price of the home itself, inspection issues, knowing where to get the best mortgage, or any number of things that may be missed by the average homebuyer.

I am always open to hearing some feedback about any of the emails I send out. Please feel free to write to me any time you have a comment, suggestion or question.

Jim Armstrong
jim@armstrongfield.com

Real Estate Outlook: Market is Stirring
by Kenneth R. Harney

April 3, 2008
Affordable mortgage money is the fuel that is going to pull the real estate market out of the woods. And there are some encouraging signs that may be happening right now. Read the rest of the story at:
http://realtytimes.com/rtpages/20080403_realestateoutlook.htm

See the Real Estate Video News here for the latest updates on what is happening in the real estate market.


Video Real Estate Market Conditions for Salem Massachusetts

Real Estate Outlook: Existing Home Sales Rise

We don't want to overplay the significance of this, but we actually got some positive economic news this week: Sales of existing homes last month rose for the first time in half a year, adding fresh evidence that the housing cycle may finally be bottoming out after nearly three years of correction.
The national gains in resales announced on Monday were not huge -- 2.8 percent for single family homes and 3.7 percent for condominiums. Total sales hit 5.03 million units, though Wall Street economists had predicted another DECLINE to a consensus estimate of around 4.8 million units.
So breaking the 5 million mark is pretty good, given where we are in the overall economy.
Now in fairness, the latest sales gains were accompanied by a decline in the national median price of homes sold -- down by 8.2 percent from year-earlier numbers.
You might think an 8 percent drop in prices is terrible. But let's face it: The only way we're going to burn off that 10-month overhang of unsold houses on the market is through more affordable, more realistic prices pulling buyers off the sidelines.
There's another factor at work pulling down the national median number: Relatively more houses are selling in places like Texas, North Carolina and Utah, where prices are moderate and affordable, while there are relatively fewer sales in ultra-high-cost California.
So the median price may be lower, but it's not just because home values across the country are crashing. The mix is different, so the median price is a lower number.
Low-cost mortgage money is also definitely helping to fire up sales. Average 30-year rates declined to 5.875 percent last week -- and any time mortgage money is under 6 percent, you're going to see more homebuying.
By the way, sales in California, which have been a leaden weight dragging down national market numbers for more than a year, are likely to improve in the coming months as the new "super-jumbo" FHA, Fannie Mae and Freddie Mac mortgages start hitting the street.
FHA's mortgages should be especially popular in California, where the median home price in some local areas like San Francisco exceeds $700,000. Thanks to FHA's low 3 percent minimum downpayment requirement, Californians should be able to buy a $700,000 house with just $21,000 down -- and walk away with a 6.5 percent 30-year fixed rate.
Fannie Mae and Freddie Mac, by contrast, want a minimum 10 percent down for their new jumbos.
So let's take our good news about sales and interest rates … and look to better days as the Spring buying season kicks off.

By Kenneth R. HarneyMarch 27, 2008
Copyright © 2008 Realty Times. All Rights Reserved.

See more real estate news at: http://realtytimes.com/customnews/JimArmstrong.htm

Is State Crawling Out Of Housing Slump?

National Expert Says Region Moving In Positive Direction
UPDATED: 6:53 pm EST March 3, 2008

BOSTON -- A national real estate expert said Monday that the Massachusetts region could soon start moving in a positive direction. The chief economist for the National Association of Realtors offered a ray of sunshine to his New England members.
"The worst in the sub-prime foreclosures is probably peaking at this point, but most of the mortgages -- 90 percent of the homeowners -- are not exposed to sub-prime loans. A vast number of neighborhoods are doing fine," said Lawrence Yun, of the National Association of Realtors.

Massachusetts is just below the national average when it comes to foreclosures due to sub-prime mortgages.

Read the full story at The Boston Channel

PRICING YOUR HOME IN A DECLINING MARKET

When do you drop the price on your home?

If you are receiving a lot of buyers through your home but aren't receiving offers, then it is either priced too high or shows poorly. In this market, orice is the driving force. If you have receive offers, but they have been low-ball offers, then maybe you should look at the price. It's impossible to say when you should consider reducing your price without knowing all the circumstances, but if you haven't received an offer in 30 days, it's time to re-evaluate your price.

I just attended meeting of all the mortgage officers for one of the larger regional banks, and their treasurer and ecomomist was finding home prices dropping at 1-2% per month, and expected it to continue through this year. While I think this is a pessermistic outlook, what it could mean to you is that for every month your home sits on the market, it is worth 1-2% less. If you have a $400,000 home and it doesn't sell in 2 months, it could be worth $16,000 less. So even if you dropped the price by $10,000 you are still behind the eightball. You could be playing catch-up with the market for months.

An example of this is someone I know who was selling a condo in Florida (be glad you are not trying to sell there). They placed their property on the market in 2005 at just above what others had recently sold for (at the height of the market). Other units came on priced lower, and sold. They lowered their price to that level, but now the market had dropped even more. This scenario went on for 2 years until they dropped the price fast enough to catch up with the market. The bottom line - they originally listed their condo at $280,000 when they could have sold it for $250,000. Instead they played the waiting game and ending up selling for $140,000! This is an extreme example in a market that is much worst then we have here on the North Shore of Massachusetts (we actually have it pretty good for the most part)., but I have seen this same thing happen locally.

If you home is not selling, there is only one reason - marketing... and pricing your home correctly is an intergral part of marketing. Determining the correct price in a declining market isn't easy, though. But if your home is not getting many showings, or a lot of showings without offers, drop the price quickly if you are really serious about selling.

- Jim

IS IT POSSIBLE TO BUY A HOME NOW

AND SELL IT AT A PROFIT IN 2 YEARS?

It's possible, but there are so many variables that it is impossible to give you a definate answer. I will give you a couple of hints, though.

1. Buy low. Nobody can predict what is going to happen with the market in the next 2 year. Yes, some people try, many with very impressive credentials, but there are so many different opinions, who do you believe? The fact is, real estate will always go up in value over time. How much time is the big unknown right now. But if you buy low enough, you have a better chance of selling for a profit. And by low, I don't mean low-priced. I mean below current market value. Look at bank owned (REO) properties to find some great deals.
2. FInd homes that mainly need cosmetics. A coat of paint, new flooring, and a spruce up of the kitchen and baths will dramtically raise the value and lower market time. Don't buy a home that needs major renovations unless you can do most of the work yourself to keep the costs down.
3. Make sure the home is located in a desirable, fast-selling neighborhood. It doesn't matter how nice you make the place, if no one likes the neighborhood, they won't even want to see it, let alone buy it.
4. Concentrate on curb appeal. Make sure the outside of the house is immaculate. Spend some money on landscaping.
5. Enjoy the tax benefits in the meantime (assuming you are going to live there for the 2 years). Not only can you deduct the mortgage interest and some other expenses, when you sell you can make up to $250,000 profit and not pay any taxes on it! ($500,000 for couples). Please talk to your tax advisor for full details.

Remember - real estate is more than an investment when you are living in it. It is also your home. Whether you live there for 2 years or 30 years, buy something that you really like.

- Jim

Trade group lifts outlook for 2008 home sales,
insists US housing market is stabilizing

WASHINGTON (AP) -- Bucking conventional wisdom, a trade group for real-estate agents on Monday said the battered housing market is on the verge of stabilizing and inched-up its outlook for 2007 and 2008 home sales.

The revised monthly forecast from the National Association of Realtors, which followed nine straight months of downward revisions, calls for U.S. existing home sales to fall 12.5 percent this year to 5.67 million -- the lowest level since 2002. Last month, the association predicted 5.66 million existing homes would be sold this year, down from 6.48 million last year.
The Realtors' group also forecast sales will rise slightly in 2008 to 5.7 million, up from last month's prediction of 5.69 million.

See the full story at Yahoo Finance...

21 Rules That Will Bring Good Karma to Your Life,

And Make you Happier.

1. Give people more than they expect and do it cheerfully.
2. Marry a man/woman you love to talk to. As you get older, their conversational skills will be as important as any other.
3. Don't believe all you hear, spend all you have or sleep all you want.
4. When you say, 'I love you,' mean it.
5. When you say, 'I'm sorry,' look the person in the eye.
6. Be engaged at least six months before you get married.
7. Believe in love at first sight.
8. Never laugh at anyone's dreams. People who don't have dreams don't have much.
9. Love deeply and passionately. You might get hurt but it's the only way to live life completely.
10. In disagreements, fight fairly. No name calling.
11. Don't judge people by their relatives.
12. Talk slowly but think quickly.
13. When someone asks you a question you don't want to answer, smile and ask, 'Why do you want to know?
14. Remember that great love and great achievements involve great risk.
15. Say 'bless you' when you hear someone sneeze.
16. When you lose, don't lose the lesson.
17. Remember the three R's: Respect for self; Respect for others; and Responsibility for all your actions.
18. Don't let a little dispute injure a great friendship.
19. When you realize you've made a mistake, take immediate steps to correct it.
20. Smile when picking up the phone. The caller will hear it in your voice.
21. Spend some time alone.

How Much Do Real Estate Agents Earn?

Many people think real estate agents make huge amounts of money. Some do. Most don't. But lots of consumers want to know "how much"? Because agents are so easy to poke fun at, the media often try to present the figure in a way that indicates real estate agents are overpaid.
Maybe we'll bust a myth about that. Maybe not. During the writing of this blog, we'll calculate how much agents earn in commissions. Right now, as we write the blog, we don't know what the answer will be except that commissions are down from last year. We intend to calculate the figure as we go.

So let's start.

The median average sales price in America right now is $211,000 and we're currently on a pace to sell 5 million homes. Simple multiplication provides a dollar number on which the total real estate commissions will be based. Over 1 trillion dollars worth of homes sold. That's a lot.

Most of those sales will pay a real estate commission. Folks think that the typical commission is 6%, but it varies and by law is negotiable. Some "full service" agents charge seven percent. There are "discount brokers," too - and sellers will make different kinds of deals with companies offering different levels of services.

Combining all that together, the average commission charged per deal is between 5% and 5.5% depending on the region. Although the national average is probably around 5.14%, we'll go with a figure of 5.25%, just to play on the safe side. (In eastern Massachusetts, it is typically lower)

That comes out to a total of $55 billion. The number is probably high because the estimate for 2006 was a total of $61 billion. Sales are much slower this year and prices are down. But we'll go with $55 billion. According to estimates, between 22% and 27% of the total goes to the company. That leaves between 78% to 73% for the agents. Sure, some experienced agents have higher splits. Some have lower splits. Some even get paid a flat fee or a salary. To make it easy, let's assume that the higher end applies - 78%. That leaves $43 billion for the agents.

How many agents are there?

Though it is hard to put a number on it, states like California estimate they have one licensed agent for every 52 citizens. The Wall Street Journal estimates there is one real estate agent for every 75 people in America. That would be over 4 million agents! Though that many might be licensed in their individual states, most of those aren't actively selling homes. We won't use that number.

The National Association of Realtors claims 1.3 million Realtor members. Most of those are agents, but not all are actively involved in the business. At the same time, not everyone selling real estate is a member of the National Association of Realtors, either. They are still real estate agents, just not Realtors. Even lenders and appraisers are selling real estate nowadays.
So how many folks are actively working to sell real estate? Approximately 1.25 million says the Journal.

That sounds about right.

The average agent, then, would earn about $34,400 based on current values at the current sales pace. Some more. Most less.

Less an average 14% in expenses that the agent will incur. Total? $29,584. And that's only if they earn the full commission on the sale. The fact is, most sales involve 2 agents that split the commission equally.

How do we check the figures? According to independent sources, the average commission charged per house in the USA in 2007 is $11,000. With 5 million sales, that would be...(we promise we didn't check this in advance...)

Total commissions of $55 billion.

From Armstrong Field Real Estate's November 2007 Real Estate & Mortgage Newsletter

It's A Buyer's Market....So When Are You Going to Buy?

A buyer's market is technically defined as: "A market condition characterized by an abundance of goods available for sale."



The in-depth definition from the same source is: "When a buyer's market exists in commodities, the buyer is able to be selective in purchasing contracts, as there are many individuals wishing to sell. Furthermore, these buyers will generally be able to purchase contracts at lower prices than those that were previously prevalent."



The simple version is: when no one else wants a product of value -- buy it, because the price will be lower whereby you'll be able to maximize your investment for future gain. In essence -- buy low, sell high.



When it comes to purchasing real estate, it's not as easy as investing in your 401K or savings account. Those are simple. You can select as little as $1 to invest each month or as high as the law will allow -- thousands per year.



Most people really don't worry about how the stock market ebbs and flows as they are using the practice of dollar cost averaging to invest: "Dollar cost averaging is the practice of investing or saving money at specific times, regardless of market conditions or your personal financial outlook," according to a beginners guide to investing from About.com. The idea is that if you keep investing over the market levels (low and high) you will, through the law of averages, make money in the long haul.



The challenge with that type practice in real estate is that you can't slip into real estate investing. We don't buy our housing investments month after month with prices up and down. Instead, we slap down the down payment when it's time to buy. And wherever the market is, is where we start.



The best strategy for real estate and the best way to make money in real estate is to buy low, when the conditions are in the favor of the buyer to buy. Your start-up purchase is where you "begin" your investment growth -- and that's why I submit to my buyer friends the above headline question, again: "It's a buyers market. So when are you going to buy?"



Today in many markets you can buy a house for 5 to 10 percent below asking price. For a $300,000 purchase, that's between $15,000 and $30,000 off your mortgage. On a 30-year fixed rate mortgage at 6 percent, that reduction in mortgage amount would save about $180 per month (more than $2,000 per year).



In addition, many sellers are willing to help with closing costs just to sell their house. For example, in Fairfax County, Virginia (just outside the Washington, D.C. area) half of the 3 bedroom 2 bath single-family homes sold in the last 30 days included a seller subsidy ranging from $500 to $15,000 (the average seller subsidy was $8,790).



Then there are the prices. While they have been flat over the last couple years, they are starting to increase. This is where your research on the housing market must turn local. The national numbers mean nothing to you when it comes to investing in real estate. Where are your average prices? Are they flat, deflating or appreciating?



Nevertheless, there are hot pocket markets. In the DC area, there are several zip codes that, when looking at the numbers, are technically in sellers markets. In these areas, homes are selling in under 60 days, prices are up, unit sales have outpaced the level from a year earlier and total sales volume is expanding. The thing is, though, the pressure from surrounding zip code markets keep the prices from escalating as fast as their potential.



Let's review -- you have plenty of housing inventory from which to choose. Sales are slow, so sellers are offering thousands of dollars in incentives to tempt you to buy. Prices are flat. Interest rates are still historically low. Sounds to me like the buyer who has been waiting on the sidelines needs to get off the fence and pull out his checkbook.





From the November 2007 Armstrong Field Real Estate online newsletter - Real Estate Update

The Natural Cycle of the Real Estate Market

This blog was originally published by Greg at: http://blueroof.wordpress.com/tag/blogroll/local-stuff/
http://www.blueroof.com/home.php

As the real estate market was rising nationally the last few years the media went hog wild over the frenzy and everywhere you looked there was someone or something telling you that real estate was HOT HOT HOT! Prices were going through the roof and there was unprecedented growth and people were becoming multi-millionaires from selling their homes. It was craziness.
Now the “national market” is going through a correction because it has to- there was too much too fast. In many areas prices and inventory levels are decreasing. Is that a good thing? Yes, it is. It’s healthy for each market to go through it’s cycle. This ebb and flow is good and allows each market to grow and then collect itself and catch up, and then eventually grow again.

Often when an area does go through a slowing or correction, the prices do not actually go down, but rather just don’t go up as fast. Usually the decline of a market is actually just a decline in it’s growth rate.

Areas can see rapid appreciation for different reasons. Usually it’s because of either speculatory (investment) buying or a major influx of people in a short amount of time. When an area has too many properties being bought and sold solely for investment purposes, the market values rise quickly, but this can create hollow values, because the values rise faster than the populations ability to afford them.

When an investor buys a home for $200,000, puts $70,000 into remodeling and then sells that home two months later for $400,000, that home gained 100 percent appreciation in two months. No worries. But if that happens to 20% of the homes being sold in an area over a year, and the prices are now growing exponentially while the area wages are staying the same, you have trouble.

Eventually this can catch up to the market when people are no longer able to pay the prices of the homes. The other thing that happens during this time is people begin to notice how much these neighboring homes are being sold for and they want in on the action. When a market heats up and prices begin to rise quickly everybody starts throwing their homes on the market and the market becomes flooded with property.

Eventually when the demand slows, but people are still wanting to sell for more and more, those home-sellers (who are always the last to accept the end of a growth period) will need to adjust for this and the market can correct itself. Historically this has happened through a period of prices staying relatively flat and growth slowing for a period of time until the demand increases again.

When both factors happen at the same time (investors flipping homes and people throwing their homes on the market to get the high prices), and when new homes are built rapidly in the area because of the demand and the construction brings jobs related to that construction it can really make things interesting. Because these jobs are created by, and sustained by, the real estate market.

This is what happened in Vegas between 2001 and 2005- people began to move into the area, then investors starting buying and flipping homes, and then home builders began building homes as fast as humanly possible and they were hiring people to help build all of these homes and to staff the expanding casinos and the market appreciated over 50% in a year. When the market reached the point where the demand was no longer there (everyone had bought a new home?) and all of these builders no longer needed the help and the construction crews needed to sell but couldn’t and the prices had been artificially driven up by the investors, what happened to the market? It’s now in a period of decline.

According to Marc Garrison, founder of The National Association of Real Estate Investors (NAREI), there are four main components of the real estate cycle every area experiences. These are Expansion, Equilibrium, Decline and Absorption. It’s important to note that this cycle not only applies to large geographic areas, but also applies to cities and even neighborhoods.

Expansion brings job growth, population growth and a high demand on the infrastructure of an area. Roads need to be built, restaurants open, hospitals expand and prices rise.
Equilibrium is when things begin to slow and settle. Prices have reached their limits, or beyond, and this period of time brings high prices and as a natural consequence less businesses move into, or expand in, the area. Governments are less likely to offer incentives to businesses to move into the area and job growth slows.

Decline then occurs as the job growth stops and businesses begin to relocate to save money and the demand for housing decreases. During this time, prices become stagnant or even decline as rents and occupancy go down. Usually this decline is merely a slowing of the growth rate, but in markets where the rise was too fast the decline must result in a correction (decline) of prices.
Absorption occurs as the lower prices and occupancy fall below the national averages and/or the area becomes attractive again to businesses looking to relocate. Governments again begin to incentivize business to move into the area and the population begins to grow again.
These four periods of time are all necessary and this is why real estate is so local. One market may be in a period of decline, which pushes another market into expansion.

Just as nature has it’s seasons, real estate markets have a healthy way of transitioning from period to period. Experiencing these transitions and understanding them can give home buyers and sellers not only an understanding around them, but hopefully, more peace while trying to navigate through the moving process.

REAL ESTATE BARGAINS

If you are looking for a bargain in real estate, you have to keep your eyes open, check your email for updates at least once a day (you are receiving daily updates of new listings, aren't you?), and move quickly when you see the right property.

The property to the left has a 1 bedroom condominium that just came on the market today at $129,900, well below the city assessed value of $271,000. I took a walk through it, and through it needs a little bit of work (new carpets, paint)

Located on Lynde Street in downtown Salem, it is a few minute walk to the commuter rail station, and to some of the best restaurants on the north shore. I bet it won't last more than a couple of days on the market.

Many of the bank owned properties aren't bargains because the bank is owed more money than the property is worth. Most of the properties that were foreclosed on recently were purchased with 100% financing, and the real estate market has seen some lowering of values over the last year. The market seems to be pretty stable right now, and by most accounts will be flat for the next year or so.

It's been a while since I posted an entry in my blog, but I'm going to do my best to keep it updated. The real estate market has been very busy. I had 2 new single family listings that received multiple offers after the first open house this month. The phone is ringing, and we are doing plenty of showings. I hear from other Realtors that their business is slow, so the only thing I can attribute our full schedules is that we have a huge internet presence, and work with closely with the hundreds of buyer clients registered with us.

The National Association of Realtors® released their existing home sales report today. The report indicated that existing Single-family home sales rose 3.7 percent from the month prior.

David Lereah, NAR’s chief economist, said the strong gain is a bit of a surprise. “Some of the rise in home sales may be from mild weather that brought out shoppers in December, but fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers,” he said. “Even so, winter storms last month discouraged shopping, and buyers were chilled with the third coldest February on record. These unusual weather patterns mean home sales that close in March may decline before rebounding later this spring.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.16 percent in the last week, down from an average of 6.29 percent in February. The 30-year fixed was 6.22 percent in January, and 6.25 percent in February 2006.

Regionally, existing-home sales in the Northeast surged 14.2 percent to a level of 1.21 million in February, and are 3.4 percent higher than February 2006. The median existing-home price in the Northeast was $265,900, down only 1.4 percent from a year earlier.

Single family homes are doing the best right now, with many homes going under agreement in under a week if they are priced right. That is the key - pricing. If a home is not overpriced, and in a desirable neighborhood, it will sell fast. If you are a homebuyer, that means getting an offer in as soon as possible after you see a home you really like. Do not low-ball properties that are priced right. If you are working with a buyer agent (and you should be!), he or she can advise you on the amount you should offer.

Jim

Halloween in Salem! It's a time for scary going ons in this city, but real estate isn't one of them. Though if you read some of the statistics that are out there for real estate sales, it may scare the bejeezuz out of you.

Just yesterday I was reading the single family sales for the first 9 months of this year in Salem MA compared to last year. The number of homes sold were almost exactly the same - 162 for 2005 and 160 for 2006 - statistically the same. The big difference is the average sale price - $359,500 for 2005 compared to $319,750 for 2006. I know what you are thinking - OMG, that's a almost a 12% decrease! The bubble has burst and the real estate market is in shambles!

But let's take a closer look at the figures. For an accurate look at the market, you have to compare apples to apples - or in our case, similar style and age homes. You cannot just take the total sales and make generalizations about what is happening with the market. Lets take a look at the sales for a specific home style. I'm going to use capes, because they were for the most part built around the same time - late 1940's through 1950's. I'm going to further break them down and only look at 3 bedroom capes. Now I could narrow it down even more by looking at square footage of living space, # of baths, lot size and neighborhood, but for this purpose just style and bedrooms will do.

In 2005, the average 3 bedroom cape-style home sold for $351,857. In 2006, the average was $339,900. This is a difference of just over 3%. Quite a bit of difference between this and the 12% published in Bankers & Tradesman. But it is a more accurate picture of the real estate market. The reason Bankers & Tradesman shows such a difference is simple - less expensive homes have been selling faster than more expensive homes. It not because the bottom has fallen out of the market.
Real estate runs in cycles, and we are currently going through a normal cycle. In every case the prices comes back up again and usually surpass where they were before the downturn. So is today a good time to buy a home? Yes, it's a great time to buy. Mortgage interest rates are still great, and because there are so many homes on the market, the sellers are willing to negotiate. Your best tool in this (or any) market is your real estate agent. Your agent will help you find the home that meets your needs, and will help negotiate for the lowest price.

So if you want a home, get off your arse (sorry, it's the Scottish in me), and make some appointments to see a few homes. You may even find your "dream home" (more on that in a later blog).

Jim

An article in this week's edition of Bankers and Tradesman pointed out how the current real estate market has made it a great opportunity for prospective home buyers to get a good deal on a home. Most home sellers now realize that their price has to be reasonable if they want their property to sell anytime soon. The thing to remember is that this is a normal real estate cycle. There are ups and downs in every cycle, but prices always eventually go up again. How long will this take? Your guess is as good as mine, but according to yesterday's Boston Globe article the prices have bottomed out and now is a good time to buy with mortgage interest rates still low (take it from someone who paid 13% back in the late 80's) and sellers willing to bargain.

But don't wait for an open house to see that home that you like. Many agents are not doing open houses because they have been getting very little response to them. Call your Buyer's Agent to make an appointment for you. This is even more important if there has been a recent price drop on the property, because that usually creates a plethora of activity, even in a slow market.

Here are some stats for the current real estate market on the north shore of Massachusetts.

Compared to this same day 1 year ago:

• There are 7364 properties on the market. Last year there were 6414.



• Time on market this year is 146 days, compared with 105 days last year.



• The median price is list $379,900 compared to $395,000 for 2005.

These stats are for a combined single, multi and condos.

Average sale price over the last 3 months was $408,537, compared with the same 3 month period last last of $403,369. Confusing, isn't it? First I tell you that the current on market prices are lower than last year, then I tell you that the last 3 months sale prices are higher that 2005! What' sgoing on?

Well , the key phase is that the sale prices were for the last 3 months, which included a pretty good sales period. It's only the last couple of months where we have seen wholesale dropping of prices, which is why the current list prices are lower than 2005's.

Of course, every town varies slightly. Salem for example is still doing very well, mainly because of the proximity to the commuter train and the vibrant downtown (where everyone wants to live!)

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.