Real Estate Indicators and the Real Estate Market Review

The leading market indicators are showing some positive signs toward recovery. The most recent Case-Shiller Report indicates that the prices in the leading cities are flat, not descending, as may be reported by some of the media. Of course, all real estate is local and some areas may still be struggling.




A recent article in the Worcester Telegram and Gazette noted that the home prices across Massachusetts had fallen about 14% since 2006, but the Warren Group, which tracks all sales in the state, report that the home prices in Central MA have fallen 27% in that same time frame.



It will certainly take Worcester County longer to recover from this downturn than the Boston area. Employment figures confirm that Boston  unemployment is 6.8% and the Worcester unemployment stands at 8.4%.  Even though there is quite a wide discrepancy between Boston and Worcester, but both numbers are better than the national unemployment of 9.2%

Nationally, the Builder Confidence Level is in the positive realm, because there are more new housing starts most notably in the West.  The positive signs in many areas of the market belie the Consumer Confidence Index at 39.8%, which says the consumers believe we are still in a very serious recession.


This video from the National Association of Realtors give some glimpses of light at the end of a long dark tunnel.  We can all use some good news.  Young people are starting to look at homes because they have faith that things will improve, and it could not be a better time to buy. Interest rates have never been lower and prices are excellent.


 The Zillow Home Value Index fell 26% from its peak in June 2006.  That’s a greater decline than seen in the Depression-era years of 1928 to 1933.

According to, “November marked the 53rd consecutive month of home value declines, with the Zillow Home Value Index (ZHVI) falling 0.8% from October to November, and falling 5.1% year-over-year.”

Although the news on housing seems bad, we do have some bright spots in the economy.   According to Zillow Research, the economy is improving.  The improvement is expected to be slow, but job creation and consumer confidence are improving gradually, and this is good news for everyone.   

The improvement is expected to gradually increase “household formation and consumer confidence”.  But the housing market may still face greater declines due to “excess inventory of homes, high negative equity and foreclosure rates, and weakened demand due to elevated unemployment,” reported  

If you have been waiting and watching this unfolding situation, take note.    Although no one can tell you with absolute certainty, the opportunity for buyers today is very favorable.  Now is the time to buy

The interest rates are still very good, but no one is expecting them to stay at this low rate indefinitely.  If you buy a home for $250,000 at a 5% interest, you would have to find the same house later for $205,000  price to qualify at the same mortgage payment if the interest rate went to 7%.   Affordability will go down significantly when interest rates move up.   

All things are coming together to provide first-time home buyers with a unique opportunity to grab their chance at the American Dream.  Home prices are trending at low levels.  Sellers are prepared to negotiate to move on to their next homes.  There is a good inventory of homes in many price ranges.    

A few things to consider:  Do you need a place to live?  (Rents are going up.)  Would you plan to stay in your home for at least a few of years? (Most buyers live in their home on average seven years).  Do you want to own a home of your own?  Have you saved some money for a down payment?

Remember that homeownership has many benefits including tax deductions, the opportunity to make your own creative changes to your home, the opportunity to plant your own garden to grow organic food, and future increase in equity when you sell your home some day.   

Appreciation may be slow in coming in the short term, but the National Association of Realtors reports that homeowners have between 31% and 46% higher net work over renters.  This will make a big difference in your future.  Now is the time to buy!

What is the Real Estate Forecast for 2011?

Foreclosure?The media covers the real estate market with an eye to creating headlines to capture reader attention. So what is the real story?

The banks have just had their hands slapped for foreclosing on perhaps thousands of properties with out the proper documentation. A Massachusetts Supreme Judicial Court ruling on the “Ibanez” case declared the two bank, Wells Fargo and U S Bancorp, improperly foreclosed on these two homes because they could not prove the owned the mortgages at the time of foreclosure. This may have a significant effect on thousand of people who have already purchased homes, especially if they did not purchase title insurance for themselves.

Some economists believe that we will not see a rebound in prices for a while, and there will be some regional variations in local markets.    The Boston Market Forecast

 Robert Shiller is the Yale professor who created the closely watched Case-Shiller Home Price Indices.  He has a great interactive map which demonstrates the percentage changes with Moody Analytics forecasting what the real estate market for the various cities will look like.  The Price Indices does indicate that the prices seen at the high of the market in 2005 will not be seen until 2015.  Some people have decided to wait for their equity to return, so they will have quite a while to wait.   

Real Estate TV NewsMany economists believe that over the next 12 to 24 months as many as 60% of the regions will see some appreciation in house pricing, but not at a very rapid rate, as the interactive map indicates.  All this being said, the economy  is improving;  there is more confidence in future; interest rates will not stay this low forever; it is time to think about buying or building you new home.  Visit our Real Estate TV for the latest mortgage interest rate news.  Real estate new is updated every week.

Mortgage Implications – FHA Makes Changes

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The Real Estate Monitor is a research arm of the National Association of Realtors and takes a snap shot to predict the economy over the next quarter.  There appear to be some bright spots in the economy, but the pace of recover will be slower than most people want.

Although the number of homes sold fell in December, this should have been expected.  The deadline for the first $8,000 tax credit was November 30, 2009, and many people stopped looking for homes, when they felt they had missed their opportunity.

Now that the government has extended the tax credits through April 30, 2010, with a closing date by June 30, 2010, we should see a good upturn in sales.  With the first time buyer getting the $8,000 tax credit and the move up buyer qualifying for a $6,500 tax credit, we should see a good spring market.  The interest rates are holding at a very competitive level.  The only thing that could derail a very busy spring will be the possible lack of inventory.  Back in January 2008 there were almost 90 homes in sale in Sterling.   Today in January 2010 there are 45 houses for sale.  A real dilemma for potential buyers!

Many people may not be able to put their homes on the market, because they will not be able to sell them for what they owe.  For these folks, it may be best to hold on to the house until the market turns around, but this may take a number of years.

Some people believe the price of homes will be better soon, and they want to wait to make a better profit on their homes.  If you want to make a move, waiting may not be the best decision.  If you sell your home now, and with the tax credits possible in both directions, you will have the benefit of saving money on the purchase of your new home and get an interest rate significantly lower than rates projected for our future.

With rates being held down by the Fed, future affordability of homes could be in question.  Some of us remember the mortgage rates at 18% to 19% in the early 80’s, and the real estate market was in the dumps.  The pent up demand in 1982 – 83 when rates were a “bargain” at 15% was something to experience.

The Federal Reserve Report for Boston gives a powerful analysis for economy in the short term.   In the final analysis, if you have an interest in selling your home in a reasonable amount of time, this spring may be your time, and you should be ready to do this within the next month.  The Spring Market is NOW.


The economic “crisis” with continued bad news may actually be blocking the recovery of the housing sector. The government has been “throwing money” at a myriad of problems, hoping this will provide a solution. In fact, the economy will recover in its own time, and the throwing of money at complex problems without careful analysis by economically knowledgeable experts may, in fact, make the recovery a longer process.

The real estate market in the small towns in Central Massachusetts and near Boston has started a slow recover already. Inventories are down substantially from the 2008 levels. The people who have been waiting on the side lines are getting ready to make a move. The $8,000 first-time home buyer credit will help move those buyers into the marketplace.

The National Builders Association proposal of a $15,000 credit for all buyers would have given a much better and bigger push to bring stabilization to the housing market. Massachusetts has reached a 50 year low for new construction, and the construction job losses are devastating.

See a forecast for 2009.  If you need further information, please email me.

Sterling Market Snap Shot:

There are 44 homes on the market at the present time in Sterling with the average list price of $436,000 and an average days on market of 338. In the last 6 months, 19 homes sold for an average price of $303,000.

Taking into consideration that 19 homes sold in the last 6 months with days on the market of 184 days, Sterling has a 14 month supply of inventory. A normal market would be 6 to 7 months of inventory.

Buyers should definitely take advantage of the very low interest rates and great pricing and purchase now. The special financing options, including the $8,000 federal tax credit for new purchases, are abundant now. This is a strong buyer’s market with the interest rates drifting below 5%.

For a review of other communities, see my Market Condition Report on Realty Times