Waiting for the Bottom of the Real Estate Market?

RECESSION ENDS IN 2009 Many people have been telling me for years that the real estate market is turning around.  Newspapers and blogs have been enthusiastically predicted that the recession ended and everything was going to be alright.  I heard the real estate market had “turned around” in 2010, but the downward trend continued.  Now new data is coming forward.

Home Prices over the Last 10 YearsAll signs indicate that we are very likely skimming the bottom of the real estate bust, and things are just beginning to look up.  Nationally, many other locations were much harder hit than Massachusetts.  Prices and sales in the Boston area were not has hard hit as Central Massachusetts.  The towns in the Wachusett Region lost an average of 25% to 30% from 2006 to 2012.

October sales numbers jumped 21%, according to the Warren Group.  Meanwhile home prices spiked 4.4 percent, according to the Massachusetts Association of Realtors, which also released its October numbers. .  This is the most impressive jump in median prices since the end of the $8,000 home buyer credit in 2010.  Unfortunately, the Warren Group, which includes all sales in Massachusetts, not just Realtor assisted sales, has home prices staying essentially flat.

NEW CONSTRUCTION INVENTORY 112812The new construction starts are down dramatically, as you can see by this chart.  In 2000 there were 850,000 homes built, and by 2005 we reached an all-time high of almost 1,400,000.    Today, we are lucky to see 390,000 built and they cost more than the existing homes available.  The new energy and upgraded code requirements haveNew Construction Inventory added thousands of dollars to the cost of construction.  Material costs have really started to move up as well, which makes new construction more risky.  As you can see, the inventory for new homes for sale is down dramatically, at its lowest point since 1960.

Although the inventory is down in both new construction and existing homes for sale, the advice to buyers is to consider buying sooner rather than later.  It is only a matter of time before the prices do start to move up and the interest rates will unlikely be better.  Buy a home you love and settle in for the long haul as a wonderful place to live, not just an “investment”.

The elections are over, and if our politicians don’t push us over the “Fiscal Cliff“, I believe we will start the slow recovery of improved pricing and reasonable sales pace.  Sellers will need to listen careful to their Realtors when pricing their homes, but the low inventory will help move homes.  I saw the crash coming in 2005, but I never believed it would be a seven-year fall.

What Kind of Real Estate Forecast Can We Make for 2012?

The National Bureau of Economic Research, a group of independent economists, had declared that the recession ended in June of 2009.  RECESSION ENDS IN 2009The Bureau took more than a year to decide that we started the recession in December of 2007 and decided in the summer of 2010 that the recession ended in June 2009.  This recession has been the longest and deepest recession the country ever experienced. 

Many people know that we are now undergoing the longest, slowest, most painful recovery the country has ever experienced.  Now in January 2012, two and a half years after the recession “ended”, we are seeing hopeful signs of life in some areas of the economic picture.  MA UNEMPLOYMENT 1991 TO 2011The unemployment rate in Massachusetts has fallen to its lowest level in a long time to 7.3%.  Some industries are beginning to experience growth and we can only hope they continue to hire and create new jobs.

One area we continue to struggle with is housing.  The actual loss of wealth for so many people in this country is staggering.  The California Association of Realtors has released its real estate forecast for 2012. 

It is interesting to see that in 2005 they sold 625,000 homes and in 2007  that number dropped to 346,900—a 55% drop in the number of sales.  The median price of homes in 2005 was $522,700, but by 2011 the median prices have dropped to $291,000—a 56% drop in value.   All real estate is local, but some parts of California, Nevada, and Florida have experienced over 75% loss in value.

Massachusetts, and particularly Boston, has fared much better than many of the states.  Trulia has come out with its top five places slated for a quicker recovery:  Austin, Houston, San Jose, Boston, (and in particular Cambridge, Newton, Framingham, and Worcester) and Rochester, NY.  Austin and Houston have seen jobs and new construction get a jump-start.  San Jose and Boston areas are home to the technology belt with lots of smart, well-educated people, and Rochester  has had stable prices and economy throughout the downturn.  The take away is that highly educated, tech-savvy cities may push through the recovery quicker than other parts of the country.

Realtors have not been able to see the bottoming of prices yet,  but I expect this year will be it.   Once we have hit the bottom, it will be a slow climb back up, but there truly is light at the end of the tunnel.  I first saw the warning signs of trouble in 2005, and after 6 years of serious turmoil,  I believe we are past the worst.

The new economic reality may be something we have to get used to, because this complete recovery may be many years in the making.  Some people, like seniors, who have done everything right, have had their planned retirement future smashed by the dramatic loss of wealth.  We are already seeing not only seniors, but young college graduates moving back to the family home.  This may be the new reality for now as we all adjust to the slow recovery.  But I am looking forward to 2012 as our turn around year.  What do you think?



Home ownership has a significant impact on net worth, educational achievement, civic participation, health, and overall quality of life. And, home ownership helps create jobs—lots of them—right here at home.

Home Ownership matters…to people, to communities, and to America. Why?

Every additional 1,000 home sales this year over last year create 500 new private-sector jobs in the U.S.

Every home sale touches 80 occupations. America needs jobs, and a strong housing market can provide them.

Each purchase generates as much as $60,000 in economic activity.

The home ownership debate


Some who care about creating jobs also argue that home ownership may be overrated, and that we might be better off as a nation of renters—including some in the Obama Administration and Congress.

 If that’s of concern to you, follow the debate about federal government incentives to home ownership—the outcome of which will determine whether the average American can still get an affordable mortgage and whether home owners can continue to deduct their mortgage interest  as a benefit of home ownership. 

Owning your own home is not only beneficial to you; it also helps create jobs and stimulate the economy

  • Read about the issues affecting you as a home owner right now:

Home ownership

It pays to support responsible home ownership.  Protect your home’s value and build stronger communities.


American home owners need affordable mortgages, REALTORS® say.    The president’s proposal for a new secondary mortgage market structure needs to ensure home owners have access to a constant source of reasonably priced home loans.

Losing Fannie Mae, Freddie Mac would increase mortgage interest rates, which will slow down the economic recovery.  Without government-supported mortgage programs from Fannie Mae, Freddie Mac, FHA, and VA, interest rates on home mortgages would rise by 2 percentage points.

 How Fannie Mae, Freddie Mac Save You Money  Home owners who use Fannie Mae and Freddie Mac mortgages save thousands of dollars in interest payments each year.

Show Your Support for FHA
   FHA supports home values by providing a steady source of mortgage financing for families across the country, but critics worry it has taken on too much risk.

Mortgage deduction

Mortgage Interest Deduction Vital to Housing Market    The mortgage deduction saves the average home owner thousands of dollars at tax time, supports home values at the community level, and helps American home buyers get into their first house.
 Deduct Mortgage Interest and Home Equity Loans   
Deducting mortgage interest, as well as interest on home equity loans and HELOCs, can save you money on taxes.

Published: February 11, 2011  House Logic

Vote No on Question 2

The state of Massachusetts is faced with a serious attack on an important By-Law which provides housing for our workforce population.   Please Vote No on Question 2.   The Affordable Housing Law is working.  It has created 58,000 homes across the state and is responsible for approximately 80% of new affordable housing over the past decade, outside the larger cities. The 12,000 homes in the pipeline that have already been locally approved would add $10 billion in economic activity and 50,000 jobs that come with them.

It means that your children may someday be able to “Afford” to live in the small communities in Massachusetts.  First, affordable (or workforce housing) means people making between $45,000 and $65,000 would qualify for this housing…..young teachers, firemen, police, public works folks, young people just starting their families, and people who work ordinary jobs.

Some people have stated that “Stuff gets jammed down local communities throats,” during a 40B proposal.  As a former member of my local planning board, I understand how our local planning boards have done a fine job making sure the development process so expensive and time-consuming that finding a way to build affordable housing is pretty much impossible in Massachusetts without some reasonable waivers.

It is important to note that Chapter 40B does not cost the tax payer anything. It is a function of the development process and can give people a chance at home ownership.    

The ideas put forth in a Chapter 40B proposal request relief from some extraordinarily stringent local requirements—far beyond state codes—including 2 to 3 acre zoning, doubling Title V (septic system) requirements, doubling all wetlands setbacks and recharge areas.  My town does not allow condo developments or apartments to be built without a special permit.  They reject out of hand any of the new concepts like cluster zoning.

The general thinking in Massachusetts is “I live here, but I don’t want anyone else to move in and burden my town.”   Massachusetts is one of the only states in the union to be losing population, specifically young people.  Check out the articles in the Boston Globe  and the CSMonitor  to see the concern about decrease in a balanced workforce.  Chapter 40B is designed to counter the “snob zoning” we have carefully put in place throughout the Commonwealth, and it is working.

All the candidates for governor agree on this question and our local news paper, the Sentinel and Enterprise, speaks to some very compelling data.  The Chapter 40B By-Law has been held up nationally as a template for a fair and equitable way to provide housing for a wide variety of incomes, including rental property and homes for first time home buyers.   PLEASE VOTE NO ON QUESTION 2!!!  We will need homes for our children and growth for our state.

Real Estate Trends in Sterling MA


Real estate has been on a roller coaster ride for over five years now. The Sterling Real Estate Market Statistics Chart demonstrates that the highest number of homes sold in recent years was 2004 when we sold 95 homes. In 2009 we sold just 49 homes.

Interestingly enough, the median selling price continued to rise for two more years when the highest median price in Sterling was $400,000 in 2006. The lack of inventory was part of the cause, but many people failed to see warning signs of the overheated market. The median sale price for 2009 was $291,000, and the lost value in homes has hit many people very hard. Even Sterling has had its share of short sales and foreclosures.

Our Annual Sales Trends Report , which we send to our clients on a quarterly basis, helps folks keep abreast of the fast changing real estate market. This report shows the listing and sales activity of many of the local communities.

Our Local Market Conditions Report is a monthly on the current real estate trends in Sterling. Just a couple of weeks ago, there were only 50 homes for sale in Sterling and 17 homes sold in the previous 6 months. Today there are 77 homes on the market, which may be indicative of the spring market. There are 3 homes under agreement and 24 homes sold in the last 6 months. Each time a home sells gives Realtors a different perspective on the changing market. It is one of the reasons we track these trends so closely, and many people appreciate having a better idea what their home is worth.

Bookmark our blog, Massachusetts Real Estate Trends and check for frequent updates.

Will a Short Sale Be the Best Decision for the Long Term?

When someone is unable to refinance their mortgage and unable to pay their mortgage for any reason, it can feel like everything is against you.  Information can be very confusing, and no one seems to have good answers.  Even some attorneys and financial consultants don’t have the right answers.

Bankruptcy attorneys have suggested to me that a short sale, once negotiated, may be the best solution for a difficult situation.  The credit bureaus do not view a short sale like a foreclosure, which can show up on a credit report as a strong negative for 7 to 10 years.    Some of the banks are taking one to three years to complete the foreclosure, and if the foreclosure is mishandled, it could be even longer.  The real problem is that process is up to the bank, not the borrower.

Rebuilding credit and making timely payments will start as soon as the short sale is complete.   Making the decision to do a short sale may be difficult, but the results will give people a jump start on a new financial life.

The administration has created a reasonable way to deal with the short sale issues. The new program is called the Home Affordable Foreclosure Alternative (HAFA), and it will make a big difference to people who need to get out from under crushing debt.  The clear deadlines and parameters will make a short sale much easier for both the sellers and the buyers.  The guidelines incorporate mandatory deadlines for the offer to acceptance and then a reasonable time for closing.  The buyer will have time to have a home inspection and get a bank commitment.

The most important date for homeowners is the 14 day response time once the bank makes an offer for a short sale.  Homeowners RESPOND within the 14 days, and you will have adequate time to sell your home through the short sale process.  There are also financial incentives for the homeowners to cover relocation costs and fees to banks to make this program work.  If the homeowner qualifies, the bank will fully release any future liability for the first mortgage debt.  There are several ways to deal with a second mortgage, so call if you have a second mortgage for additional information.

The banks and mortgage companies that participated in the Home Affordable Mortgage Program must offer this solution to their borrowers.   If you have any questions about this program, contact a Realtor who has had special training in Loss Mitigation Certification or Short Sale Designation.  They will help you figure out this process.

If you would like a brochure about the HAFA program, make a comment with your email.

Mortgage Implications – FHA Makes Changes

[Read more…]


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

Restructuring Help for Troubled Homeowners

Chase Bank has taken a very valuable step in dealing with the prevention of foreclosures with the mortgages they service.  This very important step could go a long way to keeping homeowners in their homes.  This, in turn, will help put a stop to falling property values.  The entire economic situation in this country, and even worldwide, has ties to the real value of property in the United States. 


When homes do not support the mortgage amounts, the crisis we create will affect the world economy.  Chase has taken steps to create a department with regional offices to work with homeowners to restructure their loans, keep them in their homes with payments they can afford, and prevent more foreclosures from coming on the market.  They have provided specialized training to 300 new loan counselors to work with their homeowners and their troubled assets.  Chase will be opening branch offices around the country to expedite this process.


This is outstanding news for Realtors who have been trying to help homeowners avoid foreclosure, either through short sales or restructuring.   Frequently, the banks and/or the loss mitigation departments don’t understand the local real estate situation and miss the opportunity to rectify the problem to the benefit of both the homeowner and the bank. 


Many Realtors in Massachusetts have taken and been certified Loss Mitigation Specialists, and this special training will provide homeowners with a great resource to help find answers to their mortgage problems. 


Now we need to get the word out to homeowners.  Chase has taken the first step, and we hope that the other banks and mortgage servicing organizations do the same.