Massachusetts Profile of Home Buyers & Sellers - Interesting Statistics

This annual survey is conducted by the National Association of REALTORS of recent home buyers and sellers.  The results below are specific for Massachusetts.    I think you will find it very interesting and also useful whether you are thinking about buying or selling.   

2014 Profile of Home Buyers and Sellers

Massachusetts Report

Characteristics of Home Buyers and their Experience:

• 94% of buyers used the internet in some way for their home search process and 53% used a mobile website

• 97% of the Buyers felt real estate agents were viewed as a useful information source.

• Typical homebuyer in Massachusetts searched 16 weeks for a home and viewed 10 homes.

• 89% of buyers were satisfied with their home buying process.

• 91% of the buyers purchased their home through a real estate agent.

• 88% of the buyers would recommend their agent to others.

• 84% of buyers believe their home is a good financial investment.

Characteristics of Home Sellers their Experience

• Typical seller in Massachusetts lives in their home for 10 years.

• 92% of sellers used a real estate agent.

• Sellers typically sold their home for 97% of the listing price and 49% reduced the asking price at least once.

• Only 14% of sellers offered incentives to buyers.

• 69% of home sellers contacted just one agent.  45% found their agent due to a recommendation from family member or friend and 26% worked with their agent previously.

• 83% of the home sellers would recommend their agent again.

• The share of home sellers who sold their home without an assistance of a real estate was only 7%.  49% knew the buyer prior to home purchase.

Keep up with the maintenance of your home! Can lose $20,000 in value - read on . . .

An out-of-shape house is older than its years and could lose 10% of its appraised value, that’s a $15,000-$20,000 adjustment for the average home. But good maintenance can even add value. A study out of the University of Connecticut and Syracuse University finds that regular maintenance increases the value of a home by about 1% each year. So if you’ve been deferring maintenance, or just need a good strategy to stay on top of it, here’s the simplest way to keep your home in good health.

This article has a list of things that you can do to keep up with the maintenance of your home.  Another good idea is to contact your local realtor and have them take a look at your house to determine what things would need to be done to retain the home's value.   

Click here to read the entire article.

Impact of Rising Mortgage Rates

Mortgage rates will continue to rise. They will probably be near 5 percent by this time next year, compared to the 3.5 percent average of the past 12 months. The rates will be even higher in 2015 and 2016. Certainly, rising rates are bad news for buyers and some potential homebuyers will be pushed out of the market. For example, the number of renter households that have sufficient income to buy a $177,000 home at a 3.5 percent mortgage rate is 17.8 million. The number drops to 14.9 million at a 5.0 percent mortgage rate, which is a decline in percentage terms of 16 percent.

But there is one major compensating factor that can easily neutralize the negative impact of rising rates. As REALTORS® well know, there are many good potential buyers who have been denied a mortgage that in past normal years would have easily qualified. The comparison is with normal years and not the bubble years of no standards whatsoever. The Federal Reserve has also often commented about the excessively tight underwriting standards in today’s mortgage market. At the same time, banks have been reporting a strong profit growth from mortgage originations due to exceptionally low default rates on recently originated mortgages, particularly since 2010. Such well-performing recent mortgages should not be surprising since defaults do not happen in an environment with rising home prices. It appears then more loan originations, at least at the margin, will bring more profits for the lenders and correspondingly bring more buyers out into the marketplace. My estimation says there would be an additional 15 to 20 percent more homebuyers who qualify by returning to normal underwriting standards from the current very tight conditions. The table below shows the average credit score of those who obtained mortgage approvals in recent years. The credit scores are much higher now than in past normal times. So, for example, someone with a credit score of 730 would have had no trouble obtaining a Fannie-backed mortgage in the past, but is currently getting denied today.

There are other factors that can also help alleviate the rising interest rate conditions. The economy is adding jobs. A total of 2 million net new jobs were added in the past 12 months and another 2 million new ones are likely over the next 12 months. More jobs always lead to more home sales as long as rates do not spike.

Furthermore, there could be room for a reduction in fees associated with obtaining government-backed mortgages. The high profits generated by Fannie and Freddie in recent quarters are implying excessive add-on fees charged to consumers by these two effectively government agencies. A pure for-profit company should have the right to innovate and earn any profit it can obtain as long as there are no barriers to entry into the business. But Fannie and Freddie, as we have learned, are not and should not be for-profit entities. They got into a mess because of the hyper-gambling mindset of “heads we win and tails taxpayers lose”. Fannie and Freddie need to stick to the simple business plan of guaranteeing soundly underwritten, mostly boring 30-year mortgages, as they are currently doing. These simple 30-year fixed rate mortgages served our grandparents well and they subsequently will serve our grandkids well. No major innovation is required, which is the reason why being an effectively government agency can work fine. (We should, however, never trust the government to come up with an innovative product. Today’s iPhone and similar competitive products are worlds apart from the phones that our grandparents used.) The point is that Fannie and Freddie are making good profits now. They should first speedily repay the taxpayer bailout money. But afterwards, excess profits only mean excessive consumers fees. So a reduction in fees in the near future should occur, just in time to help offset the higher mortgage rate environment.

Lawrence Yun, Chief Economist

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members

Housing Update - Chief Economist National Assoc of REALTORS

National Association of REALTORS Chief Economist Lawrence Yun breaks down the housing market, job growth numbers and the impact of the Presidential election in this candid interview.  An interview worth listening to.

Home Prices expected to increase by 3%

Recently released research data project rising residential prices in 2013. The October 2012 Economic Survey by the Wall Street Journal panel of economists forecasted home prices as increasing at an annual rate of 3.25 percent in the forthcoming year. A similar National Association of Business Economists survey projected a 2.8 percent increase in home prices by the end of 2013.

Based on information from the latest Realtors Confidence Index (see below), REALTORS® are projecting a 3 percent increase in home prices in the forthcoming year. Both practitioners and economists are in good agreement on this one: prices are projected to increase.

RCI September 2012 Edition

Information provided by Jed Smith is Managing Director, Quantitative Research with the National Association of Realtors®. He has worked on real estate issues for the past 20 years, providing input on a variety of housing, commercial real estate, tax, and planning issues. Recently he has been involved in several international studies.

3.8% Medicare Tax - Not a Real Estate Transfer Tax

Rumors have spread about this 3.8% tax.  The National Association of REALTORS has done an excellent job explaining the details of the tax.  The video is only 6 minutes and explains the property owners that are effected by the tax.   I hope this information is helpful.  Don't hesitate to contact me if you have any additional questions.

Rumors about the 3.8% Medicare tax continue to circulate. Here's the definitive word on what's true and what's not on how the tax impacts real estate.

OCTOBER 2012 | BY ROBERT FREEDMAN

Ever since health care reform was enacted into law more than two years ago, rumors have been circulating on the Internet and in e-mails that the law contains a 3.8 percent tax on real estate. The tax doesn’t target real estate and will in fact affect very few home sales, because it’s a tax that will only affect high-income households that realize a substantial gain on an asset sale, including on a home sale, once other factors are taken into account. Maybe 2-3 percent of home sellers will be affected.

Nevertheless, the rumors persist and the latest version that’s circulating falsely say NAR is advocating for the tax’s repeal. But while NAR doesn’t support the tax (it was added into the health care law at the last minute and never considered in hearings), it’s not advocating for its repeal at this time.

The characterization of the 3.8 percent tax as a tax on real estate is an example of an Internet rumor, says Heather Elias, NAR’s director of social business media. Elias and Linda Goold, NAR’s director of tax policy, sat down for a discussion of how the tax works.