Realtor® clients showing some concern with interest rates increasing
WALTHAM, Mass. – December, 14, 2016 – The Massachusetts Association of Realtors® (MAR) reported today that the number of homes put under agreement in November were up over 23 percent from last year. Condominium pending sales were also up almost 16 percent as prices for both property types continue to go up. The strong market was reflected in a high Realtor® Market Confidence Index, while the Price Confidence Index remained essentially flat compared to the same time last year.
November Pending Sales:
|Single Family||November 2016||November 2015||% Change|
- Pending sales have been up 44 of last 45 months
|Condominium||November 2016||November 2015||% Change|
- Pending sales have been up for 14 of last 15 months
“Homebuyers didn’t let the all-consuming nature of the presidential election in November keep them from making offers,” said 2016 MAR President Annie Blatz, branch executive at Kinlin Grover Real Estate on Cape Cod. “With such little inventory, buyers needed to be quick with their best offers from the start and they were.”
Realtor® Market and Price Confidence Indexes:
|Confidence Index||November 2016||November 2015||% Change|
- The Realtor® Market Confidence Index was up for the 21st straight month
- Measured on a 100-point scale, a score of 50 is the midpoint between a “strong” (100 points) and a “weak” (0 points) market condition
“The Realtor® Market Confidence Index dipped below the 70-point mark for the first time since February of this year,” said Blatz. “While it remains higher than the same time last year, some uncertainty with the new administration may exist which could impact the index going forward.”
Monthly ‘Hot Topic’ Question:
The November “Hot Topic” question asked Realtors® to describe their clients concern about interest rates going up. Of those Realtors® who responded, the largest group (46%) reported that some of their clients are concerned with interest rates going up. Thirty-two percent responded that most of their clients were concerned, while 13% reported all of their clients were concerned. Eight percent of the Realtors® who responded indicated that none of their clients were concerned.
“A little tick up in interest rates can push buyers who were on the fence to get serious and make offers,” said Blatz. “It’s when rates go up over a point that affordability is impacted and causes concern for buyer and sellers. The next few months will show us just how strong the desire to live in Massachusetts really is.”
About the Data Sets:
The tracking of signed purchase and sales agreements (also called “pending sales”) provide reliable information about where the real estate market is heading in coming months.
A pending sale or a sale “under agreement” happens when the buyer and seller agree on the terms of the sale of a home and have a signed purchase and sale agreement, but have yet to close and be recorded as such. MAR is the only organization, which compiles this statewide information from Multiple Listing Services each month.
Monthly pending (or under agreement) data and closed sales data comes from the three Realtor®-affiliated Multiple Listing Services in Massachusetts. They are the Berkshire County Multiple Listing Service, Cape Cod & Islands Association of Realtors® Multiple Listing Service, Inc.; and MLS Property Information Network, Inc. The data is compiled by ShowingTime/10K and updated each month. As a result, previous data may change after the reports have been run.
The REALTOR® Index Methodology – The Massachusetts Realtor® Market Confidence Index (RMCI) and Price Confidence Index (RPCI) are based on monthly responses from a random sampling of Massachusetts Association of Realtors® members on the state of the housing market. More specifically, the survey asks members two basic questions pertaining to the real estate business in their market area in Massachusetts.
- How would you describe the current housing market?
- What are your expectations of home prices over the next year?
In addition to these standard questions, the survey each month includes one wildcard question that changes each month and is based on an industry hot topic.
The RMCI is calculated in the following way. Respondents indicate whether conditions are, or are expected to be “strong” (100 points), “moderate” (50 points), and “weak” (0 points). The results are the average score for each question. A score of 50 is the threshold between a “strong” and a “weak” condition. Similarly, the question about home prices over the next year (Realtor® Price Confidence Index) is calculated using five categories: “Rise 0-5%” (75 points), “Rise 5%+” (100 points), “Level” (50 points), “Fall 0-5%” (25 points), and “Fall >5%” (0 points).
About the Massachusetts Association of Realtors®:
Organized in 1924, the Massachusetts Association of Realtors® is a professional trade organization with 24,000+ members. The term Realtor® is registered as the exclusive designation of members of the National Association of Realtors® who subscribe to a strict code of ethics and enjoy continuing education programs.
by Eric Berman – eberman (at) marealtor (dot) com – 781-839-5507 |