According to RE/MAX of New England, loosening lending practices, low inventory and steady interest rates are anticipated to heat-up the New England housing market in the first half of the year. Increased consumer confidence, a rebounding local economy and continued low-interest rates have converged to create a steady, consistent housing market throughout much of New England in 2014. Inventory shortages in desirable areas drove prices up, but throughout much of the region, overall home sales decreased over 2013 numbers. In Vermont, total sales were down and single-family homes paid slightly less, with the average median price dropping 3.8 percent to $205,000 in 2014, down from $213,000 a year ago.
The first quarter of 2014 saw lower-than-anticipated sales throughout New England, but as interest rates and oil prices ticked down, and the weather heated up, pending sales throughout the region hit double-digit increases year-over-year. Price increases coupled with inventory shortages helped to motivate buyers from the sidelines resulting in a busy spring and summer market. Investors took a backseat in 2014, as fewer distressed or under-valued properties entered the market. RE/MAX of New England data illustrates a similar housing market in 2014 as experienced in 2013 with approximately 575 fewer single-family homes and condominiums sold throughout the region this year.
“Our road to recovery has been a slow, steady climb,” said Dan Breault, Executive Vice President and Regional Director of RE/MAX of New England. “The boom and the bottom of the market are behind us, and we are now seeing a healthy, more normal real estate market. If consumer confidence remains strong and unemployment rates remain low, 2015 will be an excellent market for both first-time buyers and move-up buyers.”
According to Steve Harney, President and Founder of Keeping Current Matters, an organization which tracks and analyzes real estate trends, 2014 had its challenges in the Northeast.
“Sales in the first quarter of the year were dismal and much of that was weather related. However, the last three quarters of the year were much stronger year-over-year and we closed 2014 on par with last year,” said Harney. Single-family and condominium home transactions in New England were down approximately 0.4% on average in 2014. Certain states experienced year-over-year increases including Maine, which saw a 7.8% boost in single-family home transactions; the largest increase in New England. In Connecticut, where the average median price of a single-family home was $190,000, sales increased 2.0% year-over-year and condominium sales rose 3.2% according to CTMLS data. According to CMLS data (which oversees the Greater Fairfield County Area), single-family home sales decreased 5.9% and condominium sales increased 1.5%. The average median price of a single-family home was $400,000 in 2014, remaining unchanged from 2013 CMLS figures.
The average median sales price of a single-family home in Massachusetts increased 3.8% from $320,000 to $332,000 in 2014 according to MLSPIN data. Single-family home transactions decreased 3.0% and condominium sales decreased 0.6% year-over-year. At $227,900, the average median sales price of a single-family home in New Hampshire was up 3.6% over 2013. Single-family home transactions decreased 1.6% year-over-year, and condominium transactions dipped 0.5%.
Rhode Island single-family home sales were down 1.3% year-over-year and condominium sales decreased 7.0%. The average median price for single-family home increased 3.8% compared to 2013, reaching $218,000. Single-family home transactions remained level in Vermont, with two fewer homes sold in 2014. Condominium transactions rose 9.5%, the highest gain in this category in New England. The average median price of a condominium sold was $190,000. “Across New England we experienced extremely moderate price increases,” said Breault. “Singlefamily homes increased 0.8% on average, while condominiums fared better, rising 2.7% over last year’s prices. This is the type of appreciation we expect to see in a healthy market and helps set the stage for what we can expect to see in 2015.”
Interest rates will continue to be an important factor to watch in 2015. Breault expects interest rates to continue to drive home sales in the first half of the year as rates remain under 4% and pricing stays level, but cautions that rates are projected to rise to 5% by the end of 2015. “It is important that REALTORS® educate consumers who might be waiting to purchase a home that their affordability will diminish the longer they wait to purchase this year.” At the end of 2014, both Fannie Mae and Freddie Mac put new lending guidelines in place to help stimulate the first-time and millennial homebuyer market. Qualified buyers can now put as little as 3% down on a mortgage. “Loosening up the lending guidelines will help responsible first-time buyers become homeowners,” said Breault. “This should also stimulate the second or third-time buyer because the demand for their homes will increase, driving up pricing and allowing them to either move up or downsize.”
According to a report by Trulia Chief Economist, Jed Kolko, consumers are optimistic about the housing market, with 78% of 18-34 year-olds believing that home ownership is part of the American dream. This is up from a low of 65% in 2011. And, 93% of young renters plan to buy a home someday. “2015 looks to be the year of the millennial – at least in New England,” said Harney. “This age group likes to stay around the schools that they attended. When they graduated college, the jobs really were not there, so many of them stayed and went on to higher education. There is no region in the country that has a larger number of great educational institutions than New England. The job market is strong, the economy is improving and that’s reflected in areas like Boston which is a hot-spot for real estate.” Another area RE/MAX of New England has identified to watch in 2015 is the level of available inventory. Nearly all RE/MAX REALTORS® who were interviewed for this report were facing inventory shortages in their own markets in New England.
“The 2015 housing market in New England will be all about balance,” commented Harney. “We came out of the seller’s market from 2000-2007 and the buyer’s market from 2008-2012. Now, we’re seeing the shift back to a balanced market. Inventory is going to match the demand for the most part and I expect price appreciation to level off at 3% to 3.5%.” RE/MAX of New England will offer monthly updates on real estate activity in New England throughout 2015. To access these reports, please visit RE/MAX of New England’s Website.
Segments of Vermont’s housing market fared very well in 2014. While single-family home sales were just about even with two fewer transactions reported year-over-year according to NNEREN data at the close of November, condominium sales were up 9.5%, by far the highest-percent increase in New England. Consumers who purchased condos paid $190,000 on average in 2014, up from $184,000 in 2013. Those who purchased single-family homes paid slightly less, with the average median price dropping 3.8% to $205,000, down from $213,000 a year ago. Single-family homes stayed on the market an average of 4 fewer days in 2014. Rich Gardner, Broker/Owner of RE/MAX North Professionals in Colchester, does business in the state’s Chittenden County area. There, he found overall sales down between 6% and 7% year-over-year.
“Our market was very much divided this year,” said Gardner. “The first two quarters were extremely busy, creating a seller’s market which we haven’t seen in quite some time.” However, Gardner saw a slow-down in the second half of the year and attributes that to a lack of saleable inventory. “Our inventory dropped as we headed into the summer months. It really made our market lag as we headed into the fall and winter months.”
However, by November, Gardner saw the lag in his business end. “Our closed sales on condominiums were up five percent, and pricing was up almost ten-percent. I believe new construction played a huge role in this segment of the market.”
Gardner’s business was up by more than 20% in 2014 due to high activity in a few key, new developments. “We had some great developments finally come online in late 2013 and early 2014,” said Gardner. “The mix of singlefamily homes and condominiums have been a popular option for consumers.” One of state’s biggest news stories in 2014, according to the Burlington Free Press, includes the sale of IBM’s semiconductor plant to Abu-Dhabi-based GlobalFoundries. While the new company has made statements that they will not be laying off workers or closing the plant, this purchase has impacted Vermont’s housing industry according to Gardner.
“The GlobalFoundries purchase of the IBM plant has really rocked the confidence of many prospective purchasers and existing homeowners,” said Gardner. “Even though there might not be an immediate impact to our economy, there is a lot of speculation as to what this means for the 4,000 people employed there, as well as home values should the plant close.”
With the second lowest unemployment rate in New England at 4.4% according to U.S. Bureau of Labor statistics, Vermont’s economy fared well over the course of the year. Gardner says there are several areas to watch in Vermont in 2015, including how interest rates will fare and the subsequent impact on the local market. Additionally, the construction of rental houses will play a role as well, “There is potentially a big impact in this segment of the market. If rates go up, as projected, it will be more affordable to rent a home in some communities, as opposed to purchasing.”
Gardner also noted that one of the area’s largest first-time homebuyer lending tools, the USDA Rural Development Loan, might not be available in certain areas of the market including. “There has been a lot of talk that these loans just won’t be available and that will absolutely impact homes priced below $250,000.”
Connecticut’s housing market was similar to its 2013 market with approximately 40 fewer homes sold over the course of the year, according to CTMLS and CMLS data. For the first ten consecutive months of the year, pending sales showed year-over-year double-digit percentage increases, setting the stage for a solid 2014. According to CTMLS data, single-family homes in this category were up 2.0%, with 23,501 transactions posted by the end of November. Condominium sales also received a boost, up 3.2% to 7,302 transactions in the same period. Median price for a single family home dipped slightly, down 2.6% over 2013 figures at $190,000, according to CTMLS data. Condominium pricing dropped 11.6% year-over-year, at $78,700, down from $89,000 in 2013. Condos also stayed on the market nine fewer days in 2014.
“Overall sales activity was good, but pricing was sluggish,” said Kurt Potter, Broker/Owner of RE/MAX Edge in Glastonbury. “We saw prices lower in 2014 than the previous year. There’s still a lack of security here; we don’t have the type of job growth that translates into people buying homes, particularly at the bottom of the market.” Potter says that while he feels that Connecticut remains behind the economic curve, fortunately most of his clientele are move-up buyers with good credit, and select towns like Glastonbury and West Hartford are a competitive environment for homebuyers. “I’m seeing homes in the $400,000 - $600,000 range receive multiple offers from professionals if they’re in good condition.” But, Potter cautions that this is the exception, not the rule in most areas of the state.
According to CMLS data, single-family homes in the Greater Fairfield County area did not fare as well overall, with transactions down 5.9%. However, pricing remained flat with the average median sold price at $400,000 in both 2014 and 2013. The condominium market was up 1.5% and median price also increased 4.7% to $225,002. Virginia Klein, Broker/Owner of RE/MAX Heritage in Westport, operates in Greenwich, Darien, Westport and Fairfield. She says her market is directly tied to how Wall Street performs.
“In 2004, we closed 13,500 transactions in Fairfield County. By 2009, when we were in the height of the financial crisis, that number dropped to a low of 6,700 transactions. In 2014, we saw 9,400 transactions close.”
Klein attributes the upswing to a better economy and more job security in the financial industry which she predominantly serves. Klein says that she has also noticed a big uptick in condominium sales by first-time home buyers who now find owning to be less expensive than renting in the area.
“I’m seeing a lot of buyers taking advantage of first-time home buyer financing. After the devastation of hurricane Irene and Sandy, we saw developers come in and purchase undervalued, destroyed properties to tear down and build new single-family homes. Both new home buyers and first-time buyers are finding wonderful opportunities to realize their dreams of ownership.” Both Potter and Klein believe that 2015 will be a balanced market in the state. “We’re going to get as close to balanced in Fairfield County as we’ll ever see, but a cautionary note… we don’t stay balanced for very long in this region,” said Klein.
The state of Maine was the only state in New England to post year-over-year transaction increases in both single-family and condominium sales. According to MREIS data, single-family home transactions were up 7.8% and condominium sales were up 3.2% over 2013 data. The average median price of a single-family home declined 0.3% to $174,500, down from $175,000 in 2013. The average median price for condominiums increased 6.1% to $195,250 – the highest percent jump in New England. “The state of Maine realized continuously improving sales and shrinking inventory,” said Don Wunder, Broker/Owner of RE/MAX Realty One with offices in York, Ogunquit, Kennebunk and Saco.
“Things were moving off the market faster as consumer confidence improved and became stronger.” Wunder worked with an array of buyers in 2014, from move-up, to downsizers and also experienced a rapidly strengthening second-home market. “I think buyers are comfortable with the fact that the housing market is a safe investment,” said Wunder. “They’re not worried about prices going down and they’re seeing strong interest rates. There is less hesitation in the market.” According to Wunder, Maine’s luxury market fared well in 2014.
“If homes in the million-dollar range were priced right and were located near the ocean, they sold. We experienced an incredibly strong market from Kittery to Kennebunkport.” Further up the coastline in Topsham, Broker/Owner Sue Spann of RE/MAX Riverside also saw a strengthening market in 2014, bolstered by an economic boost happening as far south as Boston, Massachusetts. “Our market is a series of concentric circles,” said Spann. “As home prices increase in Boston, it affects the market in Southern New Hampshire and Southern Maine. That puts pressure on the Portland market, which affects us.” Spann says that the communities closer to Portland tend to have a stronger housing market. Topsham is approximately 30 miles from Portland according to Spann, and is a “quintessential New England town that is geared perfectly for families.”
According to Spann, the hottest price category in her area was $200,000 and under, which appeals to firsttime buyers. Last year, RE/MAX Riverside represented $109 million dollars, a 5.8% increase from 2013. Spann attributes the increase to low interest rates and inventory available for purchase, “In 2014, we were able to absorb much of the extra inventory from distressed properties. That made for a more balanced market.”
Major area employers including Bath Iron Works and Bowdoin College bolster the local economy and create a steady job market. “We are fortunate to be equidistant between Augusta and Portland,” said Spann. “The proximity of Interstate 295 to Topsham and Brunswick make it a great choice for commuters who work in either of these two cities.”
The redevelopment of the now-closed Naval Air Station Brunswick is expected to provide an increasing economic boost as the redevelopment effort progresses. The mixed-use space, called Brunswick Landing, is designed to create jobs and is predicted to further strengthen the local economy.
According to Wunder, 2015 looks to be a good year for Maine’s housing market. “I have a strong belief that if buyers are not buying right now, they will absolutely look back with regret. I tell this to first-time buyers and luxury vacation-home buyers alike.” Concluded Spann, “we used to call this area the Gold Coast…for a while, we faced some tough years, but we turned the corner and I feel 2015 will be even better.”
The Massachusetts housing market experienced fewer overall single-family home transactions in 2014, down 3.0% to 42,745 closed by the end of November, but pricing rose 3.8%, creating more than $692 million more in volume for the year. According to MLSPIN, condominium transactions held steady, declining just 0.6% in 2014, while prices increased 3.7% in this segment. The average median price of single-family home was $332,000, while condos were $310,000.
According to Karen Landry, Broker Associate at RE/MAX Leading Edge in Boston, the city’s housing market experienced significant inventory shortages in 2014. “Boston had a 7.1% decline in inventory this past year. With rates hovering around four percent, homes sold much faster and for a higher price. People realize that buying was actually cheaper than renting in the city.”
Melvin Vieira, a Sales Consultant at RE/MAX Destiny in Jamaica Plain, also found homes selling quickly in his neighborhood. “It’s been incredible. The average median price is about $407,000 in my area, up from $375,000 in 2013. Days on the market have decreased from 80-plus days to an average of 55 days.” Vieira has also seen a strong push from first-time, millennial buyers who finally have job security. In the greater Boston area, Sales Associate Mike DelRose at RE/MAX Leading Edge in Watertown experienced a significant lack of inventory over the summer, forcing the number of buyers in the market to look elsewhere.
“While rates remained low, the level of inventory here was challenging. It created the biggest impact on my business in 2014.” According to Trulia Chief Economist, Jed Kolko, Boston is the number one market to watch out of ten select markets in 2015 because of its strong housing market fundamentals. Number four on the list is Middlesex County. Elaine McDonald, a Sales Associate at RE/MAX Executive Realty in Middlesex County, saw her numbers in 2014 exceed 2013’s figures by more than 20%. “Nearly half of my business is from first-time, younger buyers who are looking in the under $300,000 range. Mortgage regulations were a little looser this past year, and I think 2015 will be very positive with a more balanced market.”
Deb Hamilton, Sales Associate at RE/MAX On The River in Newburyport, says her area has showed moderate increases in 2014 and feels 2015 will bring a bump in the luxury market. “We saw area prices up around 2.5% with a lot of activity in the lower-end of our market,” said Hamilton. “The trend I’m beginning to see heading into 2015 is higher-end homes sold to empty nesters who want extra room for families who come home to visit.” Hamilton attributes this to consumer optimism and a well-performing stock market. Hamilton also expects prices in the Greater Newburyport area to recover to their previous highs, barring a large bump in interest rates.
Deborah Schilling, Sales Associate at RE/MAX Spectrum in Marstons Mills on Cape Cod, experienced a 15% boost in median pricing and her volume was up 30%. “We started out a little late in the Cape. It didn’t get strong until mid-year and then dropped off in the fall. However, that resulted in a much more balanced market here, said Schilling. “Also, the number of younger people buying second homes has been really surprising.”
Leon Lopes, Sales Associate at RE/MAX Spectrum in Plymouth, MA, saw slow, but inconsistent improvement in 2014. “It’s gotten better, but not across the board,” said Lopes. “Many of the higher-priced properties in my local market are not selling as quickly as the lower-priced homes, but I feel that in 2015 we will continue to see slow, positive momentum, particularly if interest rates remain low in the first half of the year.”
In Foxboro, Sales Associate Gil Campos of Campos Homes Team, RE/MAX Real Estate Center experienced an improved market in 2014, with his business up about 10%. His buyers are looking for homes that require little work. “There are a huge number of millennial, first-time buyers out there,” said Campos. “But, they’re looking for ‘HGTV’ properties – perfect houses.” Campos said the hottest housing segment in his market is homes priced between $400,000 - $500,000. In the Springfield market, Sales Associate Karen King of RE/MAX Professional Associates in Wilbraham saw sales increase 6% year-over-year, with prices up 5.4% over 2013. She feels 2015 will be a balanced market in Western Massachusetts. “2015 looks like it will be a good year. Freddie Mac and Fannie Mae’s new 3% down programs are going to be a game changer in this market.”
2015 New Hampshire
New Hampshire’s 2014 housing market largely mirrored the activity in 2013. Slightly fewer homes were sold in the Granite State over the course of the year, but the overall volume increased between 3.0% and 4.0%.
According to NNEREN data, the number of single-family home sales declined 1.6% compared to 2013, with condominium sales decreasing 0.5% year-over-year. The average median price of a single-family home rose 3.6% to $227,900, up from $220,000 the previous year. The average median price for condominiums increased 4.3% to $169,000, up from $162,000 in 2013. Homes in both categories stayed on the market fewer days in 2014. Single-family homes were on the market an average of 98 days, down from 106 days the previous year. Condominiums averaged 105 days in 2014, down from 117 days in 2013. Certain areas of the state showed high levels of activity in 2014.
Ann Cummings, Sales Associate at RE/MAX By The Bay in Portsmouth, experienced a robust market in 2014. “Portsmouth is one of the hottest markets in the state right now,” said Cummings. “Our downtown market took off like crazy in 2014. A listing was barely live for five minutes and we’d see offers come in. Buyers finally got the message that prices were not going down. Consumer confidence coupled with relatively low inventory really spurred the market into high gear.”
According to NNEREN, the average sales price for a single-family home in Portsmouth was $409,667 in 2014, down 5.2% over the previous year when the average sales price reached $432,117. Average days on market was 53 days compared to 68 days in 2013. Condominium average sales prices were $376,285 in 2014, up 6.8%, with average days on market at 66. Cummings’ business was up 40% over the previous year. She attributes that to a solid economy in the Seacoast area, low unemployment and the return of investment buyers. New Hampshire has the lowest unemployment rate in the region at 4.2%, compared with the national average of 5.8%.
“I worked primarily with move-up buyers or downsizers in the Portsmouth market,” said Cummings. “However, the Agents in our office worked with a lot of investors who were looking for multi-family properties or commercial properties with storefronts and apartments located above.” Cummings noted that many of the investment buyers her office worked with were first-time purchasers in this field, attracted by the still lowpricing and the expectation that value would increase over the coming years. Cummings also believes the Portsmouth region will continue being a seller’s market in 2015. “In the seacoast market, our absorption rate (the rate at which homes are sold during a specific time period) for single-family homes was 3.9 months and 3.2 months for condominiums,” said Cummings. A balanced market is achieved when the absorption rate is at six months of inventory.
Key factors to watch in 2015 according to Cummings include floodplain regulations and the effects on flood insurance, the state’s economy and job-growth rate as well as rising energy costs in the region.
2015 Rhode Island
Rhode Island closed out 2014 with a consistent housing market, despite once again recording the highest unemployment rate in New England consistently throughout the year. RIMLS data shows that in 2014, single-family home transactions in the Ocean State dipped 1.3% year-over-year, with 8,480 transactions reported at the close of November. Median prices rose 3.8%, which helped to push overall single-family home sales volume up more than $208.5 million dollars. Condominium sales decreased 7.0%, with 1,454 closed transactions for the year as of the end of November, compared to 1,564 in 2013. Condo pricing stayed relatively flat, increasing 0.1%, with the average median sold price of $195,250.
“2014 was very consistent in Rhode Island,” said Karl Martone, a Sales Associate with RE/MAX Properties in Smithfield. “In many ways, it was similar to 2013 with an array of different buyers. We had a lot of first-time and move-up buyers in our market.” Martone attributes higher single-family pricing to a lack of foreclosed properties. “The median price moved up because we just don’t have distressed properties on the market right now. And, with rates staying in the 4% range, consumer confidence was up in Rhode Island.”
Martone also commented that November’s elections brought a sense of renewed optimism in the state with the election of Rhode Island’s first female governor.
“We seem to have elected a pro-business governor and she is key to driving our economy in 2015. I feel our state is definitely in a better position now than we were a year ago.” In the southern part of Rhode Island, Chris Tanner and Mike Mita, Broker/Owners of RE/MAX Flagship in Narragansett, saw a strong second half of the year. “We had a slow start this past winter, but that turned into a spectacular summer and carried us to a strong close to 2014,” said Mita. “This might be the strongest winter that we’ve seen.”
Tanner and Mita generally service the southern part of the state including Narragansett, South Kingstown, North Kingstown, Charlestown, East Greenwich and Warwick, where the distressed market is on the decline. “We lag behind in the economic recovery and we’re still dealing with some foreclosed properties,” said Tanner. “However, it’s not a big portion of our market, which has helped to push home values up.” Mita is extremely optimistic about 2015’s market. “We have a pretty-balanced market in terms of inventory and pricing, and values continue to rise year-over-year at a very healthy pace of four to six-percent.”
According to Tanner, if momentum continues the way it has been trending, her business will do 25% more transactions in 2015. While prices tend to be higher in southern Rhode Island, at just under $300,000 on average, Mita continues to find the higher end of the market soft. “The market is much stronger now, except in the six-hundred thousand to one million dollar range,” said Mita. Areas of concern on the horizon in the Ocean State include new requirements on flood insurance. “I’ve had some of my listings red-flagged because even though they were moderately priced, the flood insurance costs were off the charts,” said Martone. “The insurance costs are making some properties unmarketable and I think the worst is yet to come.”
Source: 2014 RE/MAX of New England, Inc.