If 2013 was known as a turning point in the housing recovery, 2014 will most likely be known as the year of continuing recovery – or at least normalization – in the Massachusetts and U.S. housing markets.
Massachusetts single-family home sales were up more than 6 percent year to date in November, according to The Warren Group, publisher of Banker & Tradesman. A total of 3,902 single-family homes sold in November, down from 3,983 in November 2012. This is the first time that home sales posted a decrease and the fewest number of sales recorded for a month since April. And prices continue to soar.
The median price of single-family homes rose 4 percent to $307,000 in November, up from $295,000 a year earlier, according to data The Warren Group. This is the 14th consecutive month of year-over-year increases in the median price of a single-family home. The median price for homes sold January through November was $322,000, up 11 percent from $290,000 in the prior year.
The trends happening in Massachusetts aren’t isolated. According to Zillow, home values continued to increase across the U.S. home values in November were up 7.1 percent from the same period the year before. Add to that this startling statistic, also from Zillow: U.S. Homes were expected to gain almost $1.9 trillion in cumulative value in 2013, the second annual gain after the housing recession. In the Boston area, homes gained $45.6 billion in total value this year, up from a gain of $20.1 billion in 2012. Overall, the cumulative value of all homes in Greater Boston is $568.5 billion.
In other words, the housing market is gradually getting better.
“The pace of home value appreciation has leveled off and is beginning to slow down after peaking this summer. Much of this year’s rapid growth in home values can be attributed to very strong demand, as low mortgage interest rates, relatively low home prices and a slowly improving economy helped draw buyers into the market,” Zillow Chief Economist Stan Humphries said in a statement.
While Massachusetts has been posting nice gains over the course of 2013, there are some headwinds ahead – mainly in the form of interest rates and unemployment. The Commonwealth’s unemployment rate has been stubbornly flat in recent months. In November, the state rate of 7.1 percent was a little higher than the national 7 percent rate even though 6,500 jobs were added in that period. That hasn’t happened since before the recession. Progressively increasing interest rates could work to stabilize the booming market, but those rates are still historically low.
Another stumbling block is a potential Congressional impasse in February over the debt ceiling, which could also impact the economy and housing market. Congress passed a two-year budget deal in mid-December to slim down some spending cuts planned for next year, and the pact reduces the risk of a government shutdown, according to Reuters.
But, according to Reuters, the legislation doesn’t do anything to avoid a potential U.S. debt default that could occur if Washington does not raise the borrowing cap soon. And, as of this publication’s deadline, that cap had not been raised.
Yes, Massachusetts will face certain challenges over the next year, but we’re hopeful the state’s housing market will continue its recovery.
