Home sales fell in October compared to the same time in 2015, during a year that has otherwise mostly seen an upward trend in sales. Inventory continued to dip this month, dropping to its lowest level since January 2005. Median prices increased again for both single-family homes and condominiums.
Read more in the full October 2016 Closed Sales Release.
Highlights from the release:
October single-family home sales went down -5.6% over last year. (4,596 sales in 2016 from 4,870 sales in October 2015)
October single-family median prices went up 5.7% year-over-year (to $354,000 in 2016 from $335,000 in October 2015)
October condo sales went down -5.8% and median prices went up 2.2% (to $325,000)
Inventory in October went down -32.7% to 16,418 and condominiums available down -28.7% to 4,431
SF listings added to the market in October went down -11.5% over last year. (5,740 from 6,485 in 2015)
Condo listings added to the market went down -8.0% over last year. (2,098 from 2,280 in 2015)
The Federal Housing Finance Agency (FHFA) announced today that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2017 will increase from $417,000 to $424,100. This increase is particularly important in high cost states such as Massachusetts where eight counties are considered by the FHFA to be “high-cost areas,” and will see additional loan limit increases as follows:
The increase in conforming loan limits is a long time coming, according to William Brown, the president of the National Association of Realtors®.
“Today’s conforming loan limit increase is a much-needed recognition of rising home prices in high-cost markets, and a help to first-time and lower-income borrowers looking to utilize an FHA mortgage,” Brown said. “Credit remains tight, but this decision will help more qualified buyers address the hurdles and high costs standing between them and the dream of homeownership.”
This heat map shows the conforming loan limit by county.
On Tuesday, November 22nd, 2016, the California Supreme Court issued its opinion on Horiike v. Coldwell Banker, which focused on the interpretation of the California dual agency statute, Civ. Code sec 2079.13(b). The court affirmed the appellate court’s opinion by holding that, pursuant to that statute, each of the salespeople involved in a dual agency transaction owe fiduciary duties to both the buyer and the seller. It is important to note that this decision is entirely based on the literal interpretation of the California agency statute and will have no effect on agency issues here in Massachusetts.
On November 8th 2016 Ballot Question #4, which will allow for the recreational use of marijuana, was passed by Massachusetts voters in a fairly wide margin of 54% to 46%. Under the new law, the use of marijuana for recreational purposes will be legal starting on December 15, 2016. However, the sale of the drug from regulated retail stores will not be permitted until the beginning of 2018. So how will this new law impact real estate? Here are a few considerations to keep in mind, but watch for more information from MAR on this issue in the coming weeks and months.
The first thing to consider is that although legal under state law, marijuana remains a Schedule 1 illegal substance under federal law. Up until this point the federal government has taken the position that it will not enforce federal law in those states that permit recreational marijuana usage. However, there is no guarantee that they will keep this position in the future as more and more states change their laws to allow for the use of marijuana.
How will the legalization of recreational marijuana affect landlord-tenant relationships and the rights of each party? As written, the law will allow for landlords to prohibit the smoking of marijuana on their property, but owners should be sure to check the language of their lease agreements to make sure the issue is covered. Just as a landlord may prohibit smoking of cigarettes in an apartment, they may also prohibit smoking of marijuana.
How will the new law affect residential transactions? Similar to the laws in Colorado and other states, the law will permit residents to cultivate a certain amount of the drug in their homes for personal use. This could potentially impact the homeowners insurance policy if there is a loss due to issues related to water damage, electrical fires and mold issues.
When listing a home where cultivation is occurring, it is prudent to have a conversation with the seller prior to any showings or open house. A seller should consider removing or relocating equipment during the listing period.
Finally, the new law provides cities and towns with some ability to regulate or prohibit the sale of marijuana at retail locations within their community.
It is likely that additional regulations will be enacted and changes to the law itself may be made by the legislature before 2018. This will hopefully provide some additional time to clarify some of the issues that relate directly to the real estate industry.
The number of homes put under agreement in October were up 15 percent from last year. Condominium pending sales were also up almost nine percent as prices for both property types continue to go up. The strong market was reflected in high Realtor® Market Confidence Index, while the Price Confidence Index remained essentially the same over last year.
October Pending Sales:
Pending sales have been up 43 of last 44 months
Pending sales have been up for 13 of last 14 months
Realtor® Market and Price Confidence Indexes:
The Realtor® Market Confidence Index was up for the 18th straight month
The Realtor® Price Confidence Index was down or essentially flat for the eighth time in 13 months
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
October 9th-15th was Fire Prevention Week and this year’s theme was Don’t Wait, Check the Date! Replace Smoke Alarms Every 10 Years. This is also a good time to review the new Fire Prevention Regulations that are set to take effect on December 1st. The new regulations will amend the Fire Code and apply to any newly installed smoke detector. Because this is a change to the Code, homeowners will only be required to replace existing battery powered smoke alarms in pre-1975 buildings when the existing smoke alarm expires or is no longer operable. This may provide Realtors® with a good opportunity to reach out to homeowners and alert them to the coming changes so they can use the proper replacement when their current alarms expire. For additional information, please click here for a copy of the comments MAR provided or here for the Department of Fire Safety website.