May median home prices up as sales volume down in Massachusetts: proposed ‘QRM’ definition also troubling

Today we issued our May 2011 housing data and sales of both single-family homes and condos were down compared to the same time last year. While sales were down, median prices for both single-family homes and condos were up compared to the year before and from April. Month-to-month sales were up, which is typical from April to May.

If sales being down wasn’t challenging enough, we are concerned about a provision being considered by regulators as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposed provision would define a “Qualified Residential Mortgage” (QRM) as any loan that has at least 20% down. There’s more, keep reading…

What does this means in practical terms? Let’s say you have very good credit with no debt, a good job and some savings.  And let’s say you are interested in buying a home (the median price of  a single-family home this month is $300,375). Under this provision being considered by banking regulators, in order to get a loan with the best rate, you’d have to come up with a 20% downpayment or approximately $60,000. If you couldn’t come up with that money, or didn’t want to become house poor, it is anticipated that a loan could cost you up to an extra 2 and 1/4 percent.  In addition to making it more difficult and expensive to buy a home, the provision could also severely impact any housing recovery.

There is a lot to this and we suggest that you read more about the “QRM’ by going to

Click the link to see the May 2011 Housing Release and listen to the monthly podcast with MAR President-elect Trisha McCarthy.

Highlights from the release:

  • Single-family home sales were down 16.9% compared to last year.
  • Single-family median prices were up 0.5%
  • Condo sales were down 20.8% compared to the same time last year.
  • The median price for a condo was up 7.3% compared to last year.