Prediction Time: What does the Future Hold for Massachusetts Real Estate in 2012?

 

Each Year, I try to do a Prediction for my regular readers. Last years predictions got viewed 117 times, not to bad for a random post.

 

A Note about all Predictions

First: Remember to read the parable of the Zen Master and the Boy.

 

Make your own Predictions! You could get $50

Second: Before reading below, take a chance at winning $50 by making your own news years predictions here! No peeking! Winner chosen at Random.

 

What about 2011?

Third: How did last years predictions turn out? Here they are:

 

1. Housing transaction volume will be up, slightly, in Massachusetts.

Hooray for me! Looks like I've got this on in the bag. Last years's SF transactions in MA - 37,236. This years, through November, 35725. That's a difference of 1,511 for an EVEN year, so we'll need 2500 or so necessary for that to be true, which we should do easily. (2500 would be up 3%).

 

2. Prices will be up, 2-4%

Swing and Miss here. Prices, as far as I can tell, are flat. (Why don't I know? There's no good way to measure them, but I'll have a fix for that next year, I think.) They might have gone up 1-2% in some markets in the spring, but gave some back in the fall. I think some towns did manage to hold on to their price increases, some may have seen more weakness. But it's not a big move either way, certainly not 3%. What went wrong? Well, it wasn't interest rates. They should have helped, but I think they are so low that you just can't get much more push out of them. It's likely that jobs didn't improve enough, fast enough, or consumer confidence didn't get high enough, fast enough (they are both pretty intertwined). Either way, there was certainly price PRESSURE in a number of markets (over half) but not enough to move the pile.

 

3. The spring and the fall markets will be more even this year, resulting in disappointing stats in the first half, but encouraging ones in the second half.

Ok, two out of three ain't bad. The year-over-year numbers in the second half were a double-digit improvement for five months in a row, and December should make it six. Give the man a cigar!

 

2012 Predictions for Real Estate In Massachusetts

Well, I'm swamped with buyers at the moment, many very frustrated at the inventory of what's out there. (Inventory is down 10% from November 2010- that's a lot when buyers are increasing.) I don't really think there's going to be much more property than last year to choose from, so:

 

1. Housing Transaction Volume will be up, slightly. No real change in how many people can sell just yet will keep a lid on volumes.

2. Prices will be up 2-4%. Because of 1, price pressures finally break through and we see a rise. Small, but it'll be there.

3. Rates rise, but not much. Say good-bye to the 3.99 or 3.85 that some of you were lucky to get. If the economy picks up significant steam, we'll see rates go up. Now, Europe is a mess, and everytime the news is bad in Europe everybody and their sister buys US Treasuries and rates fall. And Europe isn't getting cleaned up in a month or two, the bad news is going to be kicking around all year, I suspect. But with so many people already owning Treasuries, it will take very little additional Geo-Political improvement to get people selling Treasuries (especially since they pay you 2% at the moment). So, I figure once the high 3's are gone, they're gone for good, but we'll stay under 5 by year end.

 

*All quoted data from MAR

 

 

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Matt Heisler