Doing the Numbers: 4th Quarter 2010 and 2011 Outlook

January 14, 2011

2010 has come to and end and so has a tumultuous year in real estate. The market held steady the first half of the year due to the extension of the homebuyer tax credit. A combination of extremely low interest rates and the tax extension deadline positively impacted single-family home sales and prices across the northeast.

As many analysts predicted, the second half of 2010 saw a dip, bringing the real estate industry back to reality. Although mortgage rates fell to historic lows-you could get a 15-year FRM at 3.5 percent and a 30-year FRM at close to 4 percent-low consumer confidence and a stubbornly sluggish job market decreased demand for housing. In addition, the high amount of foreclosures continued to put a question mark on the outlook for housing. According to a report by the Mortgage Bankers Association, “Headwinds from defaults and a rising rate of new foreclosure applications keep the housing outlook muddied.”

However, amidst some of the adverse rhetoric on real estate, the 4^th quarter showed parts of the northeast faring better than expected compared to same time last year when looking at some key market indicators, such as average sales price. Below is a breakdown of these numbers:

AVERAGE SALES PRICE

Single Family

CT – up by 8.4%

MA- up by 4.9%

RI- up by 16%

Westchester County- down by .2%

Condo

CT- up by 7.2

MA- up by 13.3%

RI- up by 14.5%

Westchester County- up by 4.6%

UNIT SALES

Single Family

CT- down by 23.1%

MA- down by 20.5%

RI- down by 27 %

Westchester County- down by 19.9%

Condo

CT- down 36%

MA- down by 27.3%

RI- down by 32 %

DAYS ON MARKET

Single Family

CT- up by 8.8%

MA- up by 22%

RI- up by 16%

Westchester County- down by 1.3%

Condo

CT- up by 11%

MA- up by 15.7%

RI- up by 8.2%

Westchester County- up by 4.7%

Average sales prices are up across the board in the northeast, however, other indicators are mixed. Here are some key points to be aware of in the market for 2011:

The Federal Reserve’s purchase of 600 billion dollars of treasury securities will help keep interest rates low and prop up the market
Interest rates are still at historic lows…still a great time to buy
Consumer confidence is on a general rising pace-consumers are starting to pull out their wallets again According to a study by RBS Economics Research, 2010 saw the best holiday season for retailers in 5 years
Other major economic indicators are positive. For example, the stock market is seeing a robust increase for the beginning of 2011. According to the New York Times, “the first day of trading (in 2011) saw the market reach its highest levels since 2008”

If you’d like to know more about how your town fared this quarter and year-to-date, visit raveis.com’s local housing data matrix. Click on the charts below to see more detailed data for parts of the northeast. And let us know if these numbers accurately reflect what’s happening in your market!