By RE/MAX of New England – Last updated: Tuesday, May 8, 2012
Longer days and warmer weather aren’t the only reasons to celebrate right now. Recent news continues to reinforce that the housing market in New England is improving, and just as important, there are several positive signs on the national front which should encourage buyers, sellers, and agents alike.
According to our latest RE/MAX of New England Monthly Housing Report for March, home sales were up dramatically. Each state posted double digit gains in year-over-year home sales. Rhode Island led the way with a 25.6% increase, followed by Vermont at a 25% year-over-year increase. Connecticut (up 15.4%), Massachusetts (up 14.3%), New Hampshire (up 12.3%) and Maine (up 12.1%) also posted exciting gains as well.
While home sales have been strong since the fall, it is even more encouraging to see that home prices are beginning to stabilize. In fact, in March, Maine and Massachusetts both experienced a slight uptick in median sales price, up 1.1% and 0.5% respectively. It is a trend being played out on the national level as well. According to The National Association of Realtors®, median sales price increased 2.5% in the U.S. in March 2012 compared to March 2011.
Stable prices are the next piece to fall into place in the housing recovery. As strong sales continue throughout the rest of this spring and this year, excess inventory will continue to be depleted. Prices will stop declining, begin holding steady, and eventually, they will ever so slowly begin to rise again.
The key to this entire formula is for buyers and sellers to remain active, and they certainly have good reason to. Interest rates remain at or near historic lows, and unemployment continues to decline in most communities. Buyers and sellers should also be confident that the economic recovery is not going to take a step back. Just last week, Abby Joseph Cohen, the Chief Equity Strategist for Goldman Sachs, said the investment powerhouse fully believes we will not slip back into another recession in the near future.
The Federal Reserve, which has long recognized that a robust economy is supported by a vibrant housing market, is also rolling out a new program in June which aims to speed up the short sale process. The ultimate goal is to help families shed mortgage debt and avoid foreclosure, while at the same time accelerating the pace at which this block of inventory moves.
Anyone who has ever dealt with a short sale before is well aware of the snail’s pace the process can move at. Buyers and sellers can go months without a response from the bank, only to find out their offer has been rejected.
According to the Boston Herald, the new policy will require banks respond to short sale requests within 30 days if it is owned or securitized by Fannie Mae or Freddie Mac. After 30 days, the bank must provide weekly updates explaining what is behind the delay. Final decisions are required within 60 days and banks that fail to comply will face fines and other penalties.
This new policy is sure to help make the short sale process more transparent, and will hopefully encourage buyers not to rule out this type of transaction because of the uncertainty usually associated with it.
As the government continues to adjust its housing policies to continue to make it easier for qualified borrowers to purchase a home – whether it is a short sale, foreclosure, or regular transaction —
this year’s spring housing market is shaping up to be one of the most active in recent memory thanks to an improving economy and the return of consumer confidence. Best of all, many of the indicators of a long-term, meaningful housing recovery are present, which should give buyers and sellers alike renewed confidence in the real estate market.