Tuesday, August 29, 2017

Merrimack Valley Housing Report

The Merrimack Valley Housing Report is a monthly electronic newsletter on housing issues and trends in the Merrimack Valley. It is produced jointly by UMass Lowell and the Middlesex North Registry of Deeds. For a free subscription, email David Turcotte at David_Turcotte@uml.edu.

Back issues of the Report from 2008 through the end of 2016 are available in PDF form on the MVHR website.

Each month, I provide statistics on the number of deeds, mortgages, foreclosure deeds, orders of notice and total documents recorded in the Middlesex North District, and also contribute an article on a real estate-related issue. For example, the July 2017 edition, I provided a midyear review on the real estate market. Here is my article from July:

Midyear Real Estate Report
July 5, 2017

With July upon us, it is time to look at the performance of the Greater Lowell real estate market during the first half of 2017. Anecdotally, it is a great time to be selling a house. Every day there is another story of a residence that gets multiple offers for asking price or more the same day it hits the market. But beneath the day-to-day euphoria of the sellers’ market, there are some troubling indicators.

For the entire Middlesex North Registry of Deeds district—Billerica, Carlisle, Chelmsford, Dracut, Dunstable, Lowell, Tewksbury, Tyngsborough, Westford and Wilmington—the number of deeds recorded in the first half of 2017 was down 2 percent from the same six months in 2016; the number of mortgages was down 10 percent; and the number of all documents recorded was down 4 percent. For the city of Lowell itself, deeds were up 2 percent, mortgages down 5 percent, and overall documents recorded were the same.

One bright spot is that foreclosure related activity was also down. For the entire district, the number of foreclosure deeds recorded in the first half of 2017 was down 5 percent from the same time in 2016, and the number of orders of notice was down 37 percent.

Reflecting the rising home prices brought on by the sellers’ market, the median price on deeds for nine of the ten communities in the district was up from the 2016 median (Dracut’s median stayed the same). Lowell’s median deed price rose 4 percent from $229,700 in 2016 to $239,000 in the first half of 2017. For the same two periods, Billerica’s median rose 4 percent from $370,000 to $383,000; Chelmsford’s rose 5 percent from $330,000 to $345,750; Tewksbury’s rose 1 percent, from $354,950 to $360,000; Tyngsborough’s rose 6 percent from $315,000 to $332,450; Westford’s rose 14 percent from $403,000 to $460,000; and Wilington’s rose 9 percent from $403,500 to $440,000. (Carlisle’s rose 26 percent and Dunstable’s rose 14 percent, but because of the relatively small sample from those two communities, caution should be used in interpreting their numbers although clearly prices are rising in those two towns).

The mixed message being sent by the real estate market is reflected in the different categories of revenue collected by the registry of deeds during fiscal year 2017 (July 1, 2016 to June 30, 2017) when compared to fiscal year 2016 (July 1, 2015 to June 30, 2016). The total amount of revenue collected was about the same—$16,311,832 in FY17, and $16,248,951 in FY16. The amounts collected for document recording fees and for the Community Preservation Act surcharge were both up 5 percent: Recording fees rose from $4,793,135 in FY16 to $5,032,495 in FY17; and CPA surcharges rose from $1,137,860 in FY16 to $1,196,730 in FY17. However, the amounts collected for the deeds excise tax, which is calculated based on the sales price stated on a deed, declined by 8 percent, dropping from $10,487,920 in FY16 to $9,724,776 in FY17. So even though the median price of properties sold has risen, the number of transactions declined which led to the loss in deeds excise tax revenue.

Looking forward to the second half of 2017, there are some positive signs. With prices rising, more and more people who have been underwater on their mortgages since they bought or refinanced at the height of the boom should now have some equity in their homes. This will allow more owners to put their properties on the market in pursuit of the high prices now being obtained. Still, when you sell one house, you have to buy another, so it is unlikely that there will be a sudden glut of homes on the market. Most likely, the next six months will feature a slow, steady rise in prices with an equally slow decline in the number of properties facing foreclosure.

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