About the Real Estate Market

2012 1st Quarter Market Commentary: The market at-a-glance shows inventory that has settled, sales transactions that are modestly rising and residential homes currently under agreement outpacing the same time last year. The improvements are modest, but real and bode well for continued improvements in our housing market. The home sales show most affordable prices, combined with most affordable interest rates. The combination of these two things makes it very beneficial for people who are in the market to buy.

Statewide data reports show improving unemployment rates, and are predicting favorable buying conditions and slow, but steadily growing consumer confidence in 2012, leading to positive year ahead.

Jobs Impact of an Existing Home Purchase

The National Association of Realtors® estimates that one job is generated for every two home sales. Using that ratio, 1,000 home sales generate 500 jobs. The ratio is derived from the economic impact of an existing home sale. Each home sale contributes about sixty thousand dollars to the economy or Gross Domestic Product (GDP). The component measures of this figure are shown in the table below (full methodology page available).

Impact of Single Existing Home Purchase

Median Price $173,000

GDP can be measured in three ways, one of which is the sum of all income1. Using the income concept and comparing GDP2 to the number of payroll workers in the US3, we find that the average income per employee was $113,000 in 2010.

This is an over-estimation of salary income since income can be earned from profits, rents, and other sources, however this gives us a ceiling to earnings per worker. Survey data show that full time US workers earned a median of $42,400 and average of $57, 4004 in 2009.

Putting these figures together reveals that every two home sales generate one job.

Town Highlights in Residential Home Sales:

• Adams, North Adams, Richmond, Dalton, Stockbridge, Otis and Lee showed double digit improvements over the first quarter of last year.

• Pittsfield increased the total number of homes sold, but recorded a decrease in the dollar volume transacted – prices of those sold were down / homes in lower price brackets accounted for the sales.

• Great Barrington and Lenox both were down 1 home sold from the previous quarter, but both recorded increases in the total dollar volume transacted over the previous first quarter.

• Sheffield, Becket, Lanesboro and Hancock held their own in the first quarter, with no great changes from the previous year.

Residential Sales Summary: 1st Quarter of the Year: January-March Historical Comparison

• When reviewing 1st quarter sales over the past 10 years, Central County’s residential sales reached their highest levels in 2006, with a dollar volume transacted of $24.6 million and 120 homes sold. The lowest point in central home sales was in 2009, with only 9.37 million transacted and 63 sales. The first quarter of 2012, we see sales rise 14% from the 2011 rates, to $16.8 million and 89 transacted. This is the highest residential sales market in central Berkshire since 2008.
  

• Northern Berkshire residential sales high was in 2005, with $7.6 million in sales of 39 homes. The low was in 2008 with only $3.7 million in sales and 28 homes sold. The first quarter of 2012 shows a 15% gain over 2010 sales rates, with a total of $6.8 million transacted and 43 homes sold. This is the highest residential sales market in Northern Berkshire since 2007.
  

• In Southern Berkshire, residential sales reached an all-time high in 2006, with $43.3 million in the sale of 92 homes. The lowest point in southern Berkshire history was in 2009, when the sales dropped to $11.7 million and 37 homes sold in the first quarter. Currently, the 2012 1 st quarter sales are down from the previous year by 9% in southern Berkshire (less $2.5 million over 2011 sales) and 66 homes sold.
  

• Overall, the sales pace for the county continues to slowly and steadily improve, with an increase over last year’s figures of 1% and an increase of 16% in the total number of homes sold. This reflects the third consecutive year of growth in the residential sales market during the first quarter, over the low in 2009.

Condo Sales Summary: 1 st Quarter of the Year: January-March Historical Comparison

• Strong 1 st quarter, with large jump in dollar volume transacted and number transacted. Largest unit change since 2008 and 61.8% higher than 2011 in dollar volume. Still under market averages.

Multifamily Sales Summary: 1st Quarter of the Year: January-March Historical Comparison

• Sales continue to rally in central Berkshire in the multifamily market, with a 27% increase over last year in sales volume and 50% increase in the number of units transacted, up to 15 multifamily units sold in the three months of the 1 st quarter. 
  

• North county also saw a significant increase over the 1 st quarter of 2011, but that should be tempered with the fact that 2011 reflected a drastic decrease in their multifamily sales market.
  

• If looking solely at percentages, southern Berkshire saw a decrease in their multi-family market, but it should be understood that the typical 1 st quarter reports 1-3 sales in southern Berkshire to begin with.
  

• Overall, our dollar volume transacted of multifamily units is up 11.7% and the number of units transacted is up 64%. This the third consecutive year that gains were reported in the first quarter of the year, and is much needed in a market that peaked in 2005 and saw significant decreases since 2010.

Land Sales Summary: 1st Quarter of the Year: January-March Historical Comparison

• The signs of life in the land market in central Berkshire was greatly offset by decreases in the southern Berkshire and northern Berkshire markets. Sales in southern Berkshire land sales are the lowest in 10 years.

Inventory Report:

The far majority of Berkshire County residential sales are under $250K and we have decent inventory in that range. There is approximately 8.6 months of inventory, which is good. 7 months of inventory is considered a very balanced market.

The average price for the 976 active properties is $540,056.
• The highest price is $11,000,000.
• The median price is $325,000.
• The lowest price is $20,000.
• The average Market Time is 286 days.

The average price for the 107 pending properties is $236,566.
• The highest price is $2,950,000.
• The median price is $173,000.
• The lowest price is $40,900.
• The average Market Time is 152 days.

The average price for the 182 sold properties is $254,433.
• The highest price is $2,300,000.
• The median price is $165,000.
• The lowest price is $8,500.
• The average Market Time is 201 days.

• Getting approved for financing continues to be an issue. People in the past who would have received the best rates, are having difficulty getting approved for a loan today. While we don’t want to go back to the loose lending standards that got us into this situation, we’d like to see an easing of the requirements to get more qualified buyers into homes.  Local lenders are working with buyers to prepare and position them for a safe and sound buying experience and nationally many are reexamining the current regulations to find a healthy balance.

• Consumers continue to get mixed signals about buying a home, but we need to stick with the facts about the long-term value of homeownership and avoid unrealistic expectations about appreciation.  The Federal Reserve Survey of Consumer finances shows that over time, home owners accumulate significantly more net household wealth than renters.  The most recent periodic study in 2007 showed the median net wealth of home owners was $234,200, which is 46 times that of a renter’s net worth of $5,100.  Although there has been a loss of household equity since the most recent survey, it stabilized in 2010.

• Berkshire Realtor leadership recently had a major strategic planning session that identified ways we can help real estate buyers and sellers develop confidence about the stability in our market.  One of the major initiatives we are working on is the expansion of reliable, sound information and data about the housing market to help make consumers informed decisions.

• Our housing market differs from town-to-town and from tales you hear on the national news. It’s very important that buyers can look to their local Realtor to understand the “in the field’ market conditions, review sales and listing trend data to properly know the market, and access community and lending information to make sound decisions for their unique situation.  Much of this will be included on our revamped website,BerkshireRealtors.com, but Realtors throughout the county are the #1 best resource for that data right now.

2011 Overall Market 3-Year Comparison At-A-Glance