January 16, 2012
A slowly improving economy and low interest rates should be encouraging signs for growth in the Needham real estate market in 2012. Still, there are a few factors that could dampen one’s outlook. While we are certainly not economists, and do not pretend to be, it is apparent that rising energy prices, complications overseas and generally sluggish job and stock markets are impacting real estate markets throughout Massachusetts. Should these concerns change anything in our market here in Needham?
Since 2011 just ended, it seems relevant to examine Needham’s housing performance on an annual basis (based on MLS data); we choose to look at housing data over the last seven years. This window takes us back to 2005, which is around the time when most housing markets throughout the country began to shift downward. The figures in Needham suggest that the housing market here has been remarkably stable over this time period. From a dollar volume perspective, the market peaked in 2007 with over 370 homes selling, compared to a typical range of 275 to 300 sales, which encompassed the other years in our survey. Last year (2011) there were 281 homes that sold, which was slightly lower than in 2010 when 306 homes traded hands. Overall, the average sale price has remained relatively stable from 2005 to 2011; the average price was $811,702 in 2005, compared to small jump in 2011 to $818,141. It is noteworthy that the average sales price dipped to a low of $748,577 in 2007, but has steadily risen each year from 2008 to the current high in 2011. We did discover that it is taking longer to sell a home in Needham, though not in an overly alarming way. In 2011, the average days on market was 100, which is an increase from an average sales time of 90 days in 2010; the low was in 2005 at 62 days.
You may be asking – what does this all mean? Well, the data suggests that, in general, Needham homeowners that entered the market over the last seven years should feel confident that they made a smart investment in buying their home. Home prices continue to rise and overall transaction volume is steady. Currently, there are 103 homes listed for sale in Needham. Based on 2011 indicators, this is approximately a four-month supply of homes that the market needs to absorb in order to keep pace (with historical norms). This is a slightly elevated level, though it is not surprising given the time of year (winter season). The spring market in Needham will have its twists and turns, but as we have seen over the last seven years (and likely more), homes in Needham continue to hold up no matter what is occurring in the greater economy. While it remains important to realize that there are locational fundamentals that will dictate values in neighborhoods and that the market is not the same for all price points, it is clear that the fundamentals in the Needham housing market remained solid in 2011 and Needham is poised for continued growth.