We have all heard that real estate is local. This couldn't be truer with the last few years of the national housing crisis. National media have been constant about how far the mortgage and housing crisis has affected every part of the economy. For the most part, their message is with a very broad stroke with national statistics and trends to satisfy a large audience (sometimes highlighting Las Vegas, Florida or Detroit to exaggerate the point). I am not belittling the crisis, but how is Newburyport doing?
An interesting reference point ... The first residential property to ever break the $1 million mark in Newburyport was 51 High St. for $1,125,000 back in January 2001. It had started out at $1.4 million and took 194 days to sell. That same property with only some minor cosmetic changes sold for $1,650,000 in January 2012. This time, it was only on the market for 35 days, a nice 46 percent return on investment.
In that same time period of 11 years, there have been 75 residential transactions that have closed for over $1 million; 14 that had multiple transactions (sold twice), with nine of the 14 actually losing money (one as much as 19 percent). So, even the high end is not immune to the housing downfall. Timing is everything.
Generally speaking, Newburyport saw the peak in sales price in 2005, as did the rest of the country and state. But what we have experienced is not nearly as much of a drop in values, and, actually, they now are very close to our 2004 prices. Since 2004, the state has seen seven consecutive years in declining sales volume. The year 2011 was 45 percent off its 2004 high, whereas Newburyport was off 37 percent from its high; and we hit the bottom in 2009, both in number of sales and median price (the local condo market fared slightly better until last year, when the bottom dropped).
The sales numbers are still dismal, but enough time has passed now to say objectively that the single-family market bottomed out two years ago; it's the condo market that needs to improve before we can say that we are completely in a recovery.
Both nationally and locally, the ingredients are all there to say that we are over the hump of the poor housing market. Interest rates are low and will remain low; banks are beginning to loosen their stringent credit policies; the recent Greek austerity conclusion should help the international climate (there was much more concern on this point in Washington and Wall Street than we may ever know); the recent $25-plus billion mortgage settlement should pump money back into the economy (on a side note here ... this settlement is a slap on the wrist compared to the real trillion-dollar loss that the poor mortgage policies created); and the lower than normal inventory combined with the mild winter should all contribute to start a robust 2012.
The only unknown is will the consumer have the confidence needed to pull the trigger? Shortly after a recession, even though markets may rise, the memories of buyers tend to be short, leading to conservative investing. But the Newburyport real estate market should do fine; we are a destination, and history shows that we have pulled out better than the rest of the state. It's the buyers from 2004 to 2007 who need to have a little more patience.
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Bill Barrows has been a local Realtor for 20 years. He can be reached at firstname.lastname@example.org.