Short sales and low interest mortgage rates influence Boston real estate surge
Real estate in Boston, MA, continued to show signs of marked recovery in March 2012. However, buyers all across Massachusetts have benefited from low mortgage interest rates and affordable housing costs.
Throughout the commonwealth, agents sold approximately 2,791 single-family homes in March 2012, an increase of 18.4 percent from a year ago, according to the Boston Business Journal. The increase in sales could be directly related to the falling median sale price in the state, which declined from $275,000 in March 2011 to $267,000 last month, the source reports. Nearly half of the homes sold were priced from $50,000 to $299,999, indicating homebuyers are taking advantage of the lowest prices seen in several years.
The Greater Boston area has also shown steady improvements. The Standard & Poor's (S&P) Case-Shiller Index figure for home prices in this metro is 48.46 higher in January 2012 than it was in January 2000. Data is based on multiple sales of the same properties, and if transactions continue to increase in the Hub, median prices will eventually rise.
Many real estate experts believe the surging sales are in direct relation to low interest rates and banks increasing short sales in the area.
The average rate for a 30-year fixed-rate mortgage in March 2012 was 3.95 percent, according to Freddie Mac. That low number is expected to rise over the course of 2012, reaching 4.5 percent by the end of the year. Prospective homebuyers who plan to invest in property this year may want to act fast before interest rates continue to increase.
In addition to low mortgage rates, banks are agreeing to more short sales in 2012 as an alternative to rampant foreclosures, according to NECN. Banks have agreed to let homeowners who owe more on their mortgages than the worth of their properties sell to new buyers. This causes banks to write off significant amounts of money, while avoiding the economic hardships that come with seizing properties through the foreclosure process.
Short sales were up in the United States by 33 percent in January 2012, NECN reports. This number is the most in any quarter since 2009, and the increase in short sales were even more noticeable in New England. Massachusetts experienced an uptick in short sales of 51.9 percent, while the Greater Boston metro area saw a 46.2 percent rise.
Homebuyers in the city of Boston may be able to find affordable deals on land that is likely to appreciate in value in the coming months. The market is showing signs of improved life, and the time to buy in the Hub is now.