As experts look forward, we’re projected to sell even more in the coming year. Below are the transaction forecasts from Fannie, from NAR, and from MBA, each one of them having more sales this year than we had last year during the pandemic.

Now, what’s the story here? The 2020 market is really setting up the 2021 market.

Interest rates are something certainly that all of us are wondering about and talking about. This graph is the latest look of projections from Freddie Mac on the 30-year fixed rate. 

What’s different this time? We’re starting to see that rise and as we go through the year, we could be seeing it rise up even more as the economy starts to improve. The reality right now is that we are forecasting and by looking at experts, that we’re going to be in a good rate environment in 2021. Certainly, in the low threes, whether that’s 3.2%, 3.5% or whatever forecasters continue to say throughout the year.

Historically speaking, as we can see here, in a very advantageous interest rate market going forth this year and that’s going to cause more people to say, now is the time. 

There is no doubt that affordability will be eaten into as rates rise and as prices rise. “Rising interest rates reduce house buying power and affordability, but are often a sign of a strong economy, which increases home buyer demand. By any historic standard, today’s mortgage rates remain historically low and will continue to boost house buying power and keep purchase demand robust.” - Mark Fleming, Chief Economist at First American

Historically speaking, a rising rate environment is signaling a better and improving economy. The gift of an economic slowdown is that we see the fed working and the federal government working to help lower home loan rates by the levers they have, to help spur the economy forward. They know the economy will not recover until housing recovers.

If we look at what experts are saying, this is the latest rate projects going all the way through the first quarter of 2022 and you can see there’s a range there. 3.1 on the low side, 3.55 on the high side. Altogether showing this environment that we believe is going to be a very, very good rate environment.

So, what are experts saying right now? More inventory is going to come back to market as people feel more comfortable. Does it mean it’s not going to happen on the front end of this year? Experts say some people will feel comfortable listing on the front half of this year. Probably more in the second half of the year, and then even going into the spring of next year we’ll see even more people feel comfortable for that

Forecasters are saying, we’re going to sell 5% more homes this year than we did in the prior year and last year we sold more than the year before. Let’s look real quick at where we sit right now; this graph is a look at month’s supply of inventory going all the way back to September 2019. As of December, 1.9 months of active inventory across the country. Now, to put this into perspective, last December we had 3.6 months of inventory across the country. Even then we were back in a market that was inventory deprived. We had an inventory challenge. And even more of an inventory challenge where we sit today, due to all of the things that we know happened in 2020.

This is coming from the MBA. It’s the most recent information from June 1st to January 21st of this year.  This is what’s happening from people that are coming out of forbearance. 

First of all, about 2.7 million people in active forbearance right now, those that have come off, this is what’s happened. 51.7% are in that green portion of the pie - meaning they’ve made their monthly payments. They either paid off their loan through a refinance or sold the home, or paid it off and past due payments who are brought current. Many of these people are folks who ultimately may not have needed to take forbearance but did so out of precaution.

33%, one third, are in some form of work out or repayment plan. This is a loan modification, this is a loan deferral. We’re going to tack the missing payments or make up payments on the back end of the loan. We’re going to do a rate and term refi, whatever the case may be. One out of three, a significant portion of folks in this category. The bank’s are actively working with those folks to help them find a plan that works for them. 

15.3% right now are still in trouble. These are people that don’t have a loss mitigation plan and now are delinquent. These are ones that have already started a short sale, some sort of distress sale, deed in lieu, all of those things. Those are the ones that could turn into a foreclosure at some point.  Those are the ones that are at risk.

The next topic we're going to talk about is affordability in today’s market.  Affordability is very much driving the demand side of everything that we do.  We use NAR’s Housing Affordability Index, if you remember this. The index - the higher it is, the more affordable a home is.  Where do we sit today? We sit at 168.2, the blue bar in the housing affordability index. We always reference the years when distressed properties dominated the market because of it’s extreme affordability. People might think well, homes aren’t as affordable as they were ten years ago. Well, there’s an element of truth to that, but let’s not miss the fact that we’re more affordable today than we were in the last couple of years in the housing crisis and much more affordable than 2008 and prior.

The next piece of this is, the typical mortgage payment for an individual as adjusted by inflation, and that today sits at $826. A better rate than any time except for January 2012, which if you look at a map of the crisis, the bottom of the housing crash was around January, February of 2012 and homes were extremely, extremely affordable then. Today we’re more affordable than 2018, 2019, going all the way back to 2000. Certainly more affordable than that. Very much more affordable than 2006.

In the Town of Plymouth, home sales decreased from 95 sales in December as we began the new year. The Average Days on Market decreased by nearly 50% slightly while the the Average Sale Price has remained at $541k over the last two months.

In the Town of Scituate, the Average Sale Price remains in the $700k bracket however it has increased by $70k. Home sales decreased in January, down from 37 homes sold in December.

In the Town of Kingston, the number of new offerings has increased slightly vs. the 3 homes available in December. The number of homes sold is remaining consistent month over month and the Average Sale Prices have remained consistent in the mid-$500K range. 

In the Town of Norwell, the Average Days on Market have decreased from 51 days in December to just 12 in January showing that homes were spending much less time on the market. There is limited inventory in many towns, including Norwell however the number remains consistent month over month. The number of homes sold remain consistent and the Average Sale Price decreased out of the million dollar bracket significantly in January.

In the Town of Hanover, the number of homes sold remained consistent at 10 homes from December to January. The Average Days on Market has decreased and the Average Sale price has increased by $135,000.

In the Town of Hull, the number of homes sold remained consistent throughout the last 3 months. Homes entering the market have remained consistent and there is still a limited amount of  available inventory.

The Average Days on Market have dramatically decreased from around 80-90 days over the last few months to only 13 days in January.  Similarly,  the Average Sale Price has also decreased significantly in January.

In the Town of Sandwich, the Average Days on Market increased while the number of homes sold dropped from 37 in December to 19 in the month of January. Inventory remains fairly consistent with only a slight decrease in available homes for sale. 

In the Town of Falmouth, the Average Sale Price has decreased from $955K in December back to sale prices seen in October/November of last year.  With limited inventory in most towns, there are still plenty of new homes entering the market as we moved through the month of January, more than most other towns were able to say. The number of homes sold has decreased although not drastically month over month.

In the Town of Yarmouth Port, property sales have decreased slightly since December.  The Average Days on Market decreased as well while more homes also entered the market in the month of January.