With rising interest rates, and housing appreciation of over 70% over the last 4 years, the Massachusetts housing market is slowing down.
Massachusetts’ five-year housing boom, which lifted the average home price by 71 percent and bolstered the local economy, is over, according to homeowners and real estate agents.
Rising mortgage costs, an outgrowth of 12 consecutive interest-rate increases by the Federal Reserve since June 2004, have cooled demand, they said. Prices have dipped and sellers are rushing into the market even as weekend “open houses” attract few prospective buyers.
Here is the scary part of the story.
In Massachusetts, equity cash-outs jumped to 14 percent of residents’ disposable income in 2004 from 4 percent in 2001, according to Moody’s Economy.com, a forecasting firm in West Chester, Pennsylvania. Employment tied to real estate gained 4 percent, compared with a 5 percent decline in jobs overall. via Bloomberg
If this is the case, we are looking at a potential bloodbath in Massachusetts as there will be panic selling when the income is not there that had previously come from equity. I have downplayed many of the bubble bloggers who are looking for a bloodbath, but if there is panic selling due to income concerns, they may be correct.
Yikes
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Great research! I linked to it on my blog. As an RE investor in Massachusetts I am waiting for the upcoming crash…it is only a matter of time now.
I think right now any drop in the housing market is no surprise. What we need to do is stimulate the economy to stimulate the housing market. But that’s common sense. Easier said than done, right!?
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