Berkshire County, MA Market Watch Report, By Sandy Carroll

We’d like to share news about the current state of the Berkshire’s real estate market. Last year, the real estate market continued to settle since our all time record high of dollars transacted in 2005, and everyone has been trying to predict the exact “bottom of the market” to help made sound decisions.

Berkshire County, Massachusetts land, multi-family and residential sales showed strong numbers in the first quarter of 2011 compared with the previous year. This strong pace slowed in 2nd quarter of 2011, and all markets except commercial showed losses when compared to the 2nd Quarter in 2010. The 3rd quarter sales reflect another adjustment and rebound that helped make up the 2nd quarter lags, yet was not enough to boost overall year-to-date sales over 2010 in either dollar (down 6% overall) or units sold (down 3% overall)

Quick look Commentary about Specific Property Types

  • Commercial sales rose from the previous year, comparing sales from January – September of each year. The gains reported by local Realtors® for the commercial market are quite impressive, though may not indicate the entire market, as some transactions are handled outside of the MLS.
  • Condominium sales data reads like a roller coaster, with highs and lows and little in between. During the first and second quarter of this year, condo inventory was sky high and sales dropped dramatically over 2010 rates. The third quarter showed a hearty turn-around in sales activity, seeing a large jump in dollars transacted (8.1 million, up from 3.1 million) and a nice bump in the number of units sold. Inventory is still very high for the number of sales transacted in an average year, with over 49 months of condo inventory currently on the market. Compared to last year, condos reflect higher median sale prices, absorption rates and average days on the market….Pity that the sales volume and total # sold don’t show similar gains. Historical condo sales in Berkshire County reflect that the central Berkshire market currently lags from last year and is down 47% from its all time high in 2008. Northern Berkshire, the region with the most affordable condos, is down 82% over its high in 2007 and southern Berkshire, with the most expensive condos on the market is down 52% from all time high in 2005.
  • Land sales were meeting previous year rates during the first and second quarter of 2011, but the third quarter shows a slowing of both sales and dollar volume. Nationally, housing starts are stuck. Construction of new single-family units is flat and has been for the past year. Due to shifting demand, there is a national projection that apartment construction will rise 50% over the next year.
  • Multifamily sales are still struggling, from our all time highs in 2004 and 2005. After years of falling sales, we were hopeful that the year-end 2010 sales (92 sales compared to 98 in 2009) were an indication that the multifamily market was leveling off, and potentially starting to improve. Based on 3rd quarter sales, that isn’t quite a reality yet, with units and dollar volume down over the previous year. Pittsfield has year-to-date sales gains, as we projected. The recent General Dynamics employment announcement and expected influx of demand for desirable rental housing stock helped. Overall, the main multifamily markets in North Adams and Adams are keeping our sales down as they continue to struggle. The entire multi-family market has slowed to sales rates of 12-14 years ago (1997 # sold, 1999 $ volume).

Quick look Commentary about each Region / Area

  • Northern Berkshire: You go, Adams & North Adams. Sales in the first three quarters of 2011 outpaced the last 3 years in Adams. North Adams is showing gains from the previous 4 years! Clarksburg and Florida are continuing to struggle, but represent a very small market. In Williamstown, the total number sold is down year-to-date, but it is higher than transacted in 2009. Williamstown sales volume is also slow to catch up.
  • Central Berkshire: Cheshire , Windsor and Peru sales are fairly good overall, higher than the previous 2 years and reflecting a modest average sale price. Dalton, on the other hand, has slowed since last year and sales are at the lowest rates in over seven years. Hancock and Hinsdale are holding their own, and Pittsfield is steady – not showing a big increase or decrease. Given the market size of Pittsfield, this stability helps the overall market in the Berkshires. Richmond and Lanesboro both decreased in sales volume and number of units sold.
  • Southern Berkshire: Great Barrington, New Marlboro, Otis, Sandisfield, Sheffield and West Stockbridge all show remarkably steady improvements over the same time last year. Great Barrington dollar volume is the highest since 2006 rates. Stockbridge sales are better than 2009, but the momentum built in 2010 hasn’t been sustained in 2011 so far. That said, West Stockbridge outpaced the last two years, and is showing steady signs of improvement. Becket, Lee and Lenox show decreases year-to-date in sales compared to last year. Lenox did outpace 2009 rates, but not 2010 improvements. While overall southern Berkshire shows a decrease from the first 3 quarters of 2010 compared to 2011, sales volume, number of units sold and average selling price all rose from 2009 levels.

National Influences, In Brief

  • Freddie Mac released it’s U.S. Economic and Housing Market Outlook for October which showed demand for rental housing is on the rise and that the multifamily sector of the housing market is a strong positive signal for the U.S. Housing Industry. Apartment rents, which had been flat to falling in many projects during the 2008-2009 recession, have begun to rise, albeit slowly. New construction starts of apartments in buildings with at least 20 dwellings has picked up this year, and in the second quarter was the highest since the end of 2008.
  • The Census Bureau reported a net increase of 1.4 million households that moved into rental housing, a 4 percent rise in the number of tenant households in just one year. The U.S. homeownership rate has fallen about 1.5 percent over the past year (from 66.9 percent to 65.9 percent during the second quarter of 2011) with owner rates falling by 4.4 percent (to 21.9 percent) for those under 25 years of age and by 7 percent (to 34.7 percent) for those aged 25 to 29 years.
  • The historically low mortgage rates aren’t having much impact on sales. The rates are hovering around 4% for a 30-year fixed-rate loan and it is expected that they’ll stay close to that rate into mid-2012. With many banks are requiring a down payment of 20%, it is a high hurdle for some. Other would-be buyers are holding back, worried about another recession, job security or unexpected financial matter that would result in big drop in home prices.
  • The Bureau of Labor Statistics (BLS) revealed that 103,000 nonfarm payroll jobs were created in September. They also issued an upward revision of August 2011 job creation figure – from zero to 57,000. Good news! The September’s ADP report showed that employment increased among small businesses (less than 50 workers) and medium-sized businesses (50-to-499 workers), but declined in large businesses. (It’s important to remember that the ADP figure does not include government jobs.)
  • Trans Union released a report showing the national mortgage delinquency rate (the rate of borrowers 60 or more days past due) increased to 5.88 percent (from 5.82 percent in the 2nd quarter) during the third quarter of 2011, after falling in the previous quarter by the largest rate in two years. This is the first time mortgage delinquency rates have increased since the end of 2009.

Full Market Watch Report with Graphics and Data! (ebook/save to pdf)

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