REALTORS® feel interest rates will trend up over the next 12 months
WALTHAM, Mass. – June 14, 2011 – The Massachusetts Association of REALTORS® (MAR) today announced that REALTOR® members are less confident about the market in May than they were in April according to the most recent REALTOR® Market Index. The May REALTOR® Price Index (RPI) was down from April, but was up slightly from the same time last year. While interest rates remain low, REALTORS® anticipate rates heading up over the next 12 months.
“We continue to see buyers in the market who are looking, but holding off on making serious offers,” said 2011 MAR President Laurie Cadigan, broker/owner of Barrett & Company in Concord. “For the time being interest rates continue to decline and hopefully qualified buyers will take advantage of that trend to get into a home that is right for them.”
In May 2011, the REALTOR® Market Index was 28.00, which was down 7.52 percent from the April 2011 score of 30.28. This is the second straight month-to-month decrease. On an annual basis, the May RMI was down 29.10 percent from the 39.49 score in May 2010. This is the 12th straight month that the year-over-year RMI has gone down. Measured on a 100-point scale, a score of 50 is the midpoint between a “strong” (100 points) and a “weak” (0 points) market condition.
In May 2011, the REALTOR® Price Index was 38.89, which is down 20 percent from the April 2011 RPI of 48.64. On an annual basis, the RPI was up 1.3 percent from the May 2010 RPI of 38.38. This is the first year-over-year increase since June 2010.
When REALTOR® members were asked about what they thought was going to happen with interest rates in the next 12 months, 67 percent responded that rates would either increase significantly (1 percent) or increase slightly (66 percent). Twenty-nine percent thought interest rates would stay the same and four percent thought interest rates would drop slightly. None of the respondents thought interest rates would drop significantly in the next 12 months.
About the REALTOR® Index Methodology:
The Massachusetts REALTOR® Market Index (RMI) and Price Index (RPI) are based on monthly responses from a random sampling of Massachusetts Association of REALTORS® members on the state of the housing market. More specifically, the survey asks members two basic questions pertaining to the real estate business in their market area in Massachusetts.
1. How would you describe the current housing market?
2. What are your expectations of home prices over the next year?
In addition to these standard questions, the survey each month includes one wildcard question that changes each month and is based on an industry hot topic.
The RMI is calculated in the following way. Respondents indicate whether conditions are, or are expected to be “strong” (100 points), “moderate” (50 points), and “weak” (0 points). The results are the average score for each question. A score of 50 is the threshold between a “strong” and a “weak” condition. Similarly, the question about home prices over the next year (REALTOR® Price Index) is calculated using five categories: “Rise 0-5%” (75 points), “Rise 5%+” (100 points), “Level” (50 points), “Fall 0-5%” (25 points), and “Fall >5%” (0 points).
About the Massachusetts Association of REALTORS®:
Organized in 1924, the Massachusetts Association of REALTORS® is a professional trade organization with more than 19,000 members. The term REALTOR® is registered as the exclusive designation of members of the National Association of REALTORS® who subscribe to a strict code of ethics and enjoy continuing education programs.
Editors and reporters: Please note that the term Realtor is properly spelled with an initial capital “R”, per the Associated Press Stylebook.