REALTOR® members feel ‘Qualified Residential Mortgage’ requirement would have significant negative impact on market
WALTHAM, Mass. – July 20, 2011 – The Massachusetts Association of REALTORS® (MAR) today announced that for the first time in 12 months REALTOR® members are feeling better about the Massachusetts real estate market in June compared to the same time last year. The June REALTOR® Price Index (RPI) was down from June 2010, when confidence was high because of the home buyer tax credit. REALTOR® members are very concerned about the impact a 20 percent downpayment requirement being proposed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“We are pleased to see that REALTORS® who responded to the monthly survey felt better about the market than they did in June of last year,” said 2011 MAR President Laurie Cadigan, broker/owner of Barrett & Company in Concord. “The drop in the REALTOR® Price Index was understandable this June as there was a run-up in prices as home buyer tax credit came to an end in June 2010.”
In June 2011, the REALTOR® Market Index was 29.17, which was up 2.8 percent from the June 2010 score of 28.36. This is the first year-over-year increase since May 2010. On a month-to-month basis, the June RMI was up 4.2 percent from the 28.00 score in May 2011. 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 June 2011, the REALTOR® Price Index was 38.30, which was down 18.2 percent from the June 2010 RPI of 46.85. On a month-to-month basis, the RPI was down 1.5 percent from the May 2011 RPI of 38.89.
When REALTOR® members were asked about what type of impact a proposed 20 percent downpayment requirement to obtain a “qualified residential mortgage” (QRM) would have (as proposal within Dodd-Frank bill), 96 percent responded that it would have either a slight negative impact (6 percent) or significant negative impact (86 percent), with four percent responding with comments such as “Would effectively shut down home sales,” or “It would be a disaster.” Five percent of the members responded that it would have a significant positive impact, while no members said it would have a “slight positive impact” or “no impact.”
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.