75 percent of respondents had sales with FHA financing in past year
WALTHAM, Mass. – December 13, 2011 – The Massachusetts Association of REALTORS® (MAR) today announced that for the fourth straight month, REALTOR® confidence in the real estate market has gone up compared to the same time last year according to the November 2011 REALTOR® Market Index. The REALTOR® Price Index (RPI) in November was down from last year. Seventy-five percent of REALTORS® responded that they were involved with a transaction in the last 12 months that included FHA financing.
“It makes sense that as the number of sales goes up each month our members’ confidence in the market goes up as well. These REALTORS® reflect the attitude of buyers and sellers in the marketplace,” said 2011 MAR President Laurie Cadigan, broker-owner of Barrett & Company in Concord. “Now that Congress has re-instated the increased FHA loan limits, we’ll see continued growth of the mortgage product in a high-cost state like Massachusetts.”
In November 2011, the REALTOR® Market Index was 25.24, which was up 36 percent from the November 2010 score of 18.56. This is the fourth straight month of year-over-year increases since February-May 2010. On a month-to-month basis, the November RMI was down 2.45 percent from the 25.88 score in October 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.
The REALTOR® Price Index was 44.29 in November, which was down 1.02 percent from the November 2010 RPI of 44.74. On a month-to-month basis, the RPI was up 1.22 percent from the October 2011 RPI of 43.75.
REALTOR® members were asked in November about the number transactions in the last 12 months they were involved with (either buyer or seller side) that included FHA (Federal Housing Administration) financing. Fifty-four percent responded that either 1-2 transactions (29%) or 3-5 transactions (25%) include FHA financing. Ten percent responded that 5-10 of their transactions included FHA financing, while 11 percent indicated that over 10 of their transactions included FHA financing. Twenty-six percent responded that none of their transactions included FHA financing.
Going forward, 49 percent of survey respondents do not predict an increase in FHA loan use, while 47 percent see increased (40%) or a significant increase (7%) in the program. Five percent of those answering predict either a decrease (3%) or significant decrease (2%) in the use of the program over the next year.
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.