Price difference between home heating fuels had various impacts on buyers and sellers
WALTHAM, Mass. – January 15, 2013 – The Massachusetts Association of REALTORS® (MAR) reported today that REALTORS® maintained their confidence in the overall real estate market in December and throughout 2012 according to the latest *REALTOR® Market Confidence Index (RMCI). The *REALTOR® Price Confidence Index (RPCI) also hit its all-time high in December. REALTOR®-members when asked also reported their buyer and seller clients have various opinions about the impact of price differences in home heating fuels (oil vs. nat. gas) when it came to buying and selling.
“REALTOR®-members positive attitude about the real estate market and home prices consistently increased over the course of 2012,” said 2013 MAR President Kimberly Allard-Moccia, broker-owner of Century21 Professionals in Braintree. “Many challenges occurred that had the potential to knock one’s confidence, but the high index is a testament to our members and their clients who continued to believe in the real estate market and its ongoing recovery.”
In December 2012, the REALTOR® Market Confidence Index was 57.47, which was up 103 percent from the December 2011 score of 28.28. This is the 17th straight month of year-over-year increases and the ninth straight month over the 50-point mark. On a month-to-month basis, the December RMCI was essentially flat (up 0.28 percent) from the 57.31 score in November 2012. 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 Confidence Index was 72.71 in December, which was an all-time high and the first time the RPCI went over the 70-point mark. The December index was up 50 percent from the December 2011 RPCI of 48.51. This is the 11th straight month of year-over-year increases and the eighth straight month the RPCI has been over the 60-point mark. On a month-to-month basis, the RPCI was UP eight percent from the November 2012 RPCI of 67.54.
REALTOR®-members were asked what impact the price difference between heating a home with heating oil (more expensive) vs. natural gas (less expensive) had on their buyer and seller clients’ decisions when it came to buying and selling a home.
Of those REALTORS® who responded to the survey about their buyer clients, over half (53 percent) reported “My buyer clients would strongly prefer buying a home with natural gas, but would consider buying a home with oil heat.” Thirty-three percent of those who responded reported that “My buyer clients are only concerned about finding the right home and not focused on the type of heating fuel used.” Only three percent of those reported, “My buyer clients would only consider a home heated by natural gas,” while two percent answered, “My buyer clients would strongly prefer a home heated with oil, but would consider a home heated with natural gas.” Zero respondents answered their buyer clients “would only consider a home with oil heat,” while seven percent answered either “NA” or “other.”
When asked specifically about their seller clients, 70 percent of REALTOR®-members who responded answered, “My seller clients would not make any changes or provide money back to the buyer to convert from oil to natural gas.” Despite that overwhelming response, at least 10 percent of respondents said, “My seller clients would consider providing money back to the buyer to convert from oil to gas.” Of the other respondents, seven percent replied, “My seller clients would consider changing the heating system to improve the chances of their home selling.” Two percent responded that, “My seller clients have converted their oil heat to natural gas to make the home more salable.” The remainder of respondents selected “NA or “other.”
The REALTOR® Market Confidence Index for 2012 was 54.05, which was UP 110 percent from the 2011 RMCI of 27.13. The REALTOR® Price Confidence Index was 63.13, which was UP 45 percent from the 2011 RPCI of 43.66.
About the REALTOR® Index Methodology:
The Massachusetts REALTOR® Market Confidence Index (RMCI) and Price Confidence Index (RPCI) 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 RMCI 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 Confidence 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.
*Please note, starting with the release of the September 2012 Index data, the REALTOR® Market Index will be renamed the REALTOR® Market Confidence Index and the REALTOR® Price Index will be renamed the REALTOR® Price Confidence Index.
Editors and reporters: Please note that the term Realtor is properly spelled with an initial capital “R”, per the Associated Press Stylebook.