‘People want to be in houses’: Attleboro area real estate market remains hot despite high prices and rising interest rates | Local News

In the 1946 classic “It’s a Wonderful Life,” Peter Bailey attempted to explain to his skeptical eldest son, George, that their small building and loan helped the citizens of Bedford Falls earn their own share of the American Dream. He made an argument that resonated with many viewers at the time.

They were the members of the greatest generation who had deferred family and home during the Great Depression and lived in barracks and foxholes during World War II. Now they were more than ready to claim everything they had waited for and fought for.

And American industry, which had perfected mass production techniques during the war, responded.

The Levittowns and their many imitators swallowed up acres of former potato fields, scrub woods and desert land.

A nascent conservation movement might decry suburban sprawl and folksinger Pete Seeger might poke fun at “little boxes made out of tacky pantyhose,” but for the new owners, they felt like home.

For decades, as baby boomers grew up and started their own families, filling their new homes with furniture and appliances, construction was a major driver of the American economy.

So it was only natural that millennials — the generation born between the early 1980s and early 1990s and now entering their 30s and 40s — would expect the same. Instead, they’re facing a market real estate professionals say they’ve never seen before.

“What we’re seeing is dysfunctional,” said Virna Brown, mortgage broker at Envoy Mortgage in Franklin. “You have high (interest) rates and high prices.”

While mortgage rates have been at historic lows for years, that has started to change rapidly.

“Normally when interest rates go up,” Brown said, “prices go down. That’s a completely different situation.

Average long-term U.S. mortgage rates rose again this week, with the key 30-year lending rate rising above 4.5% to its highest level since the end of 2018.

Amid inflation at its highest level in four decades, the increases in home loan rates come weeks after the Federal Reserve raised its benchmark short-term interest rate by a quarter of a point – qu ‘it had maintained close to zero since the start of the pandemic recession. two years ago — to cool the economy. The central bank announced potentially up to seven additional rate hikes this year.

These developments mean that mortgage rates will likely continue to rise over the course of the year.

Mortgage buyer Freddie Mac reported on Thursday that the average rate on the 30-year loan this week rose to 4.67% from 4.42% last week. This is a stark contrast to last year’s record mortgage rates of around 3%. A year ago, the 30-year rate was 3.18%.

The average rate on 15-year fixed-rate mortgages, popular among those refinancing their homes, jumped to 3.83% from 3.63% last week.

Home value appreciation in 2021 was above median wages in 25 of 38 major metropolitan areas, according to Zillow, the online real estate company.

And data from census figures shows Massachusetts has the third highest home value in the nation, with a median of nearly $400,000. Cities like Boston have seen prices rise by more than 50% over the past decade, and a median owner-occupied home was valued at $581,000 in 2020.

Median prices for a single-family home in the 10 communities covered by The Sun Chronicle have also risen over the past decade, if not as sharply, the latest US Census figures show. But housing stock has tended to lag in the wake of the Great Recession. And over the past year, prices have jumped in some of the larger communities between more than 15% and nearly 19%, even as sales have begun to slow.

For example, according to The Warren Group, which tracks mortgages and home sales statewide, the number of single-family home sales in Attleboro increased from 446 in 2020 to 457 in 2021. The median price of these homes has jumped 14.6% to $420,000. At Norton, sales rose from 157 to 189, an increase of more than 20%. The median price for these homes was $480,000, a jump of 18.4%. (For the most expensive homes in the area, head to Wrentham. Sales have fallen more than 50% to just nine homes sold in 2021, but the median price was just under $600,000.)

This is a classic case of supply and demand that can take a long time to resolve.

“People want to be in homes,” Brown said, adding, “Millennials are the ones buying. They’re now raising families and COVID has changed their view ‘of where to live. Rather than an apartment in the city close to a physical office, “why not live in a cheaper neighborhood and work from home?” she says.

“There is always pent-up demand,” said Sheryle DeGirolamo, broker/owner of Kensington Real Estate Brokerage in Attleboro. Many people are starting their first home, she said. With interest rates set to rise even further, she adds, “some people are afraid of being squeezed out of the market” and are eager to buy before a home is completely out. of their scope. She said she recently did more than 100 showings at an open house in Rehoboth. And his agents see potential buyers bidding more than 5% above the asking price.

Supply can be a problem

In the supply and demand equation, however, the real issue here may be supply.

According to a May 7, 2021 report from Freddie Mac, the government-sponsored company that buys, guarantees and securitizes home loans, the United States has nearly 4 million homes behind demand from potential buyers. And pandemic-related supply chain issues are adding tens of thousands of dollars to the price of a home. This is a problem that dates back to the housing bubble of 2008.

When home prices crashed, many builders crashed with them. Carpenters and contractors went out of business, skilled laborers had to find new trades, and many never returned to building homes.

“If you don’t have a lot of supply to choose from,” said Brown, the mortgage broker, “you have people fighting over houses and throwing money at them.” She says she was worried at the start of the pandemic. “We thought fiscal year 2021 might be slow.”

Instead, business continued at a record pace. “At least as much, if not more,” she said. “We never close” the office.

At least in some areas, builders are starting to step up to meet demand, according to Attleboro Building Commissioner Bill McDonough. “They can’t build them fast enough,” he said. Homes, he said, “are sold before they’re finished, for the most part.” Developers are also “getting more creative with land, finding land that didn’t seem buildable” and finding ways to create subdivisions.

In Attleboro, for example, the number of new single- and two-family dwellings increased from 65 in fiscal year 2018, with a total value of $14.8 million, to 87 in fiscal year 2020, d worth a total of $19.4 million, according to the numbers. provided by the city’s building department. That pace slowed a bit in FY21 with 75 single-family homes and one two-family structure, worth a combined value of just under $15.7 million. With four months left in the current fiscal year, which began in July, there are already permits for 27 single and two-family homes, with eight permits granted in September, the busiest month. The combined value is just over $1.8 million.

Still, homebuilders, Brown said, face multiple challenges, including supply chain issues and rising costs.

“There are customers who bought a house a year and a half ago who aren’t home,” Brown said. And DeGiolamo added, “Some costs have gone up exponentially.” Brown explains that when a developer started a project, the interest rate may have been around 3%. “Now they are faced with the prospect of 5%. They didn’t expect this. »

High demand

This still leaves the area with a fairly small inventory of homes for sale.

Ed Pariseau of Century 21 Northeast in North Attleboro notes that there are currently only 11 single-family homes for sale in North Attleboro. Of those, he said, “eight have been on the market for 10 days or less.” The response to the open houses has been “huge”, with each generating several offers, many of them new buyers.

“Sellers are aware that they can maximize value,” he said. “Some may want to move due to retirement,” while buyers may be looking for a place that could be both a home and a home office.

Now, with the spring home sales market traditionally the busiest of the year, “we’re likely to see an increase in listings,” he said. A number of agents will put homes on the market as lawns green and flower gardens bloom around a home “when it’s at its best.”

“The next three months will be the strongest” of the year, he said.

“If you’re ready to buy, do it now,” Pariseau said, as he believes prices will only go up.

With more than 40 years of experience as a real estate agent, Pariseau said he doubts we’re headed for another real estate bubble. “With inventory and demand, I don’t see a bubble coming.”

He is convinced that the conventional wisdom about home ownership still applies; that buying a home is the best way to build wealth, rather than renting and “just paying someone else’s mortgage”.

For people hoping to enter the market today, those involved in the business ring a few common themes: Pre-qualifying for a mortgage, in the current climate those who don’t are unlikely to see an accepted offer; find a real estate professional you can trust, research and get recommendations; speak with a qualified loan officer and have a plan; and have a lawyer who can walk you through all the legal issues.

“Try to put all the pieces together,” Brown said.

(Associated Press material was used in this story.)

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