The Essex County housing market closed the year with a modest increase in sales and some mixed results in pricing. For the year, sales were up fairly significantly, but we’re still not seeing any meaningful price appreciation.
Sales. Essex sales were up in the fourth quarter, rising over 4% from last year and finishing the year up almost 10%. Indeed, Essex closings have now gone up in each of the last four years, during which sales have now increased by over 50% from their 2011 levels at the bottom of the market. The market is in much stronger shape than it has been at any time since the 2008-09 market correction, with sustained levels of buyer demand.
Prices. This jump in sales, though, has not yet had an impact on pricing, which remains relatively flat over the past three years. We are seeing pricing about 8% higher than at the bottom of the market, but we haven’t seen any movement over the past three years, even while transactions went up. Generally, it takes time for increases in demand to drive pricing changes, so we believe it’s just a matter of time before we start to see meaningful price appreciation in Essex.
Negotiability. The negotiability indicators – the amount of time sold homes were on the market, and the rate at which sellers were able to retain their full asking price – were essentially flat. The days-on-market fell slightly in the quarter and for the year, indicating that homes were selling just a bit quicker, and the listing retention rate was up a little for both the quarter and the year, but neither indicator moved in a way that would dramatically affect the negotiating balance between buyers and sellers.
Going forward, we expect that buyer demand will stay strong through 2016. With a relatively strong economy, homes priced at attractive levels, and near-historically low interest rates, we believe that we will start to see some meaningful price appreciation by the end of the year.