Fri, May 20, 2011
BBJ Identifies Strongest and Weakest MA Housing Markets
The Boston Business Journal announced yesterday a new report on Massachusetts Housing “Leaders and Laggards” based on data from the first quarter of 2011. Our Fair City did not make it into the Top Ten, or even the Top Twenty.
While the aggregate US housing market continues to run cool, real estate markets are strongly affected by local factors. In Massachusetts, housing prices peaked earlier than in the rest of the country and current Commonwealth home sales are up in some towns and down in others.
Using data from Zillow.com, the BBJ report ranks zip codes according to their changes in home values and sales volume. Although the report’s ranking algorithm isn’t transparent and the online version of the report is downright user-unfriendly, the results are interesting. Here is the BBJ's ranking of the top twenty-five zip codes on the basis of housing market strength:
25 Strongest Housing Markets in Massachusetts (based on data from Zillow as of 3/31/11)
Zip Code / Community | Average Home Value | 1-year price change | 1-year sales volume change |
02459 / Newton Center | $731,555 | 4 % | 13 % |
02132 / West Roxbury | $373,348 | 5 % | 0 % |
02129 / Charlestown | $416,958 | 2 % | 0 % |
02478 / Belmont | $612,103 | 2 % | 22 % |
02481 / Wellesley | $920,457 | 2 % | 14 % |
01982 / South Hamilton | $380,634 | -1 % | 55 % |
02044 / Hingham | $533,339 | 5 % | -32 % |
02332 / Duxbury | $451,334 | 1 % | 25 % |
02476 / Arlington Heights | $463,934 | 1 % | 5 % |
02128 / East Boston | $347,346 | 3 % | -37 % |
02447 / Brookline | $462,846 | 2 % | -16 % |
02494 / Needham Heights | $548,197 | 0 % | 15 % |
02117 / Back Bay, Boston | $599,274 | -3 % | 64 % |
01867 / Reading | $391,223 | 1 % | 0 % |
02187 / Milton | $446,789 | -1 % | 8 % |
02067 / Sharon | $375,497 | 0 % | 0 % |
02649 / Mashpee | $294,740 | 0 % | 31 % |
01776 / Sudbury | $559,243 | 0 % | 5 % |
02475 / Arlington Heights | $428,334 | 0 % | -4 % |
01945 / Marblehead | $458,367 | 1 % | 13 % |
01890 / Winchester | $662,238 | -1 % | 3 % |
02066 / Scituate | $403,112 | 0 % | 17 % |
02420 / Lexington | $569,629 | -1 % | 19 % |
02453 / Waltham | $381,683 | -4 % | 62 % |
02056 / Norfolk | $400,614 | -2 % | 8 % |
The presence of several upscale communities in the list is interesting, as is the fact that all of the strongest housing markets are in the eastern part of the state, with quite a few inside the 128 beltway. This doubtless reflects the fact that much of the state’s economic recovery has taken place in and around Boston. At the opposite end of the scale, there are a number of communities that have experienced annual price decline percentages in the low teens, including parts of Springfield, Lawrence, Lowell, Revere, Framingham, and Worcester. One thing the report does not make clear is the meaning of the “average” prices listed. My guess is that these are not necessarily single-family prices in every case and that they encompass all residential sales, including condominiums. I'd also guess that in some zip codes the volume changes are calculated on the basis of a small number of 2010 sales, leading to large percentage changes.
According to MassBenchmarks, published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston, the Massachusetts gross state product grew at an annualized rate of 4.2% in the first quarter and the state economy grew 3.7% between Q1 2010 and Q1 2011. The state’s technology-intensive businesses are clustered in the eastern part of the state, with the bulk of the state’s medical, educational, and financial business sectors concentrated in proximity to Boston. It makes sense, then, that the communities with the strongest housing markets would be similarly situated or within commuting distance.
Housing price increases versus last year seem to be small in most instances. There doesn’t appear to be much urgency in the housing market, although I've heard that the most desirable properties are still in short supply. Housing economists seem to expect that in the aggregate, housing prices in the greater Boston area will increase 1-2%/year over the next two or three years. A broad surge in Massachusetts home prices does not seem to be on the horizon.