REALTOR® Price Index over the 50-point mark for
WALTHAM, Mass. – May 15, 2012 – The Massachusetts Association of REALTORS® (MAR) today announced that increased activity over the past several months has pushed both the REALTOR® Market Index (RMI) and the REALTOR® Price Index (RPI) to all-time highs in April. The majority of REALTORS® who responded to the survey reported that low appraisals are not having an impact on transactions that have competitive or multiple bid offers.
“The Index highs really resonate to a sense of improving confidence among the REALTOR®-membership across Massachusetts,” said 2012 MAR President Trisha McCarthy, broker at Keller Williams Realty in Newburyport. “The spring has been very active and signs point to more positive results in the months ahead, with pending sales numbers in the summer giving us the best indication of where we are in the recovery.”
In April 2012, the REALTOR® Market Index was 56.31, which was up 86 percent from the April 2011 score of 30.28. This is the highest point the Index has reached since the association has been tracking the data. In addition, this is only the second time that the Index has gone over the 50-point mark. On a month-to-month basis, the April RMI was up 13.7 percent from the 49.54 score in March 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 Index was 59.86 in April, which was up 23.1 percent from the April 2011 RPI of 48.64. This is the highest point reached on the RPI scale since the data has been tracked. This is also the first time there has been three straight months over the 50-point mark since February, March and April 2010, the final three months of the home buyer tax credit. On a month-to-month basis, the RPI was up 3.7 percent from the April 2012 RPI of 57.73.
REALTOR® members were asked in April how low appraisals were impacting the closings of homes that received competitive and multiple-bid offers in this improving market. Thirty-nine percent answered this was happening “no more than normal,” while 11 percent answered “infrequently” and seven percent answered “never.” Of those members who reported experiencing low appraisals impacting closings 39 percent answered “often” and six percent answered “very often.”
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.