Increase in interest rates by one point could push
more buyers into market
WALTHAM, Mass. – February 20, 2013 – The Massachusetts Association of REALTORS® (MAR) reported today that REALTORS® started out 2013 very confident in the real estate market as the REALTOR® Market Confidence Index (RMCI) and REALTOR® Price Confidence Index (RPCI) both hit all-time highs in January. REALTOR®-members generally believed more buyers would enter the market if interest rates were to go up at least one percentage point over the next six months.
“REALTOR®-members’ confidence in the market is miles away from when we started tracking this data in 2008,” said 2013 MAR President Kimberly Allard-Moccia, broker-owner of Century21 Professionals in Braintree. “REALTOR®-members are positive about the market because their clients are. To hit all-time highs in both indexes in the same month is a good indication of how the market is doing.”
In January 2013, the REALTOR® Market Confidence Index was 65.00, which was up 104 percent from the January 2012 score of 31.86. This is an all-time high for the RMCI and the 18th straight month of year-over-year increases. January also marks the fifth straight month of 100-percent plus increases. On a month-to-month basis, the January RMCI was UP 13 percent from the 57.47 score in December 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 77.07 in January, which was another all-time high and the second time the RPCI went over the 70-point mark. The January index was up 67 percent from the January 2012 RPCI of 46.00. This is the 12th straight month of year-over-year increases and the ninth straight month the RPCI has been over the 60-point mark. On a month-to-month basis, the RPCI was UP six percent from the December 2012 RPCI of 72.71.
REALTOR®-members were asked what would be the impact on the Massachusetts real estate market in the next six months if interest rates on mortgages went up at least one percentage point. Of those REALTORS® who responded to the survey, 39 percent answered there would be a significant increase of buyers into the market (7.4%) or there would be a moderate increase of buyers into the market (31.5%). Thirty-two percent felt there would be no change from the current trend, while seven and half percent responded there would be a significant increase in the amount of sellers that would enter the market (1.9%) or felt there would be a moderate increase of sellers into the market (5.6%). Twenty-one percent of the respondents answered “other”. Of those responses, the most common answer included the phrase “decrease of buyers into the market.”
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.
Editors and reporters: Please note that the term Realtor is properly spelled with an initial capital “R”, per the Associated Press Stylebook.