THE TOTAL AMOUNT OF MONEY SPENT ON REAL ESTATE IN HAMPDEN COUNTY DURING FISCAL YEAR 2014 WAS $1,156,955,500.00, A 17% INCREASE OVER THE PRIOR FISCAL YEAR. THE NUMBER OF DOCUMENTS RECORDED DURING FY14 WAS 74,247, A 16% DECREASE FROM THE PRIOR FISCAL YEAR. THE AMOUNT OF FEES AND CHARGES COLLECTED DURING FY14 WAS $12,193,772.58, A 6% DECREASE FROM THE PRIOR FISCAL YEAR. _______________________________________________________________________
REGISTERS FORECAST
For a number of economists, the question is not when the national economy will recover completely; it is if the economy will completely recover. Economic growth has never been weaker after any other recession since World War II. During the past five years, 1.85 million low paying jobs have been created while 1.83 million medium ($13-$20 per hour) and high ($20-$32 per hour) paying jobs have been eliminated. Job growth is still more concentrated in lower paying industries making it difficult, if not impossible, for many of those individuals to purchase a home.
Nationally, housing sales are slipping just when many of us thought it would be improving. In Hampden County, the number of real estate documents recorded in FY 2014 decreased by 16 percent, and the amount of fees collected decreased by 6 percent from the prior fiscal year. However, an increase in property values during the past two years did cause the amount of money spent on real estate to exceed a billion dollars, a 17 percent increase over FY 2013.
While there may be a number of reasons for a weak housing market, it is not due to higher interest rates. Interest rates are still at record low levels and are lower today than they were prior to the great recession when home sales were strong. In FY 2006, with interest rates in the 6.5 percent range more deeds were recorded, more fees were collected, and more money was spent on real estate in Hampden County than in FY 2014. The problem isnt higher interest rates; it is due to housing prices rising faster than income. Prior to the recession, economic growth was keeping up with higher sale prices, but that is not the case today. Although the unemployment rate in Hampden County has dropped to 7.1 percent, those individuals who have returned to work locally and nationally are receiving lower incomes than prior to their unemployment, therefore pricing them out of obtaining new mortgages under the new guidelines.
Another factor affecting the housing market is the decrease in the number of new household formations since 2007. According to census data, the number of new households only increased by an average of 569,000 from 2007 to 2013, down from an
average of 1.35 million per year from 2001 to 2006. Before the recession, 27 percent of the 18 to 30 year olds lived with their parents while today it is 34 percent.
Creating economic growth with better paying jobs consistent with rising costs is critical to achieving a healthy housing market. However, we should see some improvement in housing sales during fiscal year 2015 while interest rates remain low and home sale prices begin to stabilize. The national unemployment rate is 6.3% with 9.8 million people unemployed, and the Massachusetts rate is 5.6%. The unemployment rate in Hampden County in April 2014 was 7.1% compared to 8.2% in April 2013. The 30-year fix rate mortgage ranges from 4.2% to 4.5%.
_____________________________ Donald E. Ashe, Register _______________________________________________________________________
During FY2014, residential property values for all of Hampden County increased by 1 percent over the prior fiscal year. Some of the communities in the County had substantial increases; Southwick 22 percent, Ludlow 12 percent, and Westfield 10 percent. The average amount of a residential property for all of Hampden County was $181,201.04. Springfield which had the lowest property value of all the larger communities was $118,664.22 while Holyoke was $172,421.20 and Westfield was $210,227.75.
Homeowners are continuing to recover equity lost during the great recession as property values increase. However, as price appreciation slows, so also will the road back to positive equity for millions of homeowners that are still underwater. Today approximately 17% of the nations homeowners with mortgages are underwater. Homeowners who are considered to be underwater owe more on their mortgage than their property is worth. Property values in Hampden County are beginning to stabilize and that will help to make home prices more affordable. However, it will also keep a homeowner with negative equity from being able to sell a home and purchase another one.
In the documents section of our year-end report, we are now showing both the number of actual foreclosures recorded as FORECLOSURES and the number of foreclosure petitions filed each year as ORDER OF NOTICE/FORECLOSURES. The foreclosure petition is the first step in the foreclosure process and is required by federal law. Often the foreclosure petition can be both the first and last notice of a pending foreclosure if the mortgage default is cured or the property is sold. In FY2013 in Hampden County there were 1251 foreclosure petitions filed and only 396 recorded. In FY 2014 there were 607 foreclosure petitions filed and only 364 recorded.
While the number of foreclosures is decreasing, the time between a foreclosure auction and the recording of the foreclosure deed is increasing dramatically, on the average 200 days. We believe the delay may be due to the more rigid lending requirements and the banks reluctance to accept lower bids.
We are in the process of rescanning more than two hundred old record books to improve their online images and to preserve the integrity of the books. The images are also being microfilmed to replace aging and deteriorating microfilm which is kept offsite.
REVENUE
Source Fiscal Year End 2013 Fiscal Year End 2014 % Change