Each month I write an article for the Merrimack Valley Housing Report which is a monthly e-publication from the UMass Lowell Institute of Housing Sustainability. This month I reviewed Greater Lowell real estate trends in 2022. Because the topic may be of interest to readers of this site, I’ve reproduced it below.

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The total number of documents recorded at the Middlesex North Registry of Deeds in 2022 was down 30 percent from the number recorded in 2021. The 52,819 documents recorded in 2022 was the fewest recorded in a single year since 1991 when 52,019 were recorded. For context, the 31 year average since 1991 is about 75,000 documents per year with a high of 146,956 in 2003.

The main driver in this year’s decrease in recordings was mortgages which dropped by nearly 50 percent. In 2021, there were 18,035 mortgages recorded; in 2022, there were just 9,319. This is directly attributable to the substantial rise in interest rates that occurred this year. People buying houses must still obtain mortgages, but hardly anyone will refinance an existing mortgage given the disparity between the existing mortgage’s rate and the much higher rate on any new mortgage.

When mortgages are recorded, they tend to be part of a bigger package of documents with most accompanied by a municipal lien certificate, an assignment of the mortgage, a 6B certificate if the property is a condominium, and a discharge of the previous mortgage. Consequently, a drop in mortgage recordings has an enhanced effect on overall registry recording volume.

The number of deeds recorded in 2022 was also down from the prior year, but the decrease was much less pronounced. In 2021, there were 8,451 deeds recorded; in 2022, there were 7,138, a drop of 16 percent. When it comes to home sales, the increase in interest rates has a greater effect on the purchase price than it does on whether the sale takes place or not, which helps explain the more benign percentage decrease in deeds than in mortgages, but higher rates are also likely to dissuade current homeowners from upgrading to a bigger home which will further constrict the number of homes put on the market. The chronic shortage of homes for sale will tend to offset the tempering effect of higher interest rates on home prices.

While recording volume was down in 2022, the price of real estate was up. Way up, when measured by the median price of deeds that were recorded. While admittedly an imprecise tool for tracking home prices, calculating the median price listed on all deeds recorded for the year for each of the towns in the Middlesex North District provides some evidence of the direction of the market. In Lowell, for instance, the median price of $380,000 in 2021 rose to $425,050 in 2022, an increase of nearly 12 percent. Similar percentage increases occurred in other towns in the district with Billerica going from $537,000 to $591,750; Chelmsford from $480,000 to $529,950; and Tewksbury from $520,000 to $573,500. Dracut and Westford were outliers with prices rising but not as substantially. Dracut saw in increase of 2.6 percent, going from $420,000 to $431,000 and Westford saw a rise of 6 percent, going from $630,000 to $667,500.

Registry revenue totals for 2022 corroborate the statistical picture of a substantial decrease in recording volume but with prices remaining relatively stable. There are three main sources of revenue at the registry of deeds: recording fees (which range from $105 for a mortgage discharge to $205 for a mortgage); the deeds excise tax (assessed at the rate of $2.28 per $500 of purchase price); and various surcharges ($50 per document for the Community Preservation Act and $5 per document for the registry of deeds technology fund).

In 2022, the total amount of revenue collected at the Middlesex North Registry of Deeds was $21.6 million which was a 24 percent decrease from the $28.2 million collected in 2021. However, recording fees and surcharges which are both dependent on the volume of documents being recorded were down 35 percent and 32 percent respectively, while the deeds excise tax, which is based on the sales price of property, was down just 12 percent. Given that the number of deeds recorded for the year was down 16 percent, the smaller percentage decrease for the excise tax collected indicates that the price paid per deed in 2022 was higher than in 2021.

Another indicator of the increased value of real estate is the number of deeds recorded with a purchase price that exceeded $1 million. In 2022, there were 311 of them in the entire registry district with 44 in Billerica, 45 in Carlisle, 34 in Chelmsford, 11 in Dracut, 3 in Dunstable, 46 in Lowell, 21 in Tewksbury, 1 in Tyngsborough, 62 in Westford, and 44 in Wilmington. The five most expensive sales of the year were 1100 Technology Park Drive in Billerica which sold for $53 million in April; 800 Salem Street in Wilmington which sold for $35 million in May; 17 Progress Road in Billerica which sold for $34 million in June; 165 Thorndike Street in Lowell which sold for $33 million in March; and 1250-1260 Westford Street in Lowell which sold for $30 million in August.

It seems inevitable that the substantial rise in interest rates in 2022 will exert downward pressure on the price of real estate sold in 2023, but as we have frequently seen, the real estate market does not always follow the laws of reason so there is a chance that prices will remain stable or will even increase. Still, the overall volume of activity will likely stay down as long as interest rates stay up.

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