Massachusetts Housing Market: On the Mend?

A sharp rise in January home sales and modest price declines indicate that the Massachusetts housing market may be recovering from its worst slump in more than a decade, the Boston Globe reports.

The number of single-family homes sold rose almost 13 percent in January compared to a year earlier, the first increase in the last 10 months.

Sales were strongest on the South Shore of the Boston area and on Cape Cod. The median price of a single-family home fell to $340,000, 2.4 percent lower than a year ago, but virtually unchanged over the past four months.

“It’s been a long time since we’ve reported we had an increase in sales,” said Timothy Warren, CEO of Warren Group, a Boston real estate research and publishing firm that also tracks sales data. “I’d call it a hopeful sign.”

A warm and virtually snowless winter deserves some of the credit for the strong sales. But the most significant factor fueling the housing market this winter, agents and analysts said, may be the improving affordability of homes in one of the most expensive real estate markets in the country.

Larissa Duzhansky, a housing economist for the Lexington consulting firm Global Insight, said falling home prices “may be a sign of stabilization” because homes are becoming more affordable. Massachusetts experienced record price appreciation during the housing boom of 2002-2005.

“We had the overvaluation problem, which was one of the things that drove us into this correction in the first place. We’re less overvalued if home prices fall, and sales are beginning to go up,” Duzhansky said.

“Buyers really do want to buy but they’re afraid of making a mistake,” said the Tierneys’ agent, Gil Campos of Re/Max Real Estate Center in Foxborough, which closed 30 percent more sales last month than a year earlier. “The magic right now is, if your house is in really good condition and priced right, it will sell.”

Real estate agents statewide told of a flurry of recent activity that could reverse a trend of slow sales and shrinking commissions in 2006, when Massachusetts mortgage demand was tepid at best.

They reported their open houses are busier and buyers who window-shopped last year are now putting deadlines on finding a house. Some sale listings have even elicited multiple offers, they said.

Analysts were more cautious than agents and warned that a one-month sales increase - particularly in January, a traditionally light month - is hardly an assurance that the market is destined to rebound in 2007.

While home price declines have been good for buyers, it’s also unclear whether homeowners will see the value of the properties start to rise again this year, even as mortgage loan rates remain relatively stable.

“It’s quite possible the number of sales will be up for the whole year. My question is prices, whether they will be up for the whole year,” he said.

Beverly agent Linda O’Connor of Realpro Associates said buyers “are pawing over things like it’s Filene’s Basement.”

But they are buying. While sales in Essex County, which includes Beverly, fell by 4.34 percent in January as Massachusetts home loan activity slips, she saw “very strong pockets of activity,” especially for houses priced above $750,000.

“It’s almost as if there was a jump-start” in the high-end market, she said, though all price ranges are attracting more prospective buyers.

SOURCE: Boston Globe