Massachusetts Housing Market Shows More Declines
Maybe the housing slump isn’t over yet after all.
After getting off to a strong start in 2007, sales in the Massachusetts housing market fell 1.7 percent in April compared to the same period last year, and the median home price declined 2.3 percent, to $345,000.
A second market report was more dire.
The Boston mortgage and real estate publishing firm, The Warren Group, recorded a similar drop in the total sales, but said prices declined 4.7 percent.
The Warren Group counts a larger number of transactions in its analysis than the Massachusetts Association of Realtors, including for-sale-by-owner sales, while Realtors track sales through brokers only.
Industry officials said the downturn is because of an oversupply of homes for sale and continued fallout from problems in subprime, or bad credit mortgage lending, where overstretched buyers of the past several years are trying to unload homes they can no longer afford.
April’s sluggish pace is bad news for home sellers and mortgage brokers, who were hoping that robust sales in January and February meant the deep downturn that began last year was at an end.
For prospective buyers, however, the data suggests they wield the upper hand during the crucial spring selling season.
“This is like a retailer having a bad Christmas season,” surmized Babson College finance professor Richard Bliss. “It doesn’t matter what happens the rest of the year, [because] you’re never going to make up for what you lost in the peak season.”
The state’s condominium market was more mixed.
The realtor group reported little change in condo sales last month - up just 0.7 percent - compared with April 2006, and a 2.6 percent increase in the median condo price, to $274,650.
In contrast, Warren Group said condo sales declined 4.9 percent and prices were down 2.5 percent. Warren Group CEO Timothy Warren said the mortgage problems of recent homeowners is depressing the broader market.
“The single-family home price is declining more rapidly than I had expected,” Warren said. “The weight of distressed properties is taking a toll on the market’s recovery.”
These include the properties that were purchased within the past few years, often with adjustable-rate, no-interest, or bad credit home loan products with monthly payments that are now beginning to rise.
Homeowners forced to sell are dropping their prices, which in turn puts pressure on other sellers to reduce their prices.
Warren said there were 1,712 auctions of homes advertised in April that are in Massachusetts mortgage foreclosure, which he characterized as a big number compared with the 6,394 house and condo sales closing in April.
The Massachusetts housing market continues to suffer from more supply than demand. Even with mortgage rates so low, current inventory of properties up for sale is equal to 10 months of supply.
A normal market typically has a 7 1/2- to 8 1/2- month supply.
Gil Campos, an agent with Re/Max Real Estate Center, said the April slowdown was evident in his market, Foxborough.
“My market was screaming for the first three months, but it did get quiet in April. It’s almost like it took a breath,” he said.
Michael Ball said he misjudged the market when he purchased a small Cape on the South Shore in July 2005, to renovate and resell. An owner of a small carpentry and remodeling business in Scituate, he purchased the worn but charming house when Massachusetts real estate prices were at a peak.
With the help of a home improvement loan, he refinished all the floors, installed a new kitchen and master bath, and touched up the exterior.
By the time he finished the work and put it on the market in October, home sales were in freefall. He dropped the price $35,000, to $635,000, and hired an agent last month after failing to sell it on his own.
He said he could not go much lower on price, because of remodeling costs.
“Everyone who goes in to see it loves it,” he said. But buyers, “faced with an abundance of inventory, feel that there’s no real need to act quickly.”
SOURCE: Boston Globe