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Uptick in Shaky Housing Market

Originally published in The Boston Globe

September 28, 2011
Jennifer B. McKim (Writer, The Boston Globe)

Housing sales in Massachusetts rose last month compared with August 2010 as more buyers waded into the struggling local real estate market, data released yesterday showed.

Single-family home sales hit 4,203 last month, a 15 percent increase from last August, according to Warren Group, a Boston company that tracks local real estate data.

But the figures are actually less dramatic because they were matched against totals from August 2010, the slowest August for Massachusetts real estate sales in 20 years, Warren representatives said. Last summer, home sales slowed dramatically following the expiration of the federal home buyers’ tax credit, which earlier in 2010 gave people motivation to buy.

Sales for the first eight months of 2011 are down 12 percent compared with January through August of last year, according to Warren Group.

"It is unlikely sales volume [for 2011] will surpass the large numbers posted in 2010," said Cory S. Hopkins, managing editor of the weekly newspaper Banker & Tradesman, published by Warren Group.

While the number of sales went up in August, median home prices fell, suggesting more buyers were looking for properties at the lower end of the market, housing specialists said. Median home price, or the midpoint price, slid to $305,700, a 3.4 percent drop compared with the same time last year. Between January and August, the median price fell to $296,000, a 1.3 percent decline from the same period in 2010.

"Buyers took advantage of low interest rates and more affordable pricing to purchase a home," said Laurie Cadigan, president of the Massachusetts Association of Realtors.

Tom Courtney, president of the Northeast Association of Realtors, based in the Merrimack and Nashoba valley regions, said some buyers are so intent on seeking rock-bottom deals that they are unnecessarily walking way from properties that would have met their needs.

"Many of today’s home buyers are looking for a steal, rather than a deal," Courtney said. "They seek perfection in homes for sale, rejecting properties with the smallest or easily fixable issues."

As prospective home buyers haggle over details of a transaction, the time needed to sell single-family homes increased to 106 days in August this year compared with 95 in August 2010, according to the Massachusetts Association of Realtors, which also released data yesterday. Condominiums took an average of 105 days to sell last month, compared with about 100 days during August 2010, the association said.

The S&P/Case-Shiller home price indices also released housing data yesterday showing that Boston-area home values fell 1.9 percent in July, compared with the previous July. But the index - which tracks repeat sales and is considered by many in the industry to be the best marker of real estate health - also showed that home values from June to July increased by 0.8 percent. It was the third consecutive month of increased values.

The Boston region’s housing market has continued to fare better than many other areas of the country, with a total decline in property values of about 15 percent since the area’s housing peak in 2005. Nationwide, home values have dropped about 31 percent since the housing market’s peak, according to Case-Shiller. Over the past year, housing values in the 20 cities tracked by the index were down about 4.1 percent compared with a year earlier. But July marked the fourth month in a row of month-by-month increases for the 20-city index.

Harvard University economist Edward Glaeser said the modest US price adjustments reinforce his belief that the national housing market is in "a long period of stasis." He doesn’t expect wild gains or dramatic losses over the next few years. For conservative home shoppers, Glaeser recommended planning for a long-term investment. "You should not be counting on any housing appreciation," he said.

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