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A March 25, 2008 article in The Boston Globe suggests the worst of the Massachusetts housing slump may be behind us.
"Sales of single-family homes in Massachusetts remained in a deep rut in February, 19 percent below sales in the same month last year, but in a sign that the worst may be upon us, the depth of the rut did not increase."
A recent article in The Boston Globe discusses how the Massachusetts housing slump has put a strain on municipal finances.
Ironically, the article starts by stating these same cities and towns struggled during the housing boom.
"Only a few years ago, a residential building boom and its pressure on school, police, and fire services had officials and taxpayers worried.
"But with the nation in the throes of a real estate slump, their fears have largely shifted the other way, as a deficiency of housing starts has created a vacuum in new taxable property."
In other words, many of these municipalities are incapable of living within budgetary constraints regardless of the condition of the economy and other factors.
Read The Boston Globe Article
The S&P/Case-Shiller housing price index released data indicating that Greater Boston Area home prices have fallen 11 percent from September 2005 through January 2008, The Boston Globe reported March 26, 2008.
Prices fell 3.5 percent in January compared to January 2007.
"The multitude of different reports on real estate prices can be overwhelming, but boiling down the latest round suggests three things: The Boston market is bad. Local problems are still growing, but the pace has stopped accelerating. Many other markets are much worse."
The Massachusetts median price of single-family homes in February experienced its biggest monthly decline since December 1990, while the median price of condominiums followed suit with the largest fall since May 1993, according to a report released March 25, 2008 by The Warren Group, publisher of Banker & Tradesman.
“February’s drop in median home prices was dramatic, but not unexpected,” said Timothy Warren Jr., CEO of The Warren Group. “Sales have been in such a slump for the past six months, it was only a matter of time before prices started declining by larger percentages.”
The median price of single-family homes fell 8.8 percent in February from $330,000 in February 2007 to $301,000. That was the largest decrease in a month since December 1990, when the median price dropped 11 percent. The year-to-date price was down 6 percent at the end of February from $335,000 in 2007 to $315,000.
Single-family home sales fell 19.2 percent in February 2008, when 2,123 were sold, compared to the 2,628 sold in February 2007. Year-to-date sales were down 24 percent from 5,581 to 4,241.
Condominium prices in the Commonwealth also fell in February, dropping 6.6 percent from $274,500 to $256,000. That was the biggest price drop for condos since May 1993, when the median price fell 10 percent. The year-to-date median price fell 5.1 percent from $274,000 to $260,000.
Condo sales fell 25 percent in February from 1,641 last year to 1,231. Year-to-date sales declined 30.8 percent from 3,423 to 2,368.
The Massachusetts Association of REALTORS® released data that showed single-family sales declined 22.9 percent and condos sales plummeted 34.9 percent in February 2008 compared to February 2007.
The Massachusetts Association of REALTORS® (MAR) reported March 25, 2008 that both single-family home sales and condominium sales were down in February compared to the same time last year, and prices for both single-family properties and condos also declined.
The number of single-family homes sold in February was down 22.9 percent with median sales prices down 4.6 percent. The number of condominiums sold in February was down 34.6 percent, with median sales prices down 6.7 percent.
There were 1,857 detached single-family homes sold this February, a 22.9 percent decrease from the 2,409 homes sold the same time last year. On a month-to-month basis, there was a 6.4 percent decrease compared to the 1,984 homes sold this past January.
The median selling price for single-family homes in February was $310,000, a decrease of 4.6 percent compared to $325,000 in February 2007. On a month-to-month basis, the February median selling price was down 3.4 percent from January 2008 at $321,000.
As was the case in January, the condominium market also experienced a significant decrease in the number of units sold this February, with a 34.6 percent drop compared to the same time last year (from 1,264 units sold in 2007 to 827 units sold in 2008). On a month-to-month basis, condominium sales were down only 1.9 percent compared to 843 units sold this past January.
Condominium median selling prices in February went down 6.7 percent after 11 straight months of year-over-year increases (except for December 2007 which was flat) from $270,000 in 2007 to $252,000 in 2008. Compared to this past January, the median selling price of a condominium is down 9.2 percent (from $277,500).
The inventory of residential properties (detached single-family homes and condos) on the market as of February 29, 2008 decreased 1.5 percent compared to the same time last year (from 45,193 listings in 2007 to 44,526 listings in 2008). At the current sales pace, this represents approximately 16.6 months of supply, an increase from 12.3 months of supply in February 2007. On a month-to-month basis, the average months of supply is up from 15.8 in January 2008.
The inventory of single-family homes stayed the same from February 2007 levels (30,067 listings in 2007 to 30,048 listings in 2008) which translates into 16.2 months of supply in February 2008. This is up from 12.5 months of supply last year and up from 15.4 months of supply in January 2008.
The condominium market saw February inventory go down 4.0 percent (15,126 listings in 2007 to 14,478 listings in 2008), which translates into 17.5 months of supply, up significantly from 12 months in February 2007 and up from 16.6 months this past January.
Detached single-family homes stayed on the market an average of 166 days in January 2008 compared to an average of 150 days in February 2007, while condos stayed on the market an average of 165 days, up from an average of 142 days in February 2007.
Average rates for 30-year, fixed-rate U.S. mortgage loans declined to 5.85 percent, down from 5.87 percent the previous week, MarketWatch reported March 27, 2008.
The same loan averaged 6.16 percent a year ago.
The average rate for a 15-year, fixed-rate loan rose to 5.34 percent, up from 5.27 percent the previous week, but lower than last year's 5.86 percent.
U.S. mortgage applications have surged recently.
Read The MarketWatch Article
U.S. mortgage applications surged recently, but whether the rise in applications results in increased home sales is uncertain.
I found this comment by Dan Pierce, a portfolio manager at State Street Global Advisors in Boston, in a Reuters article about existing home sales.
"We saw a nice surge in mortgage applications in January, so we are seeing the echo of that in today's [increased] home [sales] figures. As far as home prices go, it reveals how consumers have to lower expectations if they want to sell their house. The regulators aggressive liquidity actions are definitely having an impact."
If his theory is correct, shouldn't sales rise in April? Only time will tell.
A government report showed new homes sales in the U.S. fell to their lowest level in 13 years, CNN Money reported March 26, 2008.
"February sales came in at a seasonally-adjusted annual rate of 590,000, the Census Bureau report showed, down 1.8% from a revised 601,000 in January and down 29.8% from a year earlier."
Though home sales slipped, the figures were better than economists predicted.
The report found that it took builders 7.2 months to sell a completed home in the current market.
"The report showed 188,000 completed new homes available at the end of the month, bringing total inventory - including new homes under construction and not yet started - to 471,000. That equals a 9.8-month supply, which ties January for the highest supply since 1981."
Total inventory fell by about 10,000 homes in January.
After dropping 2.9 percent compared to two weeks ago, U.S. mortgage applications surged 48.1 percent compared to the previous week, the Associated Press (AP) reported March 26, 2008.
The Mortgage Bankers Association compiles the data.
"The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week."
Refinance applications rose 82.2 while purchase volume increased 10.6 percent.
Last week mortgage applications had reached the lowest level of the year, Bloomberg reported March 19, 2008.
Read The AP Article
Read The Bloomberg Article
Buyers Brokers Only, LLC is sponsoring a first-time home buyer seminar on Saturday April 5, 2008 from 10 a.m. to 12 p.m. at the Best Western (401 Lowell Avenue, Haverhill, MA) in Haverhill.
Learn about every
aspect of buying a home: mortgages, pre approval, finding a home
(single-family, condos, multi-families, new construction), the multiple listing service (MLS),
buying bank-owned properties and short sales, negotiating the best price, home
inspections, purchase & sale agreement, the closing, tips and advice from
the professionals and an opportunity to ask all your questions.
Space Limited: Please RSVP by filling out the form online or by contacting Alexa by April 3, 2008 at 978.457.4552 or astone@buyersbrokersonly.com. Space is limited to 50 people.
Knowledgeable Speakers:
Richard J. Rosa, Esq., Buyers Brokers Only, LLC: Rich is a real estate broker, lawyer and co-owner of Buyers Brokers Only, LLC. He has practiced law for 12 years, and he is a member of the Massachusetts Association of Buyer Agents.
David S. Kres, Esq., Buyers Brokers Only, LLC: Dave is a real estate broker and lawyer, as well as co-owner of Buyers Brokers Only, LLC. Dave earned the North Shore Association of REALTORS® (NSAR) Rookie of the Year award in 2006 and currently is the president-elect at NSAR.
Robert Barr, VIP Mortgage: Rob is the vice president of sales for VIP Mortgage, located in Danvers, MA. He has 20 years of experience in the mortgage industry and has helped more than 1,000 individuals/families finance their first home.
Jeffrey Stelman, Esq., Schribman & Stelman, LLP: Jeff is a partner in the law firm of Shribman & Stelman, LLP, located in Salem, MA. He has practiced law for 17 years and has conducted more than 1,500 real estate closings.
Josh Amsler, Jackson Home Inspection: Josh works for Jackson Home Inspection in Andover, MA. He has more than 10 years experience as a licensed home inspector and has completed more than 6,000 home inspections. He also is a member of the National Association of Home Inspectors.
Donation: $15 per person. All proceeds going to Rebuilding Together Greater Haverhill, Inc., which helps revitalize homes and neighborhoods for low-income homeowners and communities in need, especially the elderly, the disabled and families, helping them to live in warmth, safety and independence. Please make checks payable to Rebuilding Together Greater Haverhill Inc., and please mail checks to Buyers Brokers Only, LLC, 7 Kenoza Avenue Haverhill MA 01830. Space limited to first 50 people, so please RSVP.
I am a Massachusetts lawyer and real estate broker and co-founder/owner of Buyers Brokers Only, LLC. I am also a partner in the law firm of Rosa & Kres, LLP.
If you have a question for me about any aspect of the home-buying process (i.e., house hunting, mortgages, negotiations, buyer agency, purchase and sale, etc.), please don't hesitate to send me an email. I'm happy to try to answer your question.
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