Mass Housing Market Ends Worst Year in Decade

Here's a report without the usual "spin" or "happy face" customarily displayed by those in our industry that refuse to face/disclose the facts.

The following was reported in the Boston Globe's Business section on January 26th, written by Kimberly Blanton:

Massachusetts house prices tumbled 5.4 percent in December, in a sour endnote to the worst year for the state's housing market in a decade.

Amid new evidence the state is still struggling to emerge from the housing downturn, economists said it is likely prices for single-family houses will continue to decline this year. Single-family sales for 2006 were 41,593, which was the lowest total since 1996, according to the Massachusetts Association of Realtors, which released its monthly market report yesterday.

"We're working through the correction," said Larissa Duzhansky, an economist with Global Insight, a Lexington economics and consulting firm. She predicted, "We're going to see home prices going down in 2007."

The backdrop for Massachusetts' woes was the biggest one-year drop in home sales nationwide since 1989, 8.4 percent.

The Northeast and the West Coast were hit particularly hard, the realtors association said. That offset higher sales in housing markets in the South and Midwest, fueling speculation that the housing market may be dampening economic growth.

For single-family houses, last month's price drop was the steepest since last summer, and the pattern of double-digit monthly sales declines each month continued. December's sales dropped 16.6 percent from a year earlier, to 2,980. The report is for sales closed last month and reflects purchase-and-sale agreements signed in October or November.

Jim Gibbons, an agent for Remax Landmark in Stoughton, said "It's going to be the same story this year -- big inventories, big selection". Your house has to be the best house out there in the best condition and priced aggressively, or it's going to sit."

The state realtor association said the supply of houses is now at 10.3 months, two months more than a year ago.

Gibbons said the current situation -- a flood of houses for sale -- is unique because there are so many types of sellers in the market. In addition to those who want to trade up, there are investors trying to dump properties purchased three or four years ago at higher prices, homeowners unable to meet rising payments on adjustable-rate mortgages or threatened with foreclosure, and empty-nesters eager to downsize.

"We've never had that at the same time," he said.