Boston, once red-hot
Mass. home prices, sales take dive
businesstoday.com
by Scott Van Voorhis
Saturday, October 26, 2002
Bay State home sales plunged and prices dropped last month as the state's once red-hot market cooled, the Massachusetts Association of Realtors reported yesterday.
Despite rock-bottom mortgage rates, single-family home sales fell 20 percent in September from August, while the average home sold for more than 5 percent less, at $348,060, the trade group said.
Condo sales also dropped - by 16 percent - while prices sagged last month. The average condo sold for 7.3 percent less than in August, at $243,172, the group said.
Falling sales and prices locally contrasted with gains nationwide. Sales of already built U.S. homes rose 1.9 percent in September from August, the National Association of Realtors reported yesterday.
While one prominent local real estate leader shrugged off the drop in Massachusetts sales as simply a product of seasonal changes, others said the downbeat numbers point to a possible slowdown in an overheated home market. Judy Moore, 2002 president elect of the state association, said homes are taking longer to sell. Because they stayed on the market for up to three weeks longer, there were more homes for sale and that helped push down prices.
The slower pace of sales is most pronounced among high-end homes priced from $800,000, Moore said.
``I think we are seeing some adjusting,'' Moore said. ``The real estate market is cyclical.''
Recently there has been much published speculation over whether home prices have risen too fast, creating the kind of ``bubble'' that inflated some high-tech and telecommunications stock prices in the late 1990s.
If there is a price bubble, Moore said the latest data aren't a sign that it has popped.
``We are not seeing a bursting by any means, (but) we definitely see a softening in prices.''
But John Burns, a prominent national real estate market expert, said Boston is at the top of his list when it comes to markets that may be overpriced. A real estate consultant in Irvine, Calif., Burns advises home builders and real estate investors on the health of real estate markets across the country.
Burns said Boston sticks out because home-price gains have far exceeded increases in incomes of potential buyers. ``Boston does seem overpriced,'' he said.
But David Drinkwater, president of the state association, blamed a seasonal sales slowdown, not an overpriced market. |
