Sellers chop asking prices as housing market slows
Cuts of up to 20% are now common as analysts see signs of a 'hard landing'
By Kimberly Blanton, Globe Staff | December 9, 2005
Boston-area homeowners trying to sell their houses are sharply reducing asking prices -- in some cases, by $100,000 or more -- in response to the sudden slowdown in the real estate market.
Demand for single-family homes has declined as prices have risen in recent years and interest rates have begun to climb, causing the number of properties on the market to pile up.
The median price of a single-family home in Massachusetts has dropped 7 percent in the past two months, to $349,000 for sales that closed in October. But reductions in asking prices of 10 percent or 20 percent are now common in both high and moderately priced neighborhoods, according to real estate agents and listings of homes for sale. In Cambridge, price cuts averaged $300,000 in a sampling of a dozen houses listed in the $1.25 million to $4.3 million price range. In suburbs like Tewksbury and Hopkinton, homes originally listed for around $500,000 have been slashed to the low $400,000s.
Asking for less: A tale of three homes
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'The evidence -- both early data and the anecdotes -- are pointing more toward a hard rather than a soft landing" in the housing market, said Nicholas Perna, an economic consultant in Ridgefield, Conn. 'Prices could come down. Could it be 10 to 15 percent? There's no way of knowing, but what we're getting is more clues that you've got a decline in prices underway.
Agents said price cutting began last summer but accelerated in the past two months and is far more frenzied than in 2004, a year of record sales volume. Today, homeowners in no rush still have the option of letting their listing expire, unsold, and putting the house back on the market in the spring when brokers hope conditions will improve.
But those who need to sell quickly -- couples in the midst of a divorce, employees who are relocating to another region, or owners who are purchasing another home, for example -- may have no choice but to entertain offers they would have scoffed at months or even weeks ago.
'It's unbelievable," said Polly Drinkwater, an agent with Coldwell Banker Cambridge, who has dropped the price on one of her listings $550,000, or 22 percent, since March. These 'are very large drops," she said.
Last February, Gary and Susan Kazmer were confident of selling their Foxborough home for $949,900. He had landed a high-level job in Manhattan, and the couple planned to relocate their three daughters during the summer to a house they purchased in Mendham, N.J., with a bridge loan.
They built the Foxborough house on a pond in 1997 and filled it with extras: two marble fireplaces and hardwood floors with dark cherry borders. 'We called it our wow house," he said.
But it attracted little interest at that price, and Gil Campos of Re/Max Real Estate Center in Foxborough lowered the price to $899,000 in early August. Since then, it has been reduced four times, to $800,000. 'That's an unbelievable spiral," he said.
The Kazmers' limbo ended this week, when they accepted an offer, which Campos declined to disclose.
'It never would've sold if it hadn't been reduced," he said. But, he added, 'Once you're in that price-reducing mode, all the vultures are out, the people looking for a deal. I've had the most ridiuclous offers I've ever had."
Some houses are now listed below what buyers paid a few months ago for a similar house, making it very difficult for real estate agents to estimate an asking price for clients.
In September, Steve Levine of Re/Max First Choice in Northborough apparently priced one client's house right, at $712,000. It sold 'within days" of putting it on the market Sept. 25, he said. But currently, two similar houses are for sale in the same area, at $689,000 and $699,000, he said, and 'those aren't moving."
Moderately priced homes are feeling the brunt of the price squeeze, according to an analysis of MLS listing data by Cambridge broker Bill Wendel.
Statewide, 38,418 houses had priced reductions between Jan. 1 and Nov. 24, or 22 percent more than the number of reductions during the same period in 2004. But the number of price reductions on homes between $500,000 and $1 million increased by 36 percent. One price segment that 'jumps off the page as soft," said Wendel, is the $500,000 to $600,000 price range, the fourth most active segment of the single-family housing market. It had 1,258 more markdowns, up 40 percent from last year.
Coldwell Banker agent Egor Evsiouk said many househunters have walked through his client's spacious 1970s Colonial in Tewksbury, which needs 'cosmetic updating" but abuts state conservation land. Since late July, the Willants have cut the price by $100,000, or 20 percent, to $429,000, barely above the town's assessed value for the property.
The house is an 'albatross around my neck," said Elsie Willant, creating so much stress she developed an inflamed sciatic nerve that has immobilized her. In the midst of separating from her husband and still grieving the death, years ago, of her oldest daughter, she is anxious to 'move on" and buy a place in Maine, closer to her second daughter.
But first they must sell. Willant said they received one 'ridiculous" offer of $380,000. 'There is nothing wrong with this house," she said.
Kimberly Blanton can be reached at blanton@globe.com.More on the Massachusetts housing market at www.boston.com/business/specials/realestate/
© Copyright 2005 Globe Newspaper Company.
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