Housing markets are strengthening in Massachusetts as a result of the home buyers’ federal tax credit, but are projected to slow over the remainder of the year as consumer confidence in the market and the overall economy wanes. Sales increased to the highest level in years, but home price appreciation remains weak.
The upsurge in sales was distributed widely across the single family and condominium sectors. Home values of lower priced homes rose slightly as buyers turned out to purchase more properties, but without further support offered to bolster sales Massachusetts markets should slow over the rest of the year.
However, the inventory of homes and condos listed for sale is decreasing, which is a sign of strengthening. But more foreclosure properties are expected to hit markets over the later half of the year as bankers unload REO properties at cheaper prices further weakening values.
In the greater Boston metropolitan area, which accounts for roughly two-thirds of the state’s population, high unemployment and rising job losses will contribute to more foreclosures even in the upper end of the market. The community will have to work through the excess inventory of homes before it is able to stabilize, which is developing but at a very slow pace.
As troubled properties are sold-off, including short sales in which banks cooperate with homeowners to sell a property for less than what is owed on a mortgage, conditions are expected to improve. Boston is now forecast to see average home prices decline just 4.2% for the year.
Nearby in Cambridge, the inventory of older homes many students at Harvard University reside in has sustained a severe downturn in prices, and the inventory of foreclosures is being somewhat limited by banks and mortgage companies that are more amicably working with homeowners to modify mortgages.
The foreclosure epidemic has been an economic crisis in Cambridge. Homes are now selling at decade old prices in the area, and are now forecast to decline a better 4.6% on average through the end of the year.
In New Bedford more homes sold because of the home buyers’ tax credit and expansion of the program to move-up buyers. The foreclosure crisis has been devastating in New Bedford, and will have a large influence on the market for quite sometime as lenders’ sell their REO properties. New Bedfordhomes are forecast to see average prices decline 3.4% in 2010.
In Cape Cod home sales have also seen an improvement and even high end properties are fetching better prices along the Cape, but creative new mortgage products purchased by some buyers and adjustable rate mortgages that got out of hand hurt values in the area, where New Englanders go to enjoy the beach along the strand of towns on the Atlantic Ocean.
In Worcester, the state’s second largest city home prices were getting so low for so long locals wondered whether they’d ever come back to the levels where they were at the peak of the market. If that ever occurs, it will likely be triggered by another financial disaster by traders on Wall Street.
Worcester will see more foreclosures from adjustable rate mortgages and homeowners walking away from mortgages that have gotten to out of hand, sustaining forecast average housing deflation of 4.0% through the end of the year.
Springfield is now Massachusetts most affordable housing market, and home values shouldn’t be hurt as much as most of the rest of the state through the later half of the year, mainly because they have come down so much on forecast deflation of just 3.4% for 2010.