Housing markets are following the national trend in all of Massachusetts except where the summer sun sets on the beaches of Cape Cod. Foreclosures are hammering the economy in most places as home values fall at double-digit rates as forecast by Housing Predictor.

The number of foreclosures in Massachusetts is growing as homeowners are unable to refinance their properties due to falling values, upwardly adjusting adjustable rate mortgages and tougher mortgage qualifying criteria. The downward pressure is evident as the financial crisis takes hold and prices are forecast to fall more throughout at least the end of the year.

Increasing job-layoffs and cutbacks is making life tough in Downtown Boston for many of those employed in finance, where layoffs have been plentiful. The lay-offs are triggering higher rental vacancies amid the worst downturn in real estate sales that Bean Town has seen in at least 20 years.

There’s no denying that Boston was an exception to the national downturn until foreclosures pressured the market. In the midst of the worst economy since the Great Depression, multi-million dollar condos in downtown Boston were selling when nearly every other metropolitan area in the country was stagnant in housing sales. As sales prices decline in value, Boston is projected to see a further increase in foreclosures, and is forecast to deflate an average of 16.8% in value in 2009.

Outside of Boston in Cambridge, the home to Harvard University, old New England style homes are piling up on the market to provide the excessive inventory that no area of the country wants to experience. Housing sales have dropped by more than half as Cambridge suffers through the housing depression with a sweeping downfall in real estate values forecast to deflate 17.6% in 2009.

City	Forecast
Boston	−  16.8%
Cambridge	−  17.6%
New Bedford	−  14.7%
Worcester	−  14.1%
Springfield	−  10.8%
Lowell	−  13.4%

Bargain priced properties are selling in New Bedford, triggered at least to some degree by the federal government’s $8,000 first time home buyers credit. The increase in foreclosures and accompanying short sales triggered by adjustable rate mortgage resets are producing a slightly more active market than in other areas. But the reprieve is only expected to be short-lived. New Bedford home values are forecast to drop average home prices 14.7% by year’s end.

In small towns along Cape Cod, where New Englanders flock to the beach for the summer sun, home sales are increasing as buyers step up hoping to take advantage of the market’s lower priced properties.

In Worcester, the state’s second largest city home values are falling at double-digit rates after climbing steadily for more than a decade. The foreclosure epidemic has forced hard hit lenders to sell at much lower prices than other homes are listed at in order to attract buyers. The epidemic of foreclosures is hitting Worcester housing values hard and is forecast to deflate 14.1% on average in 2009.

The credit crisis is also being felt in Springfield, where home sales are also declining, but not as rapidly as other more urban areas like Boston. The average cost of a home in Springfield is still one of the most affordable in the state, which will help to slow deflation. Springfield home values are forecast to deflate 10.8% in 2009.

In Lowell, the market is taking a hit as employers shed jobs, which means more services will probably have to be cut due to lower property tax collections. Lowell is projected to see a slower housing market in the remainder of 2009 on forecast deflation of 13.4%.