Lower priced homes have acted to improve sales activity in the Massachusetts housing market as buyers took advantage of the federal tax credit in growing numbers. Housing sales have reached the highest level since October, 2005 demonstrating that markets are strengthening.
The record downturn in housing prices, however, is still going on in Massachusetts, but homes values aren't falling as rapidly as they were. The inventory of homes and condos has also dropped, showing that markets are on the mend. However, another wave of foreclosures projected to hit in the early part of the year will act to send housing prices lower as bankers slash asking prices to get the surplus inventory sold.
As home prices decline the whole market will suffer in Boston, which is home to nearly two-thirds of the state's population and has growing unemployment in the financial industry and technology. Rising job losses have contributed to the high number of foreclosures in Boston, which is expected to see improving home sales in the upper end of the market with the expansion of the federal tax credit to move-up buyers.
The inventory of homes has been slashed as a result of lower prices and mortgage rates that are staying near record lows. But Boston housing will have to work through the excess inventory of foreclosures before the market finds its footing, and is forecast to see average housing prices decline another 7.2% in 2010.
| City |
Forecast |
| Boston |
− 7.2% |
| Cambridge |
− 8.6% |
| New Bedford |
− 6.1% |
| Worcester |
− 8.4% |
| Springfield |
− 5.4% |
In Cambridge just outside of Boston, older homes listed for sale are still causing an over abundance of supply from foreclosures, many of which were owned by students who attend nearby Harvard University. The foreclosure epidemic hit Cambridge hard after the real estate boom, and prices rapidly deflated. Homes are now selling at 2000 year prices in Cambridge, which is forecast to decline 8.6% by year end.
More homes are selling in New Bedford due to the first time home buyers' tax credit and expansion of the program for move-up buyers. The foreclosure crisis impacted New Bedford sales during most of last year, and will have a growing influence on the market in 2010. New Bedford homes are forecast to see average home prices decline 6.1% in 2010.
Along Cape Cod, where New Englanders go to enjoy the beach along the strand of towns on the Atlantic Ocean, home prices were some of the last to drop in Massachusetts. The vacation home market has suffered badly from fallout of the financial crisis.
In Worcester, the state's second largest city home values were dropping at double-digit rates, but the deflationary fall has slowed after an onslaught of foreclosures were sold off at bargain basement prices. Worcester is bracing for more foreclosures from adjustable rate mortgage resets and increasing walk aways by homeowners and is forecast to sustain average housing deflation of 8.4% in 2010.
The housing downturn has had a serious impact in Springfield, where home sales have also risen due mainly to lower prices. Springfield may well be the state's most affordable market, especially after prices fell as much as 40% after the boom. Home sales should see an upward trend in 2010 on forecast deflation of 5.4%.
