Our top story this evening the economic struggle hits home sales. Housing prices, a bargain in many areas, mortgage rates are at their lowest in decades. Still buyers are not buying. Sales of previously owned homes fell 27% this past month the lowest in 15 years.
All regions of the country reported sharp declines but Massachusetts, which has been doing well this past year, saw home sales drop for the first time in 12 months.
Our Peter Howe joins us with the local angle.
The first time home buyer tax credit this spring clearly was playing a huge role in driving up home and condo sales and now that the tax credit has expired, it looks like from these new data, another bubble—a mini-bubble—in the housing market has burst.
Like real estate agents across New England, Anthony Lamacchia was expecting to see a slowdown this summer after the first time home buyer tax credit expired. “A lot of the people who would have bought in May and June ended up buying in February, March and early April. So it created an urgency because of that April 30th need for a signed contract.”
What stunned Lamacchia, though, was just how badly sales dropped in July. Down 28% from a year earlier, according to the Mass Realtors Association. That’s the biggest drop since March of 2008 and represented the fewest homes sold in a July since 1990. Nationally the same: U.S. homes sales off 27%.
“We expected the market to greatly slow down,” says Lamacchia, “following the expiration of the tax credit, the thing that did surprise us, it was a worse slowdown than we anticipated.”
Vincent Valvo is with the Warren Group, the publisher of Banker and Tradesman. He looks for sales and prices to drop the rest of the year.
“The first time home buyers tax credit clearly took lots and lots of people and pushed them into the market. You’re going to give somebody an 8000 dollar gift to buy a house? It’s a great incentive.”
So what if you’re trying to get from home for sale to sale pending? Experts say the key in this market is to be realistic, not greedy, about what your home or condo is worth.
“If you’re a seller,” says Valvo, “you have to recognize that the market is working against you, price your house accordingly, you definitely want to price your home as low as you can from the beginning.”
“One of the biggest mistakes we see,” says Lamacchia, “is people shooting too high from the beginning, then their home sits on the market for months on end, and then what happens after months on end? The value comes down.”
Valvo, “It can be painful to price where the market level is really at, but don’t delude yourself.”
Now what is interesting is when you dig into these numbers in Eastern Massachusetts, town by town as a general rule, home sales fell even more than the state average in communities along interstate 495. Places like Franklin, Shrewsbury, and Billerica. But closer to Boston, Cambridge, Revere, Quincy, Somerville, sales held steady or dropped considerably less than the state average, evidence that what was leading the market was people shopping in first time home buyer communities along 495.
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