SEPTEMBER AND 3RD QUARTER 2008 HOUSING REPORT

MASSACHUSETTS ASSOCIATION OF REALTORS®

Single-Family Home Sales Increase in September as
Median Prices Now Under $300,000

Third quarter sales down for single-family and condos
while multi-family sales increase by 40%

WALTHAM, Mass. – October 27, 2008 - The Massachusetts Association of REALTORS® (MAR) reported today that single-family home sales were up five percent in September compared to the same time last year. This is the first year-over-year increase in monthly home sales in 2008. Condominium sales were down 6.2 percent in October compared to the same time last year. The median price for a single-family home in September was $295,000, the first time median prices have dipped below $300,000 since April 2003.
In the third quarter of 2008, single-family home sales were down 7.9 percent while condominium sales were down 11.5 percent compared to the same quarter last year.
“With median prices down below $300,000 for the first time since 2003, buyers are taking advantage of the affordable prices and starting to get back into the market,” said MAR President, Susan M. Renfrew, broker/co-owner of Renfrew Real Estate in Greenfield. “While transactions are up, we will still need to see how the changes in the financial markets and the upcoming election will impact sales going forward.”
There were 3,272 detached single-family homes sold this September, a five percent increase from the 3,116 homes sold the same time last year. On a month-to-month basis, home sales were down 18.8 percent from 4,032 homes sold this past August. A double digit percent decrease from August to September is typical.
The median selling price for single-family homes in September was $295,000, a decrease of 13.2 percent compared to $340,000 in September 2007. This is the first time the median price has dropped below $300,000 since April 2003, when the median price was $291,750. On a month-to-month basis, the September median selling price was down 9.2 percent from the August 2008 median of $325,000.
The condominium market experienced a 6.2 percent decrease in the number of units sold this September, compared to the same time last year (from 1,386 units sold in 2007 to 1,300 units sold in 2008). This is the smallest decrease since August 2007 when there was 3.0 percent gain. On a month-to-month basis, condominium sales were down 28.2 percent compared to 1,811 units sold this past August. Similar to single-family home sales, a double digit percent decrease from August to September is typical.
Condominium median selling prices in September were down 7.3 percent from $275,000 in 2007 to $255,000 in 2008. Compared to this past August, the median selling price of a condominium is down 12.8 percent (from $292,450).
“Despite all the financial turmoil of the past weeks and months, it continues to be a very good time to buy for qualified first-time homebuyers. In addition to the reduced prices and still-favorable interest rates, programs such as first-time homebuyer tax credit, increased FHA loan limits and affordable loan products from MassHousing are easily accessible,” said Renfrew.

Inventory and Days on Market:
The inventory of residential properties on the market as of September 30, 2008 decreased 13.6 percent compared to the same time last year (from 53,957 listings in 2007 to 46,598 listings in 2008). At the current sales pace, this represents approximately 10.2 months of supply, a decrease from 12.0 months of supply in September 2007. On a month-to-month basis, the average months of supply is up from 8.1 months in August 2008. It is considered a balanced market when there are between 7.5 and 8.5 months of supply.
The inventory of single-family homes decreased 12.0 percent from September 2007 (37,232 listings in 2007 to 32,757 listings in 2008) which translates into 10.0 months of supply in September 2008. This is down from 11.9 months of supply last year and up from 10.3 months of supply in August 2008.
The condominium market saw September inventory decrease by 17.2 percent from last year (16,725 listings in 2007 to 13,841 listings in 2008), which translates into 10.6 months of supply, down from 12.1 months in September 2007 and down from 7.6 months this past August.
Detached single-family homes stayed on the market an average of 134 days in September 2008 compared to an average of 129 days in September 2007, while condos stayed on the market an average of 143 days, up from an average of 134 days in September 2007. On a month-to-month basis, days on market for single-family homes were up from 138 days and condos were up from 136 days in August.

Quarterly Information:
The number of single-family homes sold in the third quarter of 2008 was down 7.9 percent compared to the same time last year (12,195 homes sold in 2007 to 11,235 homes sold in 2008). Median selling prices were down 10.4 percent from $355,000 in 2007 to $318,000 in 2008.
The condominium market experienced a drop of 11.5 percent in the number of units sold in the third quarter compared to the same quarter last year with 5,555 units sold in 2007 to 4,914 units sold in 2008. Median selling prices were down 2.8 percent from $288,000 in 2007 to $280,000 in 2008.
The multi-family market saw a 40.3 percent increase in the number of third-quarter sales compared to the same time last year with 1,304 homes sold in 2007 and 1,830 homes sold in 2008. Median selling prices were down 34.7 percent compared to the third quarter last year from $325,500 in 2007 to $212,500 in 2008.
Due to changes in reporting at local boards, second quarter multi-family data was not available previously. During the second quarter, multi-family home sales increased 22.9 percent from last year with 1,311 homes sold in Q2 2007 and 1,611 homes sold in Q2 2008. Multi-family median selling prices decreased 32.8 percent from the second quarter last year from $340,000 in Q2 2007 to $228,500 in Q2 2008.

Quarterly Regional Sales Data:
Regionally, every part of the state saw a decrease in sales of single-family homes compared to the same quarter last year, except Cape Cod, which saw an increase of 6.2 percent (801 homes sold in 2007 compared to 851 homes sold in 2008). Of the seven regions, the Western region experienced the largest drop in sales at 12.9 percent with 1,703 homes sold in Q3 2007 compared to 1,484 homes sold in Q3 2008.
While the Western region experienced the largest drop in home sales, it also experienced the lowest drop in median prices at four percent from $215,900 in 2007 to $207,250 in 2008. Conversely, while Cape Cod had the only increase in sales, that region of the state that had the largest drop in median prices at 16.3 percent from $409,000 in 2007 to $342,500 in 2008.
In the condo market, the Western region had the smallest drop in sales, with a 6.9 percent decrease compared to the same quarter last year with 275 units sold in 2007 to 256 units sold in 2008. The Southeast region had the biggest decrease in condo sales at 26.2 percent, going from 61 units sold in 2007 to 45 units sold in 2008.
The Western region had a 6.6 percent increase in median prices (from $160,000 in 2007 to $170,500 in 2008). The Southeast region experienced the biggest drop in median prices, with a significant 25.2 percent drop compared to the same quarter last year (from $189,900 in 2007 to $142,000 in 2008).
In the multi-family market, there were extreme increases in sales activity during the third quarter, with only the Southeast seeing a decline of 6.4 percent compared to last year (110 homes sold in 2007 to 103 homes sold in 2008). The Northeast region had an 85.8 percent increase in the Q3 compared to the same time last year with 226 homes sold in 2007 compared to 420 sold in 2008. Second quarter multi-family sales activity showed large increases for all regions except the Western region with a 0.5 percent decline from Q2 2007, and Cape Cod with a 15 percent decline from Q2 2007.
Despite the sales increases in Q3 and declines in Q2, only Cape Cod saw median price increases for multi-family homes. The median price on Cape Cod went up 7.2 percent in Q3 from $368,500 in 2007 to $395,000 in 2008, and 9.6 percent in Q2 from $375,000 in 2007 to $411,000 in 2008. The Northeast region saw the largest median prices decreases for both quarters, with a 42.8 percent drop in Q3 from $314,750 in 2007 to $180,000 in 2008, and a 33.5 percent drop in Q2 from $310,000 in 2007 to $206,000 in 2008. In Q2 the Central region also saw a 33.5 percent drop in median prices from $248,000 in 2007 to $165,000 in 2008.
“I feel it is a positive sign to see that investors are coming back into the multi-family market,” said Renfrew. “Two- and three-family homes are an important part of many communities in Massachusetts, and qualified ownership of these properties is an important step in stabilizing these neighborhoods.”

About the Massachusetts Association of REALTORS®:
Organized in 1924, the Massachusetts Association of REALTORS® is a professional trade organization with more than 21,000 members. The term REALTOR® is registered as the exclusive designation of members of the National Association of REALTORS® who subscribe to a strict code of ethics and enjoy continuing education programs.

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“The Shortest Path To Foreclosure Relief”

“The Shortest Path To Foreclosure Relief”

By: Peter P. Casey, GRI, CRB, RECS
Prudential Wilmot Whitney Real Estate


Some time ago, probably three or four years now, my colleagues and I began to notice an increasing trend toward what we saw as risky mortgages; risky for lenders and borrowers alike.

Interest rates were in the low to mid 5% range, money was easily available and many borrowers were encouraged to choose variable rate, interest only loans. It allowed them to buy larger homes, make lower monthly payments or both or refinance, using available equity to generate cash. Such loans, possibly appropriate for a few financially strong short-term borrowers, are almost always ill advised for others. Rate increases of just two or three points could, and in many cases did, force far too many borrowers into default.

In addition, substantial political pressure was brought against lenders to lower mortgage qualification standards for unqualified buyers. While lowered standards increased homeownership opportunities, it left those borrowers vulnerable to default. In either case, default rates substantially higher than normal, not surprisingly, have been the result.

As most of these loans were sold to Fannie and Freddie and later packaged as securities by Wall Street, the crisis partially caused by unwise and overly aggressive mortgage lending has escalated far beyond housing. It was never supposed to get this far, however. “Short sales” were one solution expected to prevent a rash of foreclosures. Yes, there would be losses but those losses would be substantially lower than losses resulting from a lengthy foreclosure process. But have short sales, a “foreclosure mitigation tool” if you like, worked?
A short sale, for clarity, is a sale that occurs when the sale price of a property is not sufficient to pay the total of all mortgages, liens and costs of a sale and when a seller cannot bring sufficient liquid assets to the closing to cure all deficiencies. It can also occur when a borrower is in arrears or headed for foreclosure or when the value of a property has fallen below the outstanding balance of the mortgage.

Short sales, by design, should prevent foreclosures. They would relieve borrowers of obligations they are no longer able to fully satisfy and preserve some modest credit worthiness while, at the same time, would reduce losses suffered by lenders. On average, the Towers Group estimated in a 2002 study, foreclosures result in costs of $58,759 and take eighteen months to complete. Short sale properties sell faster, attract higher prices and reduce costs and time delays associated with foreclosures.

When successful, short sales help stabilize housing prices by avoiding typically lower foreclosure sales prices. Neighbors are less affected by falling values in the neighborhood and the communities tax base remains relatively stable.

Unfortunately, Realtors® are experiencing roadblocks to their attempts to assist with short sales primarily with lender response times. It is not unusual to wait months for a response to an offer or to have a lender reverse its acceptance of an offer at the last minute. The process has so frustrated buyers that they approach short sales with great caution or avoid them in favor of other properties.

Short staffs, inexperienced lenders’ officials and artificially inflated appraisals resulting from a failure to properly calculate the effect of neighborhood foreclosures on property values are part of the problem. Approvals from second mortgage holders and others with financial interests in the transaction have also contributed to the problems. Short sales are clearly not working as expected but, if the problems can be resolved, short sales could continue to represent part of the solution.

On September 17th, Congressman Barney Frank, Chairman of the House Financial Services Committee, having heard Realtor® concerns, quickly convened a hearing to look into this and related issues. I sincerely hope the Committee, working with mortgage lenders, manages to find ways to improve the success rate for short sales. At risk homeowners and lenders should both benefit from the discussion and taxpayers might come out of this crisis with limited damage.

(END)