Massachusetts home prices and sales surged in January, providing added evidence that the state’s real estate market is on the rise. Some see signs of a rebound, but end of tax credit could hurt
Median prices for single-family homes rose 9.6 percent in January to $285,000 compared with the same month a year before, the second increase in two months, according to the Warren Group, a Boston company that tracks the housing market.
Sales volume was up 11.8 percent in January, marking the fourth consecutive month of double-digit percentage increases in single-family home sales, the Warren Group said.
Condominium prices also rose, increasing 16.7 percent in January to $245,000, and sales were up 25.3 percent, compared with January 2009.
The strong data surprised some housing market specialists, who have been pointing to signs of a real estate recovery since last March. Still, many question what will happen in the spring when the federal government pulls back on programs that are keeping interest rates artificially low and a federal tax credit for homebuyers ends.
“We had surprising gains in January, and that’s good news for the economy and that’s good news for the housing market,’’ said Timothy M. Warren Jr., chief executive of the Warren Group. “The real wild card is what will happen after mid-year.’’
Nationwide, home values increased 0.3 percent during the fourth quarter, according to seasonally adjusted data released yesterday by the S&P/Case-Shiller Home Price Indices, which track repeat home sales. Boston-area home values increased 0.9 percent in December, according to the index, widely considered the best measure of home values.
“The indices have established a bottom and are now showing some stability,’’ said David Blitzer, chairman of the Standard & Poor’s Index Committee.
Robert Shiller, cofounder of the home price index, said new data show “dramatic swings in home prices.’’ He said prices dropped 11 percent during the six months before April and then increased 6 percent during the next six months before leveling off.
“There is no precedent for such a sharp turnaround,’’ Shiller said. “We are really in uncertain times.’’
Fueling those doubts are questions about the tax credit’s expiration on April 30. The government extended and expanded the credit last year to include homeowners as well as first-time buyers. To qualify, buyers must strike a purchase deal before May 1 and complete all paperwork before July 1. Once that incentive is gone, housing specialists say, sales may slump again.
Also, the Federal Reserve plans to halt its purchase of mortgage-backed securities, which is helping to keep interest rates down, by the end of the first quarter. Historically low rates have convinced some prospective buyers to commit to mortgages.
And the inventory of homes for sale is down, complicating any assessment of the market’s health. January’s supply of single-family homes in Massachusetts was at its lowest level since January 2001 and marked the 22d consecutive month in which inventory has fallen, compared with the same month the year before, according to the Massachusetts Association of Realtors, which also released data yesterday.
“To get back to a more normal market we still need to see more homes for sale than we currently have,’’ said Kevin Sears, president of the realtors’ association and co-owner of Sears Real Estate in Springfield. “If not, prices will continue to go up to the point where it will impact sales and drive the market back down.’’
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said the new housing data add to optimism that the state’s housing prices and the economy in general have stabilized. “I’m reasonably confident we are going to see a better spring and a better summer,’’ he said.
Jenifer B. McKim Boston Globe February 24, 2010