Don’t expect the Massachusetts housing market to make a broad recovery anytime soon.
Home sales this fall are certain to be well below last year, analysts said, and the expiration of home buyers’ tax credits now leaves the market on its own to face the formidable headwinds of high unemployment and tight credit.
Although economists see another real estate crash as unlikely, the outlook remains distinctly unimpressive. Like the overall economy, housing is generally forecast to recover only gradually and unevenly through the middle of next year.
“We’re in the choppy bottom, improving, but at a slow pace,’’ said Rick Loughlin, president of Coldwell Banker Residential Brokerage New England, which has 70 offices in Massachusetts. “The real key issues are jobs and consumer confidence; when jobs come back, you’ll see more of a recovery in housing.’’
Home sales have plunged since June, when most of the purchases driven by tax credits closed, and most real estate agents expect them to remain below year-ago levels for several months.
The tax credits — up to $8,000 for home buyers — expired in the spring. Until then, they had sped up home sales, encouraging buyers to act.
Now, those buyers are out of the market, and even record-low mortgage rates have been unable to entice enough new buyers to replace them. At Fairway Independent Mortgage in Needham, for example, business is booming, but it’s nearly all refinancing, said branch manager Amy Tierce.
Of 100 loans slated to close this month, only eight are for home purchases; the rest are for refinancing, she said.
Meanwhile, home prices have stabilized. In August, the most recent month available, Greater Boston prices rose 1.5 percent, the ninth consecutive month of year-over-year increases, according to Standard & Poor’s/Case-Shiller Index, a widely respected measure of the housing market.
Single-family home sales from July to September fell more than 20 percent from the same period a year ago, according to Warren Group, a Boston real estate tracking firm.
The next few months don’t look any better. The number of homes placed under contract in September and October also declined about 20 percent, according to the Massachusetts Association of Realtors, a Waltham trade group, signaling even lower final sales in coming months, since some deals fall through.
“Appraisals don’t come in right, mortgage commitments go awry,’’ said Vincent Valvo, group publisher at Warren Group. “Barring some miracle — and it has to be a jobs miracle — the housing market is going to be down.’’
Down, however, does not mean dead. The state housing market, after all, is a collection of local markets in which activity can vary widely. In some communities, particularly within Route 128, business is steady if not brisk, and multiple offers for homes that are well priced, well located, and in good condition are not uncommon.
In Lexington, for example, a home priced at $779,000 and close to schools, parks, and the town center, attracted nine offers, including one from a client who lost out to a cash offer, said Barry Nystedt, a buyers’ agent in Newton and president of HomeBuyersAdvisor.com.
In Manchester, a home priced about 6 percent below its purchase price four years ago attracted four offers — all above the asking price, said Lynda Surdam, a Coldwell Banker agent in that community.
In Melrose, Julie and Len D’Andrea priced their three-bedroom Colonial at an entry-level price of $385,000, attracted four offers within five days, and also sold above the asking price.
Julie D’Andrea acknowledged that putting their home of 12 years up for sale was nerve-wracking. They were so worried about selling that they decided not to make an offer on a larger house in Andover until they had their Melrose home under contract.
“There was definitely a little bit of fear that there was no one to buy,’’ she said.
But it’s still a buyer’s market. The couple had their eye on the Andover house for a while, waiting for the price to drop. When it did, they didn’t feel pressure to act right away, giving them time to sell their Melrose home and, ultimately, negotiate an even lower price in Andover. They also locked in a 4.25 percent interest rate on their 30-year mortgage.
Overall, those willing and able to buy should remain in the driver’s seat for a while, analysts said. In addition to economic worries, tighter credit is reducing the pool of qualified buyers, while the recent wave of foreclosures will increase inventory.
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said the housing market and economy appear to be stuck in a chicken-and-egg-type paradox. Housing can’t recover until the economy gets stronger, but the economy won’t get stronger until housing recovers.
“It has to do with confidence,’’ Bluestone said. “Until we regain confidence in the job market and confidence in the housing market, we’re going to bounce along where we are.’’
There are signs of improvement. The state’s unemployment rate fell to 8.4 percent in September, a decline of more than a point from the beginning of the year. Seasonally adjusted housing data, which allow for valid month-to-month comparisons, show home sales rebounding in September from the August low, albeit significantly below last year.
Real estate agents, meanwhile, say the worst days of the housing crash, when they couldn’t even attract lookers to open houses, have passed. In Andover, for example, a recent open house for a home listed at $480,000 attracted 19 couples, said Lisa Johnson, a Coldwell Banker agent in that town. A Haverhill home listed at $271,500 drew more than 30 interested parties over a weekend.
In Sandwich on Cape Cod, buyers seem to be making decisions more quickly, said Beverly Comeau, an agent at Jack Conway and Co., Realtor, headquartered in Norwell. “People who have been watching the market are finding now is the time to find value,’’ she said.
Among them: Stewart Broder, who recently bought a vacation home in Sandwich’s historic district after negotiating a 20 percent price discount and getting a sub-4 percent rate on a 15-year mortgage.
“It was a positive perfect storm: lower prices and low interest rates,’’ said Broder, who lives in Foxborough. “It was good to be a buyer.’’
Robert Gavin Boston Globe November 9, 2010