Prices also are showing signs of improvement, with the median home price in December at $295,000 - up 10.4 percent over the same month in 2008. It was the first year-to-year increase since September 2007, according to data released yesterday by Warren Group, a Boston company that tracks local real estate data.
“The trend is clearly upward and up very dramatically since the end of last year,’’ said Alan Clayton-Matthews, a professor of public policy and urban affairs at Northeastern University.
But housing industry specialists and economists said the positive numbers were probably sparked by an $8,000 home buyers’ tax credit and historically low interest rates, raising questions about whether the market will recede once those incentives go away.
The federal tax credit, which was expanded and extended last year, is scheduled to expire this summer, and the Federal Reserve plans to stop buying mortgage-backed securities - an effort designed to keep interest rates low - by the end of the first quarter.
“What happens if the housing finance market loses its life support?’’ said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies. “Will the government continue its substantial intervention in the spring and if not, is the recovery strong enough to be sustainable without government capital?’’
Even with the boost from the federal government, Massachusetts’ housing recovery is so far modest at best. Although median home prices increased in December, it was not enough to reverse a downward trend for the year. For all of 2009, median prices fell 6.6 percent to $285,000, compared with $305,000 in 2008, according to Warren Group. The annual decline, however, was less dramatic than the 11 percent drop in 2008 and the 10.6 percent tumble in 2007.
“The latter part of 2009 gave us some clear signs that the housing market is stabilizing and heading for a recovery,’’ said Timothy M. Warren Jr., chief executive of Warren Group, who predicted a year of increased sales and flat prices.
Last month, the number of home sales in Massachusetts increased 16.8 percent to 3,350, up from 2,868 during the same month in 2008, the sixth straight month of increases. Condominium sales surged by 28.9 percent in December, the fourth consecutive month of increases.
But for all of 2009, condo sales were off by 6.8 percent and prices fell 8.4 percent, to a median of $252,000 compared with $275,000 in 2008.
Adding to challenges facing the fragile housing market is the shortage of available homes for sale. Inventory of single-family homes was down 14 percent in December compared with the same period 2008, according to the Massachusetts Association of Realtors, which also released data yesterday. December marked the 21st straight month of inventory declines, compared with the same month the year before, the association said.
With fewer choices for buyers, homes sold faster in 2009 than they did the previous year. Single-family homes stayed on the market an average of 136 days last year compared with 144 days in 2008, the realtors’ association said.
“We need more homes on the market if we are to keep prices stable,’’ said Kevin Sears, co-owner of Sears Real Estate in Springfield and president of the Massachusetts Association of Realtors. The Boston-area market led the nation with its housing market collapse in 2005 and could be one of the first to recover, said Karl E. Case, cofounder of the S&P/Case-Shiller Home Price Indices, a measure based on repeat home sales that is widely considered the best indicator of home values in the United States.
Case-Shiller, which also released data yesterday, showed Boston-area home values declined 0.5 percent in November compared with the month before. But values are still 5.6 percent higher than they were in March, when housing specialists believe the local market reached its bottom. Nationwide, home prices increased by 0.2 percent in November.
Case, a recently retired Wellesley College economics professor, said the extent of activity in the spring will indicate whether the market is truly on the mend.
“There are a lot of risks,’’ said Case. “If the spring market develops and expectations start to turn and people start coming out of the woodwork and rates stay down, you could see the market picking up on its own. It’s like breathing without a machine.’’
By Jenifer B. McKim for Boston Globe January 27, 2010
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