Is the Massachusetts housing market officially in recovery?
The numbers alone seem to say yes. Median sale prices for single-family homes increased 8.4 percent in February, marking the third consecutive month of higher prices compared with the same three months last year, according to data released yesterday.
Sales volume also rose 13.5 percent compared with February 2009, the eighth straight month of improvement compared with the same stretch last year, according to Warren Group, a Boston company that tracks local real estate. Condominium sales and prices also were up last month.
And there was more upbeat real estate news in another housing report released earlier this week — Boston area home values swelled by 0.3 percent in January in seasonally adjusted data, according to the S&P/Case-Shiller Home Prices Indices.
But these are not normal times, and the accumulation of data does not tell the full story of the market, housing specialists and economists said. A looming question is whether the market will keep its momentum after federal efforts to boost home sales end this spring. The federal home buyer’s tax credit, which has spurred sales nationwide, is coming to an end. To qualify, buyers must enter into a binding contract on a home before May 1, and close the deal before July 1.
Also, the Federal Reserve yesterday halted its effort to keep interest rates at rock-bottom levels by purchasing mortgage-backed securities.
“There is a real concern about what will happen to home sales once the federal government withdraws its support of the housing sector,’’ said Timothy M. Warren Jr., chief executive of Warren Group.
Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies, describes the situation as being like a tug of war. On one side, sales are boosted by more affordable housing prices and pent-up demand; on the other, sales will be slowed by the expiration of a tax credit and a likely rise in interest rates.
Retsinas said he is not ready to declare a winner.
“It’s too early to get the balloons and pop the champagne,’’ he said. “At best, we are about to embark on a sluggish recovery.’’
The housing market is further challenged by pending foreclosures and a high jobless rate, said Alan Clayton-Matthews, associate professor of public policy at Northeastern University. Clayton-Matthews said the new housing data look less impressive if the numbers are seasonally adjusted to consider the slow sales month of February. The median price for a single-family house climbed to $269,950 in February compared with $249,000 during the same month in 2009, according to Warren Group. But that’s lower than it was from July through December, Clayton-Matthews said.
“We are not seeing the same signs of recovery that we saw late last year,’’ said Clayton-Matthews. “The housing market is giving up some of its steam.’’
A shrinking pool of available houses for sale also is stalling the housing market. Inventory of single-family homes on the last day of February fell 3 percent compared with the same day last year, according to the Massachusetts Association of Realtors, which also released housing data yesterday. February’s inventory was the lowest for the month since 2002.
On the upside, February’s decline was the smallest percentage drop since inventory began to fall 23 months ago, said Kevin Sears, broker for Sears Real Estate in Springfield and president of the real estate association. “Momentum continues to build toward more normal market levels across the state,’’ Sears said.
How far interest rates will climb this year, if at all, is unclear. Rates for 30-year fixed mortgages are at historic lows of about 5 percent. Guy Cecala, publisher of the industry publication Inside Mortgage Finance, expects rates will likely drift upward, hovering between 5 and 6 percent. “They are not going to jump up overnight,’’ Cecala said.
Even real estate agents are hoping for more good news. Gary Rogers, with RE/MAX First Realty in Waltham, said he’s seeing a lot of excitement among buyers. He recently sold three properties within days for more than the asking price. But like many others who know the business, he still won’t call it a recovery.
“I feel pretty confident that transactions are going to move forward,’’ said Rogers. “I’m cautiously optimistic.’’
Jenifer B. McKim Boston globe April 1, 2010
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