Looking to buy a house this spring? Join the (growing) crowd. Improving economy, low rates building up buyer demand
Motivated by the improved economy and a fear that interest rates will definitively head upward, more prospective homeowners are scouring listings and trolling open houses these days, real estate agents said.
But what would help kick the region’s key spring market into high gear is an ample supply of well-priced and attractive homes for sale.
“There is a lot of pent-up demand for the right properties,’’ said broker Gary Dwyer, the owner of Buyer Agents of Boston. With more buyers than sellers, Dwyer said, “It’s going to be a competitive market in the Greater Boston area. Properties that are priced accordingly are going to go quickly.’’
Until now, though, it’s been a slow start to the most active market of the year. Heavy winter snows helped slow the number of single-family homes sold in February by 15.7 percent, compared to the same month last year, according to Warren Group, a Boston company that tracks local real estate.
But prices have remained relatively stable since dropping precipitously from the market peak in 2005.
Home prices for Massachusetts are nearly 17 percent below the market top, and have been bouncing along a bottom for about two years, according to the S&P/Case-Shiller Home Price Indices. And some communities appear to have moved beyond the downturn, with home prices posting moderate increases.
For example, the median price for a single-family home in Cambridge in 2010 was $755,500 — about 12 percent higher than the city’s median home prices in 2005 and a 10 percent increase from 2009.
In contrast, median home prices in Worcester, a city hard hit by the housing crisis, fell to $170,000 in 2010 — down about 31 percent from 2005 and about 2.3 percent below 2009 values.
Laurie Cadigan, the president of the Massachusetts Association of Realtors, predicted more sellers will price their properties to sell — having learned the hard way that unrealistic prices can doom a property to the unwanted bin. She said sellers have been slow to put their homes on the market, instead fixing up damage from the winter onslaught and waiting for yards to green.
“People who are putting their homes on the market are being more critical about not wanting to be on the market forever,’’ said Cadigan, the owner of Barrett & Co. Real Estate in Concord. “Buyers are coming in fully prepared with a lot of research.’’
Alex Coon, Boston-area market manager for the online brokerage, Redfin.com, advised sellers not to get too greedy if they get multiple bids for their properties, a phenomenon he has seen increase this spring. Coon said he has seen incidents where a seller accepted a good offer and then balked during negotiations, banking on another eager buyer in the wings.
But in this market, Coon said, properties can lose their shine quickly, and might not get the same offer later.
“Don’t get too confident too early,’’ he said. “There is this wave of crazy demand and then it peters off.’’
As for buyers, he advised them not to get too desperate: More properties will come on the market as the weather improves.
“That first wave of houses can be a little bit nuts,’’ he said. “There is a large group of people who are waiting on the sidelines, saving their money and basically starting to understand that rates can’t stay like this forever.’’
Mortgage interest rates remain very low for both conventional loans — up to $417,000 — and for larger amounts, known as jumbo loans. Home buyers purchasing a conventional loan with a 30-year fixed rate mortgage can still expect a rate below 5 percent.
Guy Cecala, publisher for the Maryland-based industry newsletter, Inside Mortgage Finance Publications Inc., said most lending specialists had assumed interest rates would have gone up over the past year as the economy improved. But they haven’t — yet.
“The conventional wisdom is they are drifting upwards,’’ Cecala said.
Qualifying for a loan continues to be a challenge as lenders remain conservative in reaction to the loose lending that led to the subprime meltdown and subsequent financial crisis that exploded in 2008.
Amy Tierce, head of Fairway Independent Mortgage in Needham, advised buyers and their brokers to have financing in hand before even making an offer on a home. Tierce said buyers can be shocked to find their lenders decline a mortgage when they are ready to close a deal, despite having been preapproved for a loan months earlier.
To avoid last-minute surprises, buyers should expect a complete financial review before receiving even a provisional loan approval, Tierce said. That goes for sellers too, she said, if they are looking to buy another home and don’t want to complicate the sale.
“A real approval should require a pile of paperwork,’’ she said. “Somebody could make an offer they think is solid and then get declined later.’’
Still, it appears the biggest challenge to the market is the lack of attractive, well-priced homes for sale. In February, for example, the inventory of available single-family homes fell 3 percent compared to the same month last year, according to the Mass. realtors group. Inventory of condominiums fell even farther — 11 percent — in February compared the year before, according to the association. More important, to buyers at least, is whether the market is still top-heavy with properties that are overpriced or otherwise unappealing.
Angela Harkins, the owner of Angela Harkins & Associates Real Estate in Westford, said she’s booked with buyers looking for the right place. “They are waiting for the spring inventory to come on and it hasn’t happened yet,’’ Harkins said. “We are dying for inventory.’’
Jenifer B. McKim Boston Globe April 3, 2011
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