Wednesday, August 4, 2010

Condo Prices Still Lag in Housing Rebound

As in the rest of Massachusetts, sales have picked up in Boston for homes and condominiums, though not always with a rise in prices.

According to figures from The Warren Group, sales of single-family homes in Massachusetts have increased through June of this year over the same period in 2009 by 28 percent. The increase for the second quarter was 35 percent.

The increase for condo sales in the first six months of 2010 was 30%, with an increase for the second quarter at more than fifty percent.

The brisk sales match levels that haven’t been seen since the boom years of 2005 and 2006, but the median prices are another matter. For single-family homes, the increase in June and for the first six months of 2010 was around 7 percent. For condos, the increase over the first six months was 5.7%, but the climb in the second quarter and in the month of June was lower, at less than 2 percent.

The Warren Group’s figures from Boston neighborhoods show a general flattening in prices later in the year, especially for condos, and even when sales were more numerous.

Among the areas with an above average increase in condo sales through June of 2010 were Brighton, Charlestown, South Boston, Jamaica Plain, and Mattapan. The largest increase in median price for these sales over the first six months was in Brighton, at more than 13 percent. In other areas, the median prices are down: in Charlestown by almost 2% and in South Boston by slightly more than 1½ percent.

In Jamaica Plain the increase in condo sales through June of this year was more than 39%, but the median price during that time was down by more than 7 percent. In June the drop was almost 8.7 percent.

The co-owner of the Jamaica Plain agency, McCormack & Scanlan, Karen McCormack, says one reason for a softening of condo prices was the ample supply of two-bedroom units.

“Because buyers had more choices,” she said, “there was this idea that buyers didn’t have to pay the asking price.”

But McCormack also reports more buyers from outer suburbs, attracted by Jamaica Plain’s combination of greenspace and proximity to downtown Boston.

“I’m definitely seeing again a resurgence of buyers from the suburbs, whose kids have grown up, and they’re selling their houses,” she said.

There was a different trend in areas close to downtown Boston, where the median price for condos increased over the first six months of 2010 by 12 percent. Sales volume was up, but only by 25% for the whole period, and less than 19% for the month of June.

There was also a contrast with last year in areas more severely affected by foreclosures and distressed sales. The increase in condo sales in Dorchester through June was below the statewide average, but the increase in median price was almost 28 percent. That compares with last year’s double-digit fall-off, when many units in multi-family houses were being scooped up in distressed sales for well below $100,000.

Also showing higher median prices for condos through June of this year, along with more sales, were Roxbury and part of the South End, Mattapan, and Hyde Park. With 118 transactions, the increase in median price for Roxbury and part of the South End was more than 22 percent. Though the number of condo sales through June in East Boston was down by almost 12 percent, the median price was up by almost 16 percent.

West Roxbury had what may have been the strongest contrast between the markets for condos and single-family homes.

For condos, the median price through June of this year was down by more than 20 percent, despite an increase in sales at 15 percent.

According to Joe Donnelly, an agent with West Roxbury’s Donahue-Brennan Real Estate, many of the condos are in brick apartment buildings dating from the 1960’s and 1970’s that were converted in the 1980’s.

“They went up the hottest and the hardest,” he said, “and they fell the most.”

But Donnelly says West Roxbury’s single-family market has lost less than ten percent of its value since the peak of the housing boom in 2005. Through June of this year, the market was close to the statewide average, with sales up by more than thirty percent and the median price a little better than average, increasing by almost 9 percent.

In other parts of Boston with more than twenty sales of single-family houses, there were double-digit increases in the median price through June in Hyde Park and Mattapan, with figures up in South Boston and Charlestown by about 32 percent.

Real estate agents readily acknowledge the sales volume has been given a boost by federal tax credits that were mostly for first-time home-buyers.

“The tax credit has served its purpose and has served as a stimulus to the market,” says The Warren Group CEO Timothy Warren, Jr. “Now, it’s time to withdraw that taxpayer support and let the chips fall as they may, and really see what the market will reach as a natural equilibrium.”

Warren credits two other factors with encouraging buyers: low interest rates, and the improving economy. So far, the recovery has been stronger than average in Massachusetts, but the state is not immune to more recent signs that the recovery is slowing down.