Realtors See Glimmers Of A Housing Market Turnaround
Ed Daniels, a Realtor with Realty Executives Boston West in Southborough, has had a busy summer.
And for a real estate professional in this economy, that’s a good thing.
The Massachusetts Association of Realtors recently reported a year-over-year increase of 14 percent in single-family home sales in July. That’s the first time this year there were more homes sold in a month this year compared to the same month last year.
So, is it the sign of the long-awaited real estate rebound?
Hold your horses, Realtors say.
Wait And See
Realtors like Daniels are excited about the optimistic news from the July report, but their feelings are tempered somewhat.
The sales figures are being compared to July 2010, the first month in which the market did not have the benefit of the $8,000 federal tax credit for first-time home buyers. Last year, Daniels remembers deals were getting done quickly toward the end of the summer and being squeezed in to meet the deadline for the tax credit.
“That probably stole some sales out of the July numbers” from last year, Daniels noted.
So, this year’s figures are being compared to what was a very slow month last year.
The real test, Daniels said, will be to see how well sales go the rest of this year.
Still, local Realtors said things are looking brighter than they have in the past. Anecdotally, Daniels said that during the first half of the year a lot of clients were talking about buying homes, but weren’t pulling the trigger. This summer, he’s noticed an uptick in activity.
Lots Of Activity
“It seems like everyone is very busy in this market,” agreed David Stead, a Realtor with ReMax Advantage One on Shrewsbury Street in Worcester, who also serves as the Central Massachusetts Vice President for the Massachusetts Association of Realtors.
Record low interest rates are allowing buyers to enter the market who previously may not have taken the plunge, he contended.
“At some point, when you look at it from a 30,000-foot view, consumers are going to look at the market and realize this is a good time to get in,” he said.
However, not all the news is good.
The Boston-based Warren Group recently reported that distressed properties continue to weigh on the market.
Initiated foreclosures in Massachusetts topped 1,400 in July, the highest level for any month this year. But on the bright side, foreclosures are down 38 percent compared to last year. The impact is being felt in the market, though, according to Walter Malony, a spokesperson for the National Association of Realtors.
Market Restraints
The large number of short sales and deals for distressed properties has created a tougher environment to get a deal done, he said. An estimated 16 percent of home sales are agreed upon but not being completed right now, Molony said.
“The market is trying to recover on its own, but it’s being held back.”
Malony said “unnecessarily restrictive” conditions are being placed on some mortgage applicants.
Undervalued Homes
Also, he said, some homes are being undervalued during appraisals because of the large number of foreclosed homes on the market. Homeowners are losing money on the value of their homes, making it difficult to refinance their mortgages even at today’s low interest rates.
Malony explained that a common tool appraisers use is to compare a home to similar properties in an area. But if there are a lot of foreclosures, appraisers sometimes compare home values to those of distressed homes, bringing down the market values of all homes in a neighborhood.
Mixed Short-Term Outlook
“There simply aren’t that many apples-to-apples comparisons to use,” he said.
Overall, the outlook for the rest of the year is not bad, but it’s not good either, Malony said.
NAR is predicting home sales to be relatively flat to only slightly higher this year. The real test, Malony said, will lie in how the rest of the year plays out compared to last year.
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