The Massachusetts housing market enjoyed its best year ever in 2004, as home-buying activity rose to record levels across the state, a new report issued by the Massachusetts Association of Realtors shows. Home prices also rose for an eleventh consecutive year during 2004, with double-digit appreciation observed in both the detached single-family home and condo markets.
In 2004, the MAR report found that sales of detached single-family homes increased 8.7 percent in Massachusetts, from 46,410 homes sold in 2003 to 50,441 this past year. The 2004 sales volume establishes a new state record for single-family home sales in a single year, eclipsing the prior record of 50,401 homes sold in 1998. Condominium sales also set a new all-time high in 2004, rising 26.7 percent to 19,710 last year to shatter the old record of 15,560 units sold during 2003.
“We’ve seen unprecedented demand for housing this past year, especially among entry-level buyers who are taking advantage of the increased purchasing power afforded to them through today’s low mortgage rates to buy their first home,” said MAR President Maggie Tomkiewicz, of m. macdonald real estate in Dartmouth. “With mortgage rates at their lowest level in a generation, it’s now possible to own a home for the same amount or less per month than the typical rent payment.”
The growth in detached single-family home sales was felt in all seven market areas of the state last year, with the strongest sales gains occurring in the greater Boston, Central (Worcester County) and South Shore regions, where sales rose 15.7 percent, 11 percent and 9.7 percent, respectively. Sales also improved a healthy 4 percent to 6 percent in the Northeast and West regions, while more modest sales gains took place in Cape Cod and southeastern Massachusetts. Meanwhile, the growth in condo sales was concentrated in five markets – Cape Cod, central Mass., Greater Boston, the Northeast, and South Shore – with the central, Greater Boston and Northeast regions all experiencing sales gains of 20 percent or more from 2003 to 2004.
“Condominiums are enormously popular right now because they are able to satisfy the housing needs of first-time buyers, empty-nesters and second-home buyers,” Tomkiewicz said. Last year, in fact, one in every four residential properties sold in Massachusetts was a condo, according to data from the MAR report.
Specifically, fourth-quarter sales of detached single-family homes increased 3.6 percent to 12,274 units sold in the final quarter of 2004, the third highest sales total on record for an October-December period. Only the fourth quarter of 1998 when 12,696 homes closed and the fourth quarter of 1997 when 12,368 homes sold saw greater activity. Meanwhile, condo sales set a new record for fourth quarter sales volume this past year at 4,729 units sold, an increase of 27.8 percent over the comparable period in 2003. The prior record was set just last year when 3,700 condos sold in the fourth quarter.
Despite a more plentiful inventory of homes available for sale, data from the MAR report show that housing prices continued to rise steadily across the state this past year to new record highs. In the detached single-family home market, the statewide median selling price increased 11.5 percent last year, from $305,000 in 2003 to $340,000 in 2004. In addition, the statewide median selling price for condominiums rose 15.1 percent, from $225,000 a year ago to $259,000 during 2004.
Healthy price appreciation also occurred in every region of the state this past year, both for detached homes and condos. Annual median selling prices for detached single-family homes increased 7-10 percent in the Cape Cod, Worcester County and Northeast markets, with even stronger price gains of 12-13 percent noted in the greater Boston, Southeast, South Shore and West regions. In the condo market, annual selling prices rose 8-10 percent in the Northeast and greater Boston areas, 11-13 percent in the Central, Southeast and South Shore regions, and 18-23 percent in Cape Cod and western Mass.
“Today’s healthy price increases are consistent with a market in which demand has outpaced supply, and we think that trend will continue in the coming year as large numbers of immigrant buyers and baby-boomers in their peak earning years hit the market,” Tomkiewicz said. “The good news for buyers is that we should see some moderation in price appreciation in 2005, especially if mortgage rates rise as forecasted,” she added.
Sales and price data from the MAR report reflect transactions occurring through Realtor-affiliated multiple listing services in the commonwealth, and account for approximately 80 percent of all real estate sales in Massachusetts.
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