Despite a cooling of detached single-family homes in the second quarter, demand for condominiums set a new record in Massachusetts, the Massachusetts Association of Realtors reported.
During the spring quarter, the MAR report found that detached single-family home sales slowed, falling 5.2 percent from 14,888 homes sold in the three months from April-June 2004 to 14,118 in the comparable period this year. Meanwhile, condominium sales rose sharply to a new all-time quarterly high, climbing 17.2 percent from 5,831 units sold in the second quarter last year to 6,832 from April-June 2005. The prior record for most condos sold in one quarter was set less than a year ago, when 6,217 condominiums were sold in the third quarter of 2004 in Massachusetts.
“It remains an active market, but with a larger selection of homes now available the pace of sales is less accelerated than in recent years,” said MAR President Maggie Tomkiewicz, of M. Macdonald Real Estate in Dartmouth. “There’s still a large pool of buyers, but due to affordability issues, the type of product being built and demographic factors, they’re turning increasingly to the condo market. The challenge is finding affordably priced single-family homes for entry-level buyers.”
The market’s continued strength is evident in the fact that the 20,950 detached single-family homes and condos sold in the second quarter of 2005 set a new state record for sales volume in the spring quarter, eclipsing the 20,791 homes and condos sold from April-June 2004. Notably, one of every three single-family properties sold last quarter was a condo.
“Today, condominiums not only define the first-time buyer market in many communities, they’ve also become the domain of many baby-boomers looking to downsize or purchase a second home,” Tomkiewicz said.
Regionally, sales of detached single-family homes fell in five market areas of the state during the second quarter, declining 3 percent from a year ago in the Northeast region, 7.5 percent in greater Boston, 8.3 percent on the South Shore, 11.1 percent on Cape Cod (Barnstable County), and 11.5 percent in southeastern Massachusetts. Elsewhere, sales were essentially flat, rising 0.1 percent in western Massachusetts, while slipping 0.5 percent in Worcester County from year-ago levels.
Conversely, condominium sales increased steadily in six of seven regions of the state this spring. Double-digit sales gains were observed in greater Boston (+25.6 percent); western Mass. (+18.5 percent); the Northeast region (+14.5 percent); and South Shore (+11.1 percent) over the past year, while sales also rose a healthy 3 percent-5 percent in Barnstable and Worcester counties.
In the past year, the inventory of single-family properties (detached homes and condos) on the market has risen 19 percent, from a monthly average of 42,004 listings in the second quarter of 2004 to 49,931 in the same quarter this year. At the current sales pace, this represents 7.2 months of supply, an increase from 6.1 months of supply last spring, and is the largest supply of homes for sale in nine years, dating back to the spring of 1996 when there was a monthly average of 43,569 listings statewide.
Home prices, which rose for a 47th consecutive quarter, have begun to moderate, in response to rising inventory levels, an indication that the housing market is transitioning from a seller’s market to one that is more balanced, MAR officials said.
The larger selection of homes from which to choose has helped to provide a better balance between supply and demand, and that’s led to more modest price appreciation in the past 12 months. In the detached single-family home market, the statewide median selling price increased 6.4 percent, from $343,000 in the second quarter last year to $364,900 in the spring quarter of 2005. In addition, the statewide median selling price of condominiums rose 7.7 percent, from $259,950 in the second quarter of 2004 to $280,000 in the same three-month period this year. Prices in each market set new record highs.
“Home buyers will be pleased to learn that the days of annual double-digit price appreciation appear to be over, for the most part, while sellers can take comfort in knowing their home will to continue increase in value, even as sales slow,” Tomkiewicz said. “The return to modest, single-digit price appreciation will help ensure the long-term health of the market.”
Regionally, every market area of the state experienced positive price appreciation for detached single-family homes during the second quarter. Annual price gains of 4-6 percent occurred in Central, greater Boston, Northeast, Southeast, and South Shore regions, while prices rose an even healthier 7.8 percent on Cape Cod and 11.1 percent in four western-most counties of the state over the past year.
In the condo market, regional price changes varied in the spring quarter, with annual price increases of 6 percent-7 percent observed in the greater Boston, Northeast and South Shore regions, and 13 percent-15 percent price appreciation recorded in Worcester County and western Massachusetts. Elsewhere, median selling prices slipped 0.5 percent in Barnstable County/Cape Cod, and declined 11.3 percent in the greater Fall River-New Bedford market.
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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