Home prices, sales plunge in Bay State

The number of homes and condominiums that sold in April plummeted and prices dropped as well, as the housing market showed no sign of shaking off its doldrums. Local agents say the slow start to the crucial spring season has several causes, from the sluggish economy to picky buyers holding out for bargains.

"A lot of buyers are out there, but a lot of them are very cautious. They look at a lot of properties before they want to negotiate. They are very quick to walk away," said Ronn Huth, owner of Buyer's Choice Realty in Wenham. The result, he added, is that "properties have been sitting for a long time."

Many housing specialists were hoping this spring would be busier, spurred by low prices, mortgage rates under 5 percent, and a new $8,000 federal tax credit for first-time home buyers. But growing unemployment and corporate retrenchment have made some buyers skittish, while tighter lending guidelines have made it more difficult for some to get mortgages.

"The prices are low and the interest rates are low, but the banks aren't lending," said Aliza Dash, a real estate agent at Ford Realty Brookline. "I laugh and say, 'Are you ready to get a blood sample to get a mortgage?' "

Meanwhile, owners have been reluctant to put their properties on the market at a time of low prices, meaning there are fewer choices for those who are willing and able to buy. Dash added that some sellers still do not accept the fact their home values have fallen, and so are reluctant to set a low enough price to attract offers. Those that are priced right, she said, sell quickly.

Yesterday, Warren Group, a real estate data provider, reported that single-family home sales in Massachusetts dropped 14.5 percent last month, from April 2008. It was the slowest April since 1990. The median sale price dropped a similar amount, 13 percent, with the midpoint sale price of homes that sold in April at $265,000, down from $305,000 from a year earlier. This is the eighth consecutive month prices have fallen by double digits, according to Warren Group.

Sales of condominiums skidded by 31.1 percent in April, with the statewide median sale price down 11.1 percent to $239,000.

"We still haven't found the bottom, and even when we find the bottom things are going to go sideways," said Bill Wendel, owner of the Real Estate Cafe, an online buyers' service in Cambridge. "I think there is new prudence in the market."

The traditionally desirable, upper-market communities of Cambridge, Brookline, and Sudbury have seen prices hold relatively steady or even increase this year, while the number of sales in those communities has slowed partly because prices haven't moved much. But business is more brisk in communities with inner-city neighborhoods that have a high number of foreclosures: Lynn, Worcester, and Brockton are seeing spikes in sales because home prices have dropped so much, driven down in part by the foreclosures flooding those markets.

It's a "tale of two markets," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies. One market is dominated by motivated sellers, including banks trying to unload foreclosed properties and distressed homeowners seeking a short sale. Bank-owned sales in Massachusetts made up 8.5 percent of single-family home sales for the first four months of the year. A year ago, sales of foreclosed properties made up 5.3 percent of single-family home sales, according to Warren data. Buyers of these foreclosed homes include investors and first-time buyers who remain priced out of conventional markets.

The other market is the traditional one of buyers and sellers, which is stalled. In this market, again sellers are resistant to cutting prices, Retsinas said, while buyers are reluctant to purchase if they don't feel the home is at rock-bottom.

"I don't think first-time buyers and investors alone can restore this housing market," said Retsinas. "Other buyers and sellers are largely standing on the sidelines."

Even some historically stable towns are seeing prices drop. Wellesley, for example, had a 53 percent drop in the number of single-family homes sold during the first four months of the year, compared with the same period of 2008, while the median sale price dropped 13.5 percent.

Although statewide sales and prices last month were lower than in April 2008, they were above levels in March 2009, according to the Massachusetts Association of Realtors, which yesterday reported on transactions during the period that involved a real estate broker.

From March to April, prices of single-family homes were up 7.8 percent, and 5.1 percent for condominiums, according to the realtors association. "It is encouraging to see month-to-month median prices going up, as it is reflective of the increased activity," said association president Gary Rogers, a broker at Re/Max First Realty in Waltham.

The housing markets in the rest of the country are like Massachusetts: slow. The industry's most widely followed measurement of activity, the S&P/Case-Shiller national home price index, continued to show record declines. In the first quarter of 2009, home values as measured by the index dropped 19.1 percent compared with the same period last year - the largest decline in more than two decades.

In Boston, the S&P/Case-Shiller index is down about 18 percent from the housing market's peak in September 2005.

One of the cofounders of the index, Wellesley College economics professor Karl Case, said the new data paint a bleak picture and have prompted him to reconsider his earlier prediction that the housing market would begin to recover this year.

"I've been anxious to see signs of life," said Case.

Jenifer McKim can be reached at jmckim@globe.com.