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Boston-area home prices off 2.7% in a year

But other metro areas see even steeper losses, blamed on overbuilding

By Jenifer B. McKim
Globe Staff / June 1, 2011

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Boston-area home values dropped in March as another downturn in sales pushed prices across the country to new lows since the US housing market collapsed in 2006.

Home prices in the region fell 2.7 percent, compared to March 2010 prices, according to the S&P/Case-Shiller Home Price Indices, which measure repeat home sales and are considered by many to be the best industry markers for real estate.

Other metropolitan areas suffered deeper losses. Minneapolis fell 10 percent in one year, Charlotte, N.C., dropped 6.8 percent, and Miami was down 6 percent, according to Case-Shiller.

For Boston, March was the eighth straight month that housing prices declined. Median prices remain above the lows registered when the Boston market hit bottom in 2009, however.

Barry Bluestone, dean of Northeastern University’s School of Public Policy and Urban Affairs, said the Boston-area market has fared better than others because there was less overbuilding. Elsewhere, overbuilding often led to swaths of houses falling into foreclosure.

“We are in a better place,’’ Bluestone said. “People haven’t loss as much value.’’

Many housing specialists say the numbers for Boston and the United States are disappointing, but not cause for alarm. Harvard University economics professor Edward Glaeser believes home values are slowly stabilizing, not having a double dip downward.

“It’s correct to be mildly depressed,’’ he said. “It is incorrect to be panicking. We are bumping along the bottom.’’

Paul S. Willen, a senior economist with the Federal Reserve Bank of Boston, doesn’t expect prices to spiral downward, either. Buyers who plan to live in a property for at least five years can still take advantage of relatively lower prices and low interest rates, he said.

“If you are thinking that far into the future and you are ready for homeownership and you don’t expect to have to move at the drop of a hat, it is good time to buy,’’ he said.

The Boston-area housing market experienced a smaller boom and bust than the national average — with values currently down about 19 percent from their peak, compared to a 33 percent drop for the 20 major cities tracked by Case-Shiller. The median price for a single-family home in Massachusetts is currently $274,000, according to Warren Group, a Boston company that also tracks real estate.

In 2009, home values began to swell, propped up by eager buyers armed with a now-expired tax credit that gave them up to $8,000 in incentives.

The tax credit brought many additional buyers into the market, but when it ended last year, sales slumped — sending home values down again.

Housing prices also are being depressed by the many foreclosed homes on the market, said Nicolas Retsinas, a real estate professor at Harvard Business School.

“Until we get through this foreclosure quagmire,’’ Retsinas said, “you are going to continue to have downward price pressure.’’

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