Mass. condo sales jump 14% in Nov. over '02
Massachusetts condominium sales surged 14 percent last month over the same period last year, smashing the statewide record set in 2002.
"The condo has become the equivalent of the new starter home because single-family homes are out of reach for many buyers," said Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University. "In the 1950s, new homes were built for first-time buyers. Today, new homes are so expensive only trade-up buyers can afford them."
During the first 11 months of the year, 15,819 condos sold in Massachusetts, up from the previous record-setting pace of 14,912 units sold in all of 2002, the Massachusetts Association of Realtors said yesterday.
The state's hot housing market has confounded experts who say they expected home sales to slow. Instead, condo and single-family home sales continue to rise, fueled by immigrants, baby boomers, empty nesters, and first-time buyers taking advantage of the lowest interest rates in a generation.
Fred Breimyer, regional economist at the Federal Deposit Insurance Corporation, an independent federal agency that insures bank deposits, said the increase in mortgage interest rates over the summer was enough to put a single-family home out of reach for many first-time buyers, making a condo the alternative.
The average rate for a 30-year fixed mortgage bottomed out at 5.23 percent in June, according to Freddie Mac's Primary Mortgage Market Survey. By Labor Day, that same mortgage had increased to 6.44 percent. In November, the 30-year rate fell to 5.93 percent.
"Given the high cost of single-family homes in the Boston area, entry-level buyers have two options," said Breimyer. "They can buy a condo, which costs less than a single-family home, or move further away from Boston where single-families cost less."
The average price for a condo in Massachusetts reached $264,985 last month, climbing from $252,964 a year earlier.
Sales of single-family homes also increased in November for the fifth consecutive month, rising 4.8 percent from the same period in 2002.
The statewide average selling price of a single-family home rose 9.4 percent in November to $367,350, up from $335,813 one year ago. Still, last month's average price was lower than the record high of $414,517 set in June.
Single-family sales are still on pace with last year, however. For the first 11 months of 2003, 44,787 houses sold compared to 46,769 for all of 2002.
Peter Casey, president of the Massachusetts Association of Realtors, said the sheer volume of sales surprises him.
"This year could be the best year in history," Casey said. "We began 2003 with higher unemployment and didn't expect the year to end so strong. But interest rates that had climbed over the summer settled down and the economy has turned around."
Inventories are growing in Massachusetts and have eased the growth in prices slightly, Casey said, bringing "more balance" to the region's real estate market.
Through November 24,333 single-family homes were for sale compared to 23,717 for the same period in 2002, a 2.6 percent increase. On the condo side, inventory has grown 15 percent to 9,083 units available in November, up from 7,883 during the same month last year.
Casey believes the market has finally leveled off.
"Sellers are not going to make the big gains that they had been getting for several years, but their value will continue to increase at a steady pace," he said. "And buyers are thrilled because for the first time they have a level playing field." Nationally, existing single-family home sales increased last month to a seasonally adjusted annual rate of 6.06 million units, 6.9 percent above the 5.67 million units in November 2002.
