Declining home prices boost sales

Sliding home prices are bringing out buyers in Greater Boston, increasing sales, reducing inventories, and even reviving bidding wars in some communities.

After more than a year of plunging sales, lonely open houses, and proliferating for-sale signs, realtors said many sellers are finally willing to lower prices. As a result, houses sell.

"The mantra for sellers is price, price, price," said Linda O'Koniewski , a broker owner of Re/Max Heritage in Melrose. "You have to be better priced than the competition. This market is unforgiving if you overprice."

And homes priced to move are doing just that. Two years ago, for example, said Soraya Cacici , another agent at the Re/Max Heritage office, she would have priced a three-bedroom ranch on Salem Street in Wakefield for about $370,000. Two weeks ago, she put it on the market for $319,900.

The result: six offers in eight days, with the winning bid coming in the mid-$300s, she said.

At the advertised price, "we would have been almost giving it away," she said. "But we wanted to price it very, very competitively."

The competition for the Wakefield ranch is part of an unsettled housing market working out the excesses of the recent boom. In many places sales are still slow, offers few; pockets of some cities, usually in poorer neighborhoods, are being hurt by the rising number of foreclosed homes. But other areas, generally those close to Boston, are reviving.

These mixed signals are consistent with a market still feeling its way out of a downturn, analysts said.

"It's pretty clear the market hasn't found a bottom yet," said Terry Egan , editor and chief of publications at the Warren Group, which publishes real estate data. "The pace of sales has been pretty steady, but inventories are still only slightly lower than a year ago."

The number of homes on the market has declined from last year's peak, but is still well above those of recent years. In April, the state had a 10.3- month supply of single family homes, compared with 9 months in 2005 and 7.3 months in 2004, according to the Massachusetts Association of Realtors.

The only way to cut supply, analysts said, is for prices to fall low enough to entice home shoppers to buy. And that's starting to happen. In Norfolk County, which includes Quincy, Braintree, and Dedham, the median price of homes coming under contract this spring fell $10,000, to $379,900, about 3 percent below a year ago, according to Multiple Listing Service Property Information Network. Meanwhile, pending home sales have risen about 1 percent.

"This is how corrections work," said Alan Clayton-Matthews , a professor of public policy at the University of Massachusetts at Boston. "When there's excess supply, prices will adjust to clear it. And they're not going to adjust upward."

Clayton-Matthews projects prices will hit bottom about a year from now, and then begin to rise slowly. Economists at the National Association of Realtors forecast a bottom by the end of this year.

A number of factors will keep the pressure on prices, economists said. Foreclosures are at the highest levels in years, as homeowners who borrowed heavily to buy when prices peaked can't make payments. That could put more homes on the market, adding to the oversupply problem.

In addition, lenders are reacting to the rising number of bad loans by tightening credit, which reduces the pool of eligible buyers.

Markets north and west of Boston remain sluggish this spring. In Essex County, which includes the North Shore suburbs, pending home sales are down 10 percent from last year, while homes sit on the market longer, according to Multiple Listing Service Property Information Network.

But business is brisker in areas closer to the city. In Brookline, for example, pending sales are up 10 percent from last year, according to MLSPIN. There are also 21 percent fewer condominiums available for sale than a year ago , 27 percent fewer single family homes.

Arlington, meanwhile, has about half the single family homes on the market from a year ago.

Christine Sullivan found herself bidding against four others for a three-bedroom Colonial in Arlington Heights that was listed at $459,000. She outbid the others with an offer over asking price, which she declined to detail.

Sullivan, who will move from a Charlestown apartment, said she believes she paid a fair price for the home. She looked at dozens of properties over several months of home shopping.

"You get a real feel for value after seeing what's available," she said. "This house has real potential."

Mark Lesses, a vice president at Coldwell Banker who sells in Arlington, said buyers are more savvy because they have so many properties to compare. Sellers, in turn, are learning to price their properties and negotiate reasonably.

"There's a different feel to this market," he said. "There's more balance. There's sanity."

Sellers who aren't flexible learn buyers won't stick around. Katrina and Ross Fujita had negotiated a $370,000 purchase price for a Hyde Park home that was listed at $389,000. When the owner balked at making repairs identified by the home inspection, the Fujitas rescinded the contract and walked away.

They found another home in better condition in nearby Dedham for the same price. "I can't believe they let us buy it," Katrina Fujita said.

The Fujitas' experience shows another area in which buyers have new leverage: two years ago, sellers could easily reject making repairs and find another buyer. Not so anymore.

In fact, real estate agents are urging sellers to fix and upgrade their properties before putting them on the market.

Kris and John Cain , who are relocating to California, spent some $7,000 on new landscaping and kitchen renovations that included new counter tops, fixtures, and appliances. They priced the home at $425,000, about $50,000 less than similar homes were going for two years ago.

They received two offers, accepting one that was $11,000 over asking price. The home sold in five days. "When you're seeing houses that are on the market for a long, long time, you worry about selling your house," Kris Cain said. "We're very satisfied."

Robert Gavin can be reached at rgavin@globe.com.