Bank predicts more N.E. real estate price declines
Alicia Sasser, senior economist for the Federal Reserve Bank of Boston, predicted that home prices in Massachusetts and New England would decline for the second year in a row in 2008.
The region's prices fell 1.1 percent in 2007, compared with a year earlier, she said, while prices in Massachusetts declined 1.9 percent for the same time period. A recent report from the Warren Group pegged the price of a single-family home in Massachusetts at $325,000, down from $340,000 a year ago.
But a turnaround may come late in the year -- and before a national housing turnaround sometime in 2009. One reason is that the region went into a slump earlier than the rest of the country. Also, there was less building locally than in the South and West, where the population is expanding rapidly.
With a smaller supply of housing for sale, there is less downward pressure on prices.
"Our oversupply is not as dire as the rest of the country," said Sasser, who shared her predictions with real estate agents at a conference in Cambridge.
But, she added, "It's still going to take time to work through that inventory."
When local markets do recover, she said, the boom-time price gains of 10 percent or more a year won't return. House prices, she said, will rise only about 2.1 percent annually. She said that because Massachusetts had such a steep run-up in prices, its recovery may somewhat lag the rest of the region's.
Massachusetts, along with Rhode Island, she said, "will have the slowest growth in housing prices through 2011."
(By Kimberly Blanton, Globe staff)