In real estate sales, not all cities are equal
Cambridge's real estate market is taking a harder punch from the economic downturn than its neighbors.
Single-family home sales in Cambridge declined 34 percent between January and May compared with sales during the same period last year, according to figures recently released by the Warren Group, which also found sales of condominiums down 36 percent during the period.
"That doesn't compare favorably with Brookline, which Cambridge is often compared with," said Timothy Warren, CEO of the Warren Group, a Boston-based publisher of real estate data.
Single-family home sales in Brookline decreased by nearly 15 percent in the same time period. And communities in Boston's inner belt - including Somerville, Brookline, Newton, and Jamaica Plain - are also doing somewhat better than Cambridge, with their single-family home sales collectively down about 22 percent from the first five months of 2007, he said.
In Brookline, condo sales fell only 20 percent, and the median condo sale price had actually risen 3 percent, while Cambridge's condo prices fell almost 2.5 percent, according to Warren's numbers.
Bill Wendel, a fee-for-service real estate consultant who owns the Cambridge-based Real Estate Café discount brokerage, said the city's housing market is often perceived as being insulated by expensive homes and strong demand.
However, he cited a number of single-family homes that had sold for prices well below their tax-assessed value in the first six months of this year, including a Brattle Street property that was originally listed for $5.5 million but went for $3.65 million.
"That's 74 percent of its assessed value. That's amazing," said Wendel, who released a study of 'million-dollar markdowns' in Greater Boston in 2004.
"It's a sign of the times and it challenges the mainstream myth that Cambridge always rises."
One factor that affects the real estate market is the wealth of a community.
Ken Sprague, a realtor with Griffin Properties in Cambridge, pointed to the difference in income between residents in Cambridge and Brookline. The most recent statistics available from the state Department of Revenue showed that per-capita income in Brookline in 1999 was $44,327, while in Cambridge it was $31,156, he said.
And at just over 100,000 residents at the time of the 2000 Census count, Cambridge has twice the population of Brookline and is spread out over a wider range of household income, Sprague said.
"Cambridge is really an urban city with some neighborhoods that have very beautiful, very exclusive homes, and other neighborhoods near Harvard, Central, and Kendall squares that have much denser populations. Brookline is more on the cusp of being suburban.
"There is much more affordable housing in Cambridge, whereas in Brookline there are relatively few single-family homes under a million dollars, so you have a whole different clientele looking to live in that community," he said.
In Somerville, sales numbers, while stronger than in Cambridge, are being driven in part by a drastic drop in home prices there.
"They're doing somewhat better in year-to-date sales but their median price is down for the year about 20 percent, so I guess it would be hard to say that they're doing better," Warren said.
Diane Beaudoin, a sales agent and vice president at Brattle Associates in Cambridge, said, "It used to be that if a property didn't sell within the first week or two, people would ask what's wrong. Now, properties will probably stay on the market a little longer because buyers really want to do their homework."
Still, she added, "More than 17 properties over $1 million closed in Cambridge in the past six months."
As an example of how Cambridge's property market has slowed, Wendel cited a sunny, newly renovated townhouse condo near the Fresh Pond Reservoir that was initially listed for $500,000, a price significantly lower than its assessed value.
The property still failed to attract a buyer, so "the seller slashed the asking price" to 13 percent below its assessed value, he said.
The listing remarks emphasized the property's newly lowered price, and, he said, the strategy worked. "The reduced price attracted a buyer in two weeks," Wendel said, and it shows that ''sellers need to discount their sale prices to attract a buyer in this market."
Coldwell-Banker realtor Lisa J. Drapkin said that "the real key is just going back to the basics, in that properties have to be priced properly and in a good location," adding that "there are certain pockets and certain price points, for example between $350,000 and $500,000, that even favor the seller because Cambridge is such a strong market."
But markets correct themselves. As prices go down, eventually more houses and condos will sell. "It's the laws of supply and demand," Warren said. "As prices become more attractive, it may be helping to improve the market somewhat." The trick for buyers and sellers is knowing when the market has hit bottom. And no one has an answer for that yet.
Victoria Cheng can be reached at vcheng@globe.com. 