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The sweet spots

Housing prices are rising, and bargains are getting tougher to find, but they’re still out there if you know where to look

(Photos By John Tlumacki/Globe Staff)
By Jenifer B. McKim
Globe Staff / February 28, 2010

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Looking for value in the Massachusetts housing market? Bargain hunting for homes in the Bay State has never been easy. Even though home prices fell about 20 percent from the market peak in 2005 to the bottom last year, that’s still far less than what many other regions experienced. The median prices for a single-family home in Massachusetts was $285,000 in January, and the state continues to have some of the highest prices in the country.

And now they’re going back up.

To find bargains now, look in towns and neighborhoods where prices dropped the most during the downturn, either because they are far from Boston or had a high concentration of foreclosures that dragged down home values.

“Sellers are more realistic now,’’ said Phyllis Sagan, owner of Sagan Realties in Swampscott, a North Shore beach town where the median price dropped 23.5 percent between 2005 and 2009, and is now under $400,000. “You can really get in now at a reasonable price.’’

Communities with above-average price drops include oceanside Hyannis, where the median price of $190,000 is nearly 42 percent from the 2005 high; urban Roxbury, which at $195,000 is down 42.7 percent; and rural Harvard, which experienced a price decline of 26.3 percent over the five-year period, to a current median price of $457,000, according to Warren Group, a Boston company that tracks real estate prices.

“We certainly have got some very, very good buys,’’ said Nancy Hazel, president of TP Hazel Sotheby’s International Realty in Harvard, a community about 32 miles from Boston where median home prices peaked at $620,000 in 2005.

In Harvard, prices dropped as a consequence of the ripple effect of a slow market, as many buyers found they could finally afford properties closer to Boston.

“People were able to choose other towns they didn’t use to be able to afford,’’ said Rhonda Sprague, owner of Harvard Realty Sprague. “We are lovely scenic town, but we are just out a ways.’’

In North Andover, broker Kathy Cyrier of Prudential Howe and Doherty said interested buyers can find a “beautiful Colonial-style house,’’ with a two-car garage on an acre of land for between $500,000 and $550,000. The current median price is $410,500, nearly 30 percent below the peak of 2005.

But Cyrier also cautioned that genuine bargains may not last long, as the Andover market has seesawed.

First prices fell as the market was flooded by properties. That kept other sellers from coming on the market, so now there are fewer homes and more buyers.

“I’m finding that houses priced under $400,000 that are properly priced have an incredible amount of showings and even multiple offers,’’ Cyrier said.

This being real estate, there is no clear picture in the crystal ball. Prices are surely heading up -or not, depending on how you sift the evidence.

Home values in Massachusetts peaked in September 2005 and declined until March of 2009, according to the S&P/Case-Shiller home price indexes, a measure that tracks repeated home sales across the country. Since last spring, prices have come back up, 5.4 percent.

And sales volume has been on the increase, too.

David Kres, a buyers agent with Buyers Brokers Only LLC in Haverhill is in the camp that prices will continue to go up, albeit slowly.

His explanation? Buyers, he said, “are out there in droves. They are not waiting for prices to go down because they are not likely going down anymore.’’

But there’s also an argument that housing is experiencing a mini-boom now because of the looming expiration of a federal tax credit for home buyers at the end of April and the ending of other government efforts to support the housing market.

Once those supports are pulled this spring, the market could soften again, dramatically.

“The market remains precarious,’’ said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies.

He cautioned home buyers not to purchase in the expectation of making a quick profit, but rather to plan on staying in their homes for five to seven years.

As if this weren’t confusing enough, trying to gauge where the market is in a particular place -and how far it’s come -isn’t so straightforward. Agents argue that median price data don’t always tell a full story about the health of a town.

In Southborough, the median price has dropped 31 percent to $390,000 from $565,500.

But Barbara Heisler of Heisler and Mattson Properties in Southborough said the scale of that decline was exaggerated because so many lower-cost homes made up the recent sales data. She said a truer picture of home prices is probably around 20 down.

“Hopefully we are at the bottom and we are probably not going to shoot up like crazy,’’ Heisler said. “If we can hold the bottom it will be nice for everybody.’’

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