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Fall market kicks off as dark clouds loom

E-mail | Print | Comments () Posted by Scott Van Voorhis September 17, 2010 06:43 AM

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The for-sale signs are up again in my hometown of Natick and in neighborhoods and communities across Greater Boston as the traditional fall sales season kicks off.

But a spate of reports over the last day or two raise serious questions about where the market is headed - the downdraft in sales and prices is gaining momentum.

CoreLogic reports that home prices remained essentially flat in July, the first time in five months that no year-over-year gains were reported. Prices fell in 36 states, twice the number from May, when the afterglow from the home buyer tax credit was still strong, and the most since last November. Reuters cites the same report as predicting the inventory of unsold homes on the market - which ballooned to 11 months over the summer - could double to nearly two years.

Moody's Analytics is now forecasting an 8 percent slide in home prices, up from its 5 percent estimate previously. Prices now won't hit bottom until a year from now, in the third quarter of 2011, according to the firm. Moody's had previously predicted that prices would hit bottom in the first quarter of next year. Looks like a bit of a moving target, now doesn't it?

Sellers continue to slash prices, apparently to no avail given the number of homes actually changing hands has plunged since the home buyer tax credit expired in April. The number of homes on the market with price reductions has risen for the third straight month, to 26 percent nationally, Trulia reports. Greater Boston remains a leader, with well more than a third of homes for sale, 35 percent, having been knocked down in price at least once. The average reduction around here is 7 percent - or nearly $30,000 off a $400,000 home.

Local Realtors are feeling untypically gloomy as well. The REALTOR Market Index dropped for the third month in a row in August, while the REALTOR Price Index fell for the second month in a row, according to the Massachusetts Association of Realtors, which puts out both indexes. On a scale of 100, the market index fell to 20.36 in August.