Home prices are finally dropping again – and everyone should celebrate
Our comatose real estate market is finally stirring - and in the dead of winter no less.
Let's cut to the point. Bay State home prices have fallen for the first time in at least a year, both the Warren Group and the Massachusetts Association of Realtors report this morning.
It is a decline that has been long-anticipated since the home buyer tax credit ended in the spring.
OK, that would seem like more bad news, but it isn't because of the second part of this emerging equation, rising sales volume.
Home sales, after going into a tail spin after the tax credit breathed its last on April 30th, have finally begun to bounce back again.
Let's go to the numbers.
Home prices dropped nearly 6 percent in December, hitting a median price statewide of $277,676, according to the Warren Group, publisher of Banker & Tradesman. Meanwhile, sales rose by roughly 7 percent in December from December, 2009.
The Massachusetts Association of Realtors numbers were similar: Prices posted a 6.2 percent year-over-year decline in December, down to a statewide median of $285,950, while sales jumped 5.4 percent.
OK, it's too early to say whether we are looking at a self sustaining trend.
But as harsh as this may sound to sellers, prices need to keep falling to lure buyers into the game.
The real estate downturn here in Greater Boston and across Eastern Massachusetts has been long and shallow, starting back in 2005 when the rest of the country was still in the thrall of bubble economics. Yet we have little to show for all that, with prices, as of November, having fallen just 17 percent from their peak, Zillow.com notes.
Nationally, home prices have plunged more than 26 percent since their bubble years' peak, recently surpassing the record set back in the Great Depression.
Tough stuff, but just remember how crazy prices got back during the bubble years.
Buyers aren't fools - they aren't going to put money down in this market unless see a real bargain.
So here's a toast to home prices: May they keep on tumbling!
