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Prices are down again, but are they affordable yet?

Posted by Scott Van Voorhis May 24, 2011 09:43 AM

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As home prices across fall again, that's the big question for buyers.

The median price of a single-family home in Massachusetts posted a 4 percent, year-over-year decline in April, down to $274,000, The Warren Group reports this morning. Sales plunged 28 percent.

Still, prices have a long way to go before they hit 2000 levels. That year saw the median price of a home statewide hit $185,000, according to the U.S. Census Bureau.

The same is true, even more so, of home prices in Greater Boston.

While prices across the state have been on the decline, home prices in Boston and its far-flung suburbs actually jumped roughly 4 percent in the first quarter to $417,000, according to the Massachusetts Association of Realtors.

That's a far cry where sale prices stood for our metro market back in 2000, when the median price was $250,000.

And given sluggish paycheck growth over the past decade, that is a real problem.

Nor were the late 1990s/early 2000s some golden era of affordable home prices - values had already begun to trend sharply upward, triggering warnings from a range of organizations.

By 2001, the median price of a home in Greater Boston was already nearing $300,000, up from just $250,000 a year before and a jump of more than 50 percent over three years, the Boston Foundation warned in its annual housing report card.

"Increased housing prices in Greater Boston have outstripped the rise in household incomes and therefore decreased the affordability of single-family homes in most cities and towns in the region," the Boston Foundation warned in its 2002 report.

Sound familiar?

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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