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Dearth of decent homes hobbles market

Posted by Scott Van Voorhis June 13, 2011 06:43 AM

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There's a cruel twist to how the real estate downturn is playing out here in Greater Boston.

While home prices are on the retreat again, it may be actually becoming harder to find a decent home.

Rona, in this insightful post, argues the quality of homes on the market has dropped markedly over the past year or two. She's seeing too many homes in need of work or near major highways.

In fact, I'd argue that what we are seeing is a long-term problem that is actually growing more acute.

If I were getting besieged with buyers boasting about all the great deals out there, I would be writing about that right now. But I'm not. Instead, I am constantly getting complaints about aging, overpriced homes or the rare decent home in an upscale town that sparks a bidding war.

So how is that? Aren't sellers supposed to be desperate right now, ready to cut a deal at any price? Shouldn't this be the ultimate buyers' market?

Maybe in theory it should be, but in practice it isn't.

Just as many buyers are leery of jumping into a declining market, sellers have all the more reason to avoid putting their homes on the block.

Unless you absolutely have to sell right now, why would you? In fact, the window to dump your house came and went last spring, when the home buyer tax credit created an artificial - and quite temporary - feeding frenzy.

This has been a growing problem since prices started to trend downward five years ago. And it now appears to be reaching a critical stage as the market sinks to new lows and potential sellers go into hibernation.

On top of that, we are seeing other long-term problems also come into play.

For one thing, we've had a steady and now decades-long drop in the number of new homes built within 495. We started the housing downturn with a deficit - one that has only gotten even worse as bad times have forced builders to scale back.

Meanwhile, the other big source of supply out there, foreclosures, has temporarily dried up as banks struggle to get auctions back on track amid the lawsuits and government crackdowns triggered by the robo-signing disaster.

Now if you are reading this and floored by all the great homes out there inside 495 at decent prices, please let me know. I'd be happy to share your story.

But something tells I won't be seeing a flood of happy home buyer stories in my inbox later this morning.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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

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