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Real estate recovery overhyped?

Posted by Scott Van Voorhis February 26, 2013 06:43 AM

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The latest impressive sounding home sales numbers are out this morning.

Yet there is a real mismatch between the official numbers and the less than bubbly feel to the current market, at least when it comes to actual buyers and sellers.

After all, with many potential home sellers still sitting things out, it begs a simple question:
Are home sales truly back?

It's a yes and no answer in my view. Yes, home sales are up again here in Massachusetts, but no, they have yet to return to the more normal levels last seen before the Great Recession hit.

Let's start with the good news. Massachusetts home sales posted a double-digit increase in January, two new reports out this morning indicate.

Sales of single-family homes jumped 10 percent this January, compared to January 2012. It was the best showing for the first month of the year since the start of 2007, according to The Warren Group, publisher of Banker & Tradesman.

The Massachusetts Association of Realtors, which has its own database of home sales across the state, pegged the increase at a considerably higher 15.7 percent.

Yet it's important to keep things in perspective - the increases come after a dramatic drop in homes sales in the aftermath of the Great Recession that rivaled the decline in home prices.

And in terms of sales recovering from that historic plunge off the cliff, we've managed to crawl a little bit more than halfway back, but that's it.

Let's look at the numbers.

Just under 3,000 homes were sold in January 2007, back when the economy was still in expansion mode. The January 2006 numbers were about the same as well.

But the worst downturn since the 1930s sent Massachusetts home sales plunging below the 2,000 mark in January 2009, one of the lowest totals for the month in decades.

That's well more than a 30 percent decrease from the level of home sales activity we were seeing before the global economy went off the rails.

Sales since have rebounded, with 2,680 home sales across Massachusetts in January, The Warren Group reports.

Yes, it was the best showing since January 2007. But then again, if 3,000 sales is the normal, pre-recession level for January, we still have a long way to go.

This blog is not written or edited by Boston.com or the Boston Globe.
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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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