Move over St. Joseph, patron Saint of Home Sellers, a new saint’s in Beantown, home of two millions Catholics. Home buyers who have been praying for a decade for an opportunity to buy a home in Greater Boston’s overheated housing market, can thank St. Jude — patron Saint of Lost Causes — for delivering this long awaited headline to page one of the Boston Globe on his feast day:
Suddenly, area’s housing market favors the buyers
Cooling of sales to crimp economy
The fall slowdown not only represents a sea for sellers, who for years have enjoyed multiple offers and higher prices, but also indicates the region’s bull housing market is at an end. Real estate agents say a long-predicted market correction appears underway as the gap between the price of housing and peoples’ incomes — now even wider than at peak of the 1980s housing boom — has become too great to sustain the recent pace of sales and appreciation.
Certainly, few expect an ’80s-style collapse, when home values plunged 25 percent or more.Today, the economy and lenders are far stronger, and mortgage rates, which topped 10 percent when the last boom went bust, are far lower — currently about 6 percent. In the 1980s, overbuilding, unsound lending practices, and intense speculation by investors, along with higher interest rates, sparked a real-estate crash.
Still, real estate agents today increasingly are telling sellers to expect lower prices than comparable sellers received six months ago. Linda O’Koniewski, owner of Re/Max Heritage in Melrose, said her brokerage is still selling houses, but at prices 5-to-10 percent lower than what comparable homes sold for in spring.
”All trends point to a correction period," she said.
With growing choices, buyer psychology has changed, brokers said. In recent years, buyers raced to make offers, convinced prices would only go higher, or even bid against each other, pushing prices up. Now, many are prepared to wait, believing that prices are coming down.
Not if you buy the comparatively rosy picture hundreds of Realtors heard in one of the kick-off sessions at their annual convention today in San Francisco. Entitled, "Winding Down to an Expansion," National Association of Realtors chief economist, David Lereah joked, "it’s a good spin isn’t it?" Realtors are trying to spin the public perception of the real estate bubble across the country through a series of "anti-bubble reports," as Lereah described them.
Apparently, the press in Boston and prominent local economists aren’t buying the spin. While the spin is not real, the price reductions are, according to another story in the Boston Globe this week. So, if you’ve been haunted by the housing bubble, are the markdowns that traditionally occur between Halloween and New Years Day reason to celebrate today’s headline as an answered prayer, or time for more cautious patience before you restart your homebuying plans?