Home Sales’ Spring Surge
Last spring, Paul Yorkis, broker owner of Patriot Real Estate, spent lonely days waiting for phone calls from prospective buyers, the real estate market seemingly stuck in a never-ending slump.
But this year, the Medway real estate agent is hopping busy, and not just on weekends, showing home and condos to potential buyers every day.
After years of recession and falling prices, this is shaping up to be a breakout spring market, both for communities along the Interstate 495 corridor, from Westford down to Plainville and for other markets across the state.
The uptick in the job market and the economy, combined with a sense that home prices are finally hitting bottom, has pushed buyers off the sidelines this spring.
And sellers, who have also been holding back, in some cases for years, are now starting to edge back into the market as well amid a growing confidence that listing their homes may no longer be an exercise in futility.
There is even talk of multiple offers and bidding wars, while developers, encouraged by the rise in demand, begin to dust off plans that had been sitting dormant for months or even years.
“I am showing properties on a daily basis, not just on weekends,” Yorkis said. “Last spring, people were sitting on the sidelines waiting.”
Surging Sales
The current surge in activity began building in December, when local real estate agents found themselves busy at a time of year typically associated with holiday parties, not open houses.
It has since gained momentum, with an unmistakable turnaround in sales activity evident by March, as measured by both final sales numbers and pending sales.
Heading into March, final sales were up dramatically for the first two months of the year compared to the start of 2011. Marlborough, Medway, Foxboro, Franklin, Framingham, Westford and Acton all saw increases in sales ranging from 20 to 66 percent, according real estate publisher and data tracker The Warren Group.
And even bigger gains in sales may be on the way.
Pending sales skyrocketed in February, rising 44.2 percent over February 2011. That followed a nearly 40-percent jump in January, the Massachusetts Association of Realtors reported. In fact, February's showing was the best since April 2010, when the expiration of the $8,000 tax credit for first-time home buyers sparked a short-lived frenzy of buying.
It was the 10th straight month pending sales posted year-over-year increases, according to the MAR.
The spike in pending sales – homes under agreement but a month or two from closing – are a good forecast of future sales activity. Based on current activity, there should be a big jump in final sales – when the ones that close become official – when those numbers come out in April, May and June. It comes after years of hard times in the real estate market, both along I-495 and across the state and country, with buyers, worried about job security, fearful to take the plunge and sellers avoiding listing their homes unless confronted by pink slips, divorce or corporate relocation.
Yet while no fun for sellers, the declines in home prices – combined with the sense that the bargains won't last forever – are now helping drive the surge in activity.
Prices are already starting to go up again in towns along the Route 128 corridor, including Newton, Wellesley and Lexington, noted Lesley Palmiter of William Raveis Real Estate, who specializes in Natick and Wellesley, among other towns.
“It's a fabulous market,” Palmiter said. “I've never been busier.”
Farther out on I-495, it's more of a mixed bag, with prices falling in some towns but starting to rebound in others, but with sales activity starting to pick up in key towns.
Heading into 2012, sales were up 5.8 percent in Natick, 8.8 percent in Medway, and 9.4 percent in Franklin, the Warren Group reported.
“Natick, Ashland, Southborough, Northborough, Westborough: That whole corridor is definitely starting to pick up,” said Alex Coon, who manages online brokerage for market tracker Redfin's Boston-area operations.
Weather, Economy Also Helping
Along with the lure of lower prices, the weather has also helped get the spring market off to a fast start.
The winter without a winter certainly boosted sales activity, with record-breaking mild weather helping bring buyers out during a time of year that is typically a dead zone for residential real estate, brokers say.
But of greater importance has been the decisive shift in the economy over the past six months, with companies hiring again and the jobless rate steadily shrinking.
Medway's Yorkis said he's seeing the benefits firsthand, with a flood of buyers hitting the market who have jobs in local biotech and high-tech companies. He's also seeing a fair number of buyers who are relocating from other states after landing executive or administrative jobs with companies along I-495.
Others also say an improving economy has made a huge difference.
Angela Harkins, broker owner of Angela Harkins & Associates Real Estate in Westford, hasn't had a day off in months.
“It is definitely going to be a breakout spring,” she said.
Better yet, buyers appear ready to take the plunge – less evident is the tire-kicking mentality that prevailed over the past several years.
Still, that doesn't mean buyers haven't given up looking for bargains.
To the contrary, homes seen as priced to sell, offering a discount, can wind up getting multiple offers, Yorkis said.
When a listing comes on the market, or is reduced into the low $300,000s or down into the high $200,000s, buyers pounce.
A typical house in this category might be a colonial built in the 1970s that, while updated, might need some spiffing up.
Broad Range Of Demand
Another positive indicator is the broad range of demand. For the first time in many years, a broad range of buyers are on the hunt.
That's a departure from past years when first-time buyers came to dominate the market, partly due to the fact they didn't have to sell a home in order to move, and partly because of government incentives.
In hopes of reviving the market, Congress began doling out $8,000 tax credits to first-time buyers, triggering a short-lived rally in sales in late 2009 and early 2010. But the end of the credit that April sent sales plunging and triggered a second decline in home prices that's only now leveling off.
By contrast, this spring is seeing not just first-time buyers, but also a group that had gone into hiding when the real estate market and economy kicked into reverse back in 2007 and 2008: mover uppers. These are buyers who bought starter homes a few years ago and, with growing families, are on the hunt for bigger homes.
It has been a particularly hard-hit segment since the decline in homes sales made it difficult for would-be mover uppers to sell their homes and move up the real estate ladder.
But encouraged by the influx of buyers, more mover-uppers have opted to take a chance and put their homes on the market this spring. Some have decided to bite the bullet and take less for their homes than they believe they're truly worth, Harkins noted.
While some of these mover-uppers realize they could eventually get more if they wait out the market another year or two, home prices will also have risen again as well, negating any gain.
“If they are buying a low market they are selling in a low market,” Harkins said. “I think they are getting it.”
‘For Sale’ Signs Mushroom
If buyers sparked the rally in the real estate market, an influx of sellers putting their homes on the market has the potential to give this rebound real legs.
While the flood of buyers into the market along I-495 has been welcome, some house hunters have been frustrated by the lack of decent inventory after years in which homes didn't hit the market unless their owners absolutely had to sell.
Now that's starting to change, with new listings pouring onto the market each day. Harkins is seeing 10 new for-sale listings each day now in Westford alone.
“There have been some sellers who have been waiting and waiting,” Harkins said. “We are seeing listings come on the market every day”
One of those sellers is Tamara Dukes in Acton.
She and her husband had dreamed for years of returning to her native Indiana, but held back on putting their Acton colonial on the market when it was down.
With the market coming back to life, she and her husband have listed their home at $789,000.
They've already picked out a sprawling, 1890s Victorian they plan to buy back in Lafayette that will cost roughly half what they're planning to sell their Acton home for.
It's less than the $807,000 they bought it for in 2004, but Dukes feels reasonably comfortable she can at least find a buyer now.
A month after putting her home on the market, Dukes had seen steady traffic, with packed open houses, but no offers.
“We really felt good about putting our house on the market. We really felt the market was really bouncing back,” she said.
Builders Take Heart
Even home builders and developers, one of the hardest-hit sectors of the economy, both along I-495 and across Massachusetts, are starting to see the light at the end of the tunnel.
Sales in new developments along the I-495 corridor are slowly but steadily picking up, notes Tom Skahen, partner and co-founder of Littleton-based PrimeTime Communities.
He notes that Farm View Estates, a new development of single-family homes in Shrewsbury ranging in price from $500,000 to $800,000, had taken six reservations by the end of March during its first month on the market.
To the north, in Groton, homebuilder Habitech is building and selling homes at the Academy Hill development, while in Natick, national homebuilder Poulte Homes is in the middle of rolling out South Natick Hills, a major new subdivision with hundreds of homes.
Meanwhile, Baystone Development is rolling out hundreds of rental units in Hopkinton.
PrimeTime's Skahen sees market activity and sales, already brisk along the Route 128 corridor closer to Boston, now moving westward toward I-495.
“It is definitely a ripple effect,” Skahen said. “Boston is well on its way to recovery and there is a ripple effect to good towns well-located along the 495 beltway. It is not as vibrant as I-95, but you can tell it is moving in that direction.”
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