Dry But Promising

In the last week, some hopeful signs have developed with respect to Massachusetts real estate:

The best news by far was that home sales (overall volume) from April to May of this year had their greatest month to month percentage gain in the last 10 years! (Source: MAR, NEAR)

Although May sales on a year over year basis saw a decrease of 10.1% for single family homes and a decrease of 24.5% for condominiums, these decreases were still a vast improvement over the recent past. Meanwhile, single family home sales and condominium sales increased 24.5% and 27.5% respectively from April to May. (Source: MAR, NEAR)

A similar trend as to that which is referenced above occurred regarding prices. While single family and condominium sale prices were down 9.2% and 2.6% respectively year over year for May, April to May of this year saw sale price increases of 2.4% for single family homes and 2.7% for condominiums. (Source: MAR, NEAR)

Regarding the time it takes to sell a home, in May of this year, the average time on the market for single family homes was 143 days, as opposed to 139 days in May of 2007. The time on market for condominiums remained virtually unchanged, moving from 134 days in May of 2007 to 135 days in May of 2008. (Source: MAR, NEAR)

Although the statistical analysis may be mind-numbing, what is important is the future of the real estate market and what we might glean from these numbers. Simply put, the year over year slides in sales volume and prices were less drastic than in recent months. Both facts bode well for a gradual market stabilization. Moreover, the month to month positive gains in sales and prices strengthen this hypothesis.

However, so as not to cause irrational optimism, keep in mind that the condition of the local real estate market is far from healthy from the seller's perspective. We will not see properties flying off the market at the speed at which they did at the market's peak a few years ago for quite some time. After all, there is a difference between a bottom and a recovery. (The interchangeable manner in which these terms are used by the media and analysts alike is disconcerting.) I am seeking the former for the time being.

Finally, keep in mind a few simple rules when contemplating your particular situation. All real estate is local. Each sale depends on marketing and pricing, not necessarily in that order. Pricing must be based on market conditions and in consideration of comparable properties. Pricing has nothing to do with (or should not have anything to do with) what a seller owes, or what a seller needs to net in order to purchase another property. The market is what the market will bear.