Local Realtors Not Surprised by Plunge in Home Sales

Tewksbury Realtors say it doesn't surprise them one bit that sales of single-family homes in Massachusetts dropped 26 percent in July compared with sales from July 2009.

However, they expect that record low interest rates should help steady the market.

"No, I don't think that it's surprising at all," said Kevin Vitali of Exit Group-One Real Estate. "I think we propped up (the market) with the first-time home buyers credit. That expired and then in early summer people got some bad economic news and it made people leery about whether or not to purchase."

According to The Warren Group, a financial  information company that publishes Banker and Tradesman, a total of 3,668 single-family homes were sold in Massachusetts in July, down from 4,967 a year earlier. The Warren Group noted that this is the fewest number of sales in the month of July since 1990.

It is the first drop in year-to-year sales in Massachusetts after 12 straight months of increases.

In addition, condominium sales dropped 32 percent in July from a year earlier. A total of 1,484 condos were sold in July, down from 2,185 in 2009.

"No, it's not a shock. Everyone anticipated that July's numbers would be lower than the year before," said Andy Armata, broker/owner of 12 ReMax offices in the Merrimack Valley. "The tax credit expired at the end of June."

Armata also said that while home sales in Tewksbury also dropped in July (15 units sold with an average sales price $297,000, compared with 22 units with an average sale price of $339,00 in 2009) the overall trend this year has been positive.

From January through July of 2009, 96 single-family home were sold in Tewksbury with an average sale price of $319,000. For the same time period in 2010, 120  single-family units were sold with an average sale price of $327,000.

Armata said it's important for local buyers and sellers not to get swayed by national trends.

"I don't get dressed based on the national weather forecast and we can't judge the local real estate market based on the national real estate market," he said.

Vitali said he would like to say for certain that the market was going to continue its overall improvement. However, he conceded conditions are still volatile.

"I think  there there are so many factors, it's really hard to say," said Vitali."There is no clear definition of where it's going."

Vitali and Armata agreed that record low interest rates should keep potential homebuyers interested and looking. However, many may need some economic reassurance.

"I think if the economy stabilizes, people will be willing to get back into the market," said Vitali.

Vitali, who deals exclusively in short sales (selling a home at a price less than what is owed on the mortgage to avoid foreclosure), said indications are that the foreclosure crisis has not yet hit rock bottom.

"I think people need to pay attention to the shadow inventory out there," he said. "That is made up of homes that aren't yet on the market, but the owners are stuggling and starting to get in some trouble with their banks."

Vitali said that after a brief lull, the number of people looking at short sales to avoid foreclosure has been on the rise.