Housing Heaven Takes A Breather In Massachusetts
A pair of reports on smaller housing markets in Massachusetts. “Homes are sitting on the North Central Massachusetts market for longer than they have the past three years, local real-estate agents said. ‘We’ve had a very, very brisk market for several years and it just sort of plateaued a little, and now it’s coming back at a nice, normal comfortable pace,’ said Ellen Daly.”
“Realtors acknowledge, however, that the market had faded from its most robust seasons. Barry Cunningham, the North Central Massachusetts Association of Realtors’ president, said the plateau is to be expected. ‘The market has been hot for a number of years, but it’s making an adjustment right now,’ said Cunningham. ‘The market needed a breather.’”
“The median price of a single-family home in North Central Massachusetts has increased more than $30,000 during the past three years. The median price of all residential sales in Leominster so far this year has fallen nearly $20,000 compared to the same time period last year, according to the Warren Group ‘The prices aren’t so much coming down, it’s the sellers’ expectations coming down,’ (realtor) Rick Healey said.”
The South Coast Today. “The way the housing market is headed, with prices flat and lending rates up, bankruptcy lawyers might want to put on another pot of coffee, because company is coming. Maybe lots of it. Almost 30 percent of all of the adjustable-rate mortgages in this region will come up for adjustment this year or next, said (banker) Patrick J. Sullivan.”
“As it looks today, those mortgages will jump perhaps 2 percentage points, from about 4.5 percent to 6.2 percent or 6.5 percent, he said. For a $200,000 mortgage, that might mean about $4,000 a year in additional mortgage payments. ‘That 2 percent adjustment could kill. Four grand a year out of pocket, that’s a lot of money,’ he said.”
“Mr. Sullivan said that Bristol County has seen 263 foreclosures in the past two months, up 50 percent from six months ago. In New Bedford alone there were 64 foreclosures in the first quarter of 2006, a sharp increase, he said. At the same time, housing sales slumped badly starting last August as buyers hold back, become choosier or even start renting for a while.”
“Across America, warning flags are flying about the impending storm of foreclosures and bankruptcies, and the early signs are present in SouthCoast, bankers and lawyers say.”
“(Columnist) Richard Benson observed that for a decade Americans have been in ‘housing heaven,’ using their ever-more-valuable property as a magical ATM. Now consumer debt is up to $2 trillion, and people take out $600 billion in equity extraction each year. ‘Homeowners have basically received and spent in excess of $2 trillion that they never earned,’ he writes.”
“Roger Stanford, an attorney in New Bedford who handles some bankruptcies, said that there has been a definite upswing in cases following a lull caused by last October’s rewrite of the federal bankruptcy law. He said he is seeing the same pattern as in the last housing recession in the early 1990s: first-time homebuyers who stretched to the limit and now cannot manage an upward rate adjustment, and frequent refinancers who ‘pull the money out to pay credit cards down and the credit card goes back up again for whatever reason.’”
“Now that it is harder to declare bankruptcy, Mr. Sanford said, some homeowners see flattening prices and decide to ‘get the equity out by living three, five, six, nine months without making mortgage payments,’ then walking away from the house.”