Boston real estate market forming bottom?

April’s home price rise is significant because it may mark the formation of a home price bottom in the Greater Boston, Massachusetts real estate market.

The price increase was a bit overdue based on past years’ price patterns and may have been delayed because of March’s protracted bad weather.

As you can see in the chart below, Boston home prices have shown a strikingly consistent seasonal pattern of home price slumps and recoveries since 2001.

Ever higher Boston home prices during boom

When the market was on the upswing in the first half of the last decade, metro Boston, MA home prices peaked every spring/summer at ever-higher levels.

Each year, the fall/winter slumps were minor and each trough was higher than the prior years’ low point.

Ever lower prices during bust

During the real estate bust that took place in the second half of the last decade, the exact opposite behavior was exhibited by the Boston regional market: the annual spring/summer price increases were anemic and short-lived, while severe fall/winter price slumps kept Greater Boston home prices trending markedly lower every year.

Encouraging market performance 2009 – 2010

The chart below shows a clear improvement in the performance of the Boston, Massachusetts real estate market over the past year.

The seasonal home price slump of 2009 – 2010 was much less severe than during the worst of the market decline.

And for the first time in 4 years, the low point of the most recent seasonal market slump was HIGHER than the low reached the prior year.

This may mean that the metro Boston, MA real estate market is finding a bottom.

Caution is needed

Caution is called for; it is way too early to definitively call the bottom of the current real estate market cycle in Massachusetts.

The recently expired Federal home buyer tax credits had a beneficial impact on the April 2010 market.

It may take a full year or even two before MA home prices are clearly on the mend.

At least we have more evidence pointing to the beginning of the formation of that much-looked for home price bottom in Massachusetts.

Keep tuned for future updates!

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4 months of Metro Boston  home price increases

July’s Boston Index reading marks the fourth straight month that Boston metro-area home values have risen.  How Massachusetts home sale prices perform over the next several months will tell whether the current rise in home sale prices is only a seasonal uptick or marks a true real estate market bottom in MA.

Boston real estate market one of 4 most healthy in US

On a 12 month basis, single family home values in Greater Boston are still down 4.9% according the Standard and Poor’s.

However, that 4.9% decline over the last 12 months ranks Greater Boston as the 4^thmost healthy of all US regional markets tracked by Standard and Poor’s.  Only Cleveland (-1.3%), Dallas (-1.6%) and Denver (-2.9%) have experienced smaller home value declines than Boston in the last 12 months.

 And compared to the large double-digit declines in home values seen over the last 12 months in many other metropolitan markets tracked by Standard and Poor’s,  Greater Boston real estate almost seems healthy. 

The relatively benign decline of home values in Greater Boston over the last 12 months is consistent with a recent report that the Massachusetts economy is poised to rebound from the recession earlier than most other US states and published speculation that home values in MA may jump over 20% in the next 5 years.

Caution called for

There is still quite a lot of weakness in the national economy.  No one can predict the future with confidence so caution with home sale price predictions is certainly called for.

The following was noted by David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s in a press release accompanying the publication of the July Case-Shiller data:

“These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer’s Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures.”

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