Positive News in the Markets!

Sales of existing homes in September posted the largest monthly increase in 26 years as buyers scrambled to cash in on the first-time home buyer tax credit. Sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million last month according to the National Association of Realtors.

Nationwide sales are up almost 24 percent from their bottom in January, 2009. Prices, however, continued to be dragged down by foreclosures and short sales. The median price last month was $174,900, down almost 9 percent from $191,200 a year earlier.

But looking back at the last 4 months we can see an upward trend. According to the Case-Shiller Home Price Index of 20 cities, home prices rose for the fourth month in a row during August and suffered a smaller-than-expected annual drop. Prices in the index rose a non-seasonally adjusted 1.2% in August.

In a further sign of a stabilizing market, the inventory of unsold homes on the market fell about 7 percent to 3.63 million - less than an eight-month supply at the current sales pace.

Nationally, prices could fall further because rising unemployment leads to more foreclosures. The jobless rate, currently at 9.8 percent is expected to rise as high as 10.5 percent next year, causing more people to fall behind on their mortgages.

Here in Boston we seem to be doing better, quite a bit better, than the national average. In Massachusetts the unemployment rate is 9.3%, half a point lower than the national average. Next year the Massachusetts economy is expected to grow by 2%, faster than the national prediction. And while Massachusetts lost 4% of its jobs, the nation lost 5% of its jobs.

Although the performance of the Massachusetts economy may not seem all that much better than the national economy, there are some key differences which indicate Massachusetts will pull out of the recession sooner, and in a more meaningful way than the rest of the nation. Our mix of industries (technology, health care, biomedical and financial services) is expected to lead the recovery (as opposed to automobile, heavy manufacturing, and construction which will lag). In fact already this year Massachusetts companies are reporting strong increases in sales.

With respect to the housing market the story is rather similar. City-wide the median sale price comparing, Q3 2009 to Q3 2008, is only down 5.43%. But in some neighborhoods the median sale price for the same period is actually up. In the South End, for example, median sale price posted a 3.55% gain.

So far so good. It looks like we have seen the worst of it here in the greater Boston area. There is light at the end of the tunnel. It will be most interesting to see how we fare in Q4 since it was in Q4 2008 that we saw the start of the 6 month precipitous decline that began with the collapse of Lehman Brothers. Stay tuned!

And in the meantime please do not hesitate to call or email me whenever I can help you, a client or a friend with a real estate need in the greater Boston area. I promise to take excellent care of them.