Fewer People Line up to Buy U.S. Homes
MICHELE NORRIS, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.
There are signs the hot real estate market may be starting to cool. Across the country, homes are taking longer to sell and prices are not rising as fast. Take the Boston area, where homes had been appreciating at a faster rate than average. That's where we find Fred Thys of member station WBUR.
FRED THYS reporting:
The Massachusetts Association of Realtors reports that the median price of a single-family home in the Boston area grew by 4 1/2 percent from the third quarter of 2004 to the third quarter of this year, from $493,000 last year to $515,000 this year. Healthy growth, but the days of double-digit price increases from year to year appear to be over. And some prime real estate has hit the doldrums.
Ms. LISA DRAPKIN (Realtor): Two bedrooms, one of which is used as the master, which has access to an amazing deck.
THYS: Realtor Lisa Drapkin is selling a house on a quiet dead-end street in the wealthy Boston suburb of Cambridge, just a block away from the park along the Charles River. At the moment the river view is blocked by an abandoned garden center, but that's about to change.
Ms. DRAPKIN: The proposal is--that's been approved is that they're going to be taking down all the buildings. So this property, which right now is blocked by the view of Mahoney's, which isn't particularly attractive, is going to have an amazing city view and it's...
THYS: Yet this house has been on the market for five months.
Ms. DRAPKIN: Well, we first came on July 6th, right after the July 4th weekend, obviously, and we came on at 539. The market was pretty brisk over the summer.
THYS: But the house wasn't selling and, after four weeks, Drapkin and her clients lowered the price.
Ms. DRAPKIN: Again, lots of showings but not much in the way of offers. And then around--we figured we'd stick out the end of August because generally there's a real surge in the fall market. And after Labor Day, unfortunately, not much happened.
THYS: Last month they brought the price down again to 499,000. If houses in Cambridge continue to go at the rate they've been selling at for the past year, it would take six months to sell all those on the market right now. Drapkin says when there's a four-month inventory, it becomes a buyer's market. The trend in Boston reflects a nationwide tendency. Jay Brinkmann is a financial economist with the Mortgage Bankers Association.
Mr. JAY BRINKMANN (Mortgage Bankers Association): We see that the market has probably peaked. For the last approximately two months, applications for mortgages to purchase homes are down from the levels that we saw this time last year.
THYS: In another wealthy suburb of Boston, Brookline, Realtor Mary Gillach is selling a condo with period details and high ceilings.
Ms. MARY GILLACH (Realtor): Tons of closet space, which you don't get in Brookline a whole lot. You know, so normally this kind of place where there's parking would sell in a heartbeat.
THYS: Instead, it's been on the market since April. It started at $469,000. The price has dropped consistently since to 399,000, a little bit less than what the owners paid three years ago. Gillach says she's seeing a lot more properties on the market than last year.
Ms. GILLACH: I'd say two to three times the inventory at least.
THYS: Gillach says all the talk about a housing bubble over the last six months has made homeowners nervous.
Ms. GILLACH: And so I think you see a lot of sellers who don't really need to sell testing the market to say, `Hey, you know, maybe I should get out right now.' They're not necessarily realistic about their price 'cause they don't have to sell. That's the one extreme with what's going on with some sellers. And then you've got a fair number of buyers saying, `Hey, it might even get better, so maybe I ought to hang out.'
THYS: Across the country, homes are staying on the market longer. The inventory of existing homes has grown from three and a half months to five months, and there are a record number of new homes on the market. A spokesman for the National Association of Realtors says the days of multiple bids on a home are probably over. For NPR News, I'm Fred Thys in Boston.