Sales at the high end of the market have increased markedly over the past few months, with some Massachusetts towns seeing homes sales in the $1 million-plus price range rising to near-2007 levels in May and June.
According to data obtained from The Warren Group, publisher of Banker and Tradesman, there were 767 sales above $1 million in the first six months of the year, a 61 percent increase over 2009’s figure of 474. The bulk of that surge has come in the past two months, with 408 sales closed in May and June – figures more reminiscent of 2007’s 490 $1 million-plus sales in the same period than the troughs of last year, which had only 245 $1 million and above sales in the year’s first half.
A closer look at the data reveals the usual suspects on the rise, with 73 of the $1 million-plus sales occurring in Wellesley, followed by Newton with 59 sales, Lexington’s 44 sales, Weston at 41 and Nantucket with 40.
“I’m doing better with the luxury market than I am with the first-time homebuyers, that’s my lifeline right now,” said John Ford, a broker owner of Ford Realty in Boston. “Usually it’s the other way around.”
Rallying Around Rates
Though the recently expired $8,000 first time homebuyer tax credit and $6,500 existing homeowner credit likely weren’t much of a prompt at the ultra-luxury price level, some real estate industry observers felt the hubbub was helpful in generating interest across the board.
“There’s no question that it helped consumer psychology in general this spring,” said Mark Lippolt, senior vice president of operations for Hammond Residential Real Estate in Brookline.
An even bigger factor was the decline of the jumbo mortgage rates. Rates for conforming loans have been hovering at or near historic lows for many weeks, but jumbo rates had been slower to fall. They’ve now caught up. Last week, they hovered below 5.5 percent for an $800,000, 30-year jumbo loan with a 20 percent down payment in the Boston area, according to mortgage industry rate trackers Bankrate.com.
It isn’t only Boston which has benefited from the increase. On the Cape, the high end of the market has seen an 80 percent increase in sales so far this year over last, with the bulk of the increase coming in the second quarter, according to Jack Driscoll, branch executive at Kinlin Grover Real Estate in Sandwich.
“It shows there’s integrity in the high-end market,” he said. Driscoll said his firm had seen an increase in buyers, and sellers have become “more realistic.”
The Western part of the state has also seen an increase in activity. Anne Meczywor, broker at Roberts & Assoc. Real Estate in Lenox, and president of the Berkshire County Board of Realtors, said she’s also noticed an increase in activity. The seven properties priced $995,000 or higher listed as currently under contract on her local MLS are a marked contrast with the past couple years.
“For a while we didn’t see anything over $600,000 moving, so it’s gratifying to see these start to move,” she said.
While the decline in jumbo mortgage rates has certainly helped the market, Lippolt also sounded a note of caution.
“May and June closings could have gone under agreement back in February [or] March – when there was a bit more optimism about the economy in general and before the European debt crisis,” he said.
The drumbeat of confidence-sapping economic news has picked up again in recent weeks, and fears of a double dip in housing may yet be borne out in coming months’ numbers.
Still, given the state’s strengths in recession-resistant industries like health care, “it’s not unreasonable to be guardedly optimistic about the high end market,” said Lippolt.
