Western Massachusetts homes like this one at 126 Pinewoods Ave. in Springfield have proven to be a hot commodity.
While most real estate markets in Massachusetts are showing at least some signs of slowing down, many homebuyers are still looking to go west in search of affordable properties and available land.
Berkshire, Franklin, Hampden and Hampshire counties all faired well during the first part of this year in the face of slumping home sales volume and slower price appreciation in the eastern parts of the Bay State.
In the first seven months of this year, single-family home sales dropped 6.6 percent statewide, with prices increasing a moderate 6.5 percent, according to statistics compiled by The Warren Group, parent company of Banker & Tradesman. Even though home prices rose, the rate of appreciation is down compared with the record-breaking and often double-digit increases recorded during the past few years.
The median selling price for single-family homes increased 12.6 percent in Berkshire County, 14 percent in Franklin County, 12.3 percent in Hampden County and 15.2 percent in Hampshire County from January to July of this year compared to the same months in 2004.
In Hampden County, where the median price of a single-family home increased the least of the western counties, from $148,000 to $166,250, the number of sales rose 3.7 percent to 2,868 sales compared to last year’s 2,766 transactions between January and July.
According to Kevin Sears, a Realtor and property manager with Springfield-based Sears Real Estate and president of the Realtor Association of Pioneer Valley, urban affordability combined with developable land has helped the market to stay active.
“The growth that we’ve seen, while it’s not record-setting, is certainly healthy and robust. Springfield is an affordable option and buyers are showing confidence in the city. New construction is also very busy. Further away from urban centers there’s more raw land to build on. That little bit more inventory is keeping prices in check,” said Sears.
One area that still has a great deal of land is Belchertown in Hampshire County.
“Belchertown has much more availability, probably because it has one of the largest land areas in the state. There’s a lot of new construction in that area also because land costs are less, so people are able to build more affordable homes, which people like and are willing to seek out,” said Tini Sawicki, owner of Realty World Sawicki in Amherst and the western region vice president of the Massachusetts Association of Realtors.
Berkshire County also showed an increase in sales, up 4.3 percent from 890 single-family home transactions in 2004 to 928 in 2005. Hampshire County’s home sales volume was down 1.2 percent, while Franklin’s dropped 3.5 percent, though both counties notably buoyed above the statewide average decrease of 6.6 percent.
While the dips in sales volume may have been felt throughout the area, compared with the eastern portion of the state many Realtors seem to feel that the western Massachusetts real estate market is very stable.
“I don’t want to say that any area of the state has peaked, but some communities went through 20 to 30 percent [price] increases in a year or two, and that just can’t be maintained. On the other hand, in this area we saw single to teen numbers in terms of appreciation. It’s been pretty steady,” said Sears.
The lack of steep price hikes has kept most of the western part of the commonwealth much more accessible to potential homebuyers who may not be able to afford homes in other areas of the state.
“First of all, out here we’re a little bit more affordable than places around Boston and therefore we offer a little more variety,” said Sawicki. “We’re not as hot of a market as we were in the recent past, but this year certainly hasn’t been too bad. It’s continued strongly. We’re doing as well as we are because our housing is just a little less expensive. That’s all it takes.”
‘Robust Market’
Corinne Fitzgerald of Key 100 Real Estate in Greenfield, the primary city in Franklin County, sees what’s currently happening in the market as one phase in a cyclical and recurring process.
“What we’re seeing recently is more listings coming on the market and a few price reductions, which indicates that we’re going into a more level market Â… we’re easing into it. That’s the cycle – it goes from a seller’s market to a level market, then it potentially drops and you have a buyer’s market. I think a level market is a very good thing. It’s just better for everybody,” Fitzgerald said.
Although affordable prices are drawing buyers to those areas of the state, another factor is contributing to the region’s popularity and healthy real estate sales.
“The Internet has helped us out here tremendously. People are able to telecommute and then they’re not stuck in rush-hour traffic,” said Fitzgerald. “I’m watching where people are coming from, and it’s from all different areas. It’s a great place to live and with the Internet it can also be a great place to work, no matter where your office is. The accessibility and the quality of life out here are creating a more stable market.”
Fears of bursting bubbles that dominate real estate talk in many markets appear to hold little sway among Realtors in the steady western Massachusetts markets.
“I hear about the bubble that’s supposedly going to burst and I can’t help but chuckle,” Fitzgerald said. “This is not the same as the [real estate crash] of the late 1980s. It’s a whole different ballgame. We don’t have crystal balls, but I think we should see a nice, smooth leveling-off and that it will stay that way.”
The only thing that seems to be worrying real estate professionals is the potential for an increase in interest rates.
“I think in the next few years we’ll stay the same as we are. I’ve been here since 1974, so I know there are ups and downs, but at this point we know land costs aren’t going to change and building costs aren’t going to change. The only thing that will hurt us is a shift in interest rates. But if they stay consistent, then we’ll be OK,” said Sawicki.
The leveling-off of the market may turn out to be a very good thing, with the frenetic pace of the past few years dissolving to create a more level playing field for all involved.
“I think we can continue to expect a robust market, but an even one. The inventory that has increased will ultimately help both buyers and sellers – buyers will have a choice and it will give sellers a realistic idea of what their home is worth,” said Sears. “With the interest rates remaining low, I can’t see any reason why this wouldn’t continue for quite some time.”
