RICHARD DeWOLFE
Bought out by NRT

Even as other sectors of the economy struggled in 2002, the residential real estate industry kept chugging along. In fact, Realtors, homebuilders and developers can boast – and often did throughout the year – that the housing market propped up the economy during most of 2002.

Home sales were strong during the first half of the year – mostly the result of pent-up demand from the fall of 2001, when sales activity nearly froze because of the terrorist attacks, and historically low mortgage interest rates. Some signs of market softening were seen in the third quarter as for-sale homes, particularly higher-priced homes, started lingering on the market longer and sales prices started to hold and in some cases drop. With more homes from which to choose, buyers were able to be more selective in their purchases during the last half of the year.

Even with the slide in sales volume during the latter part of 2002, overall unit sales and price appreciation were impressive for the year as a whole.

“Clearly it’s going to shape up to be about the third-best year in history,” said Peter P. Casey, 2003 president of the Massachusetts Association of Realtors.

According to MAR, total single-family home sales volume increased by about 3.6 percent for the first three quarters of 2002, while condo sales were 8.5 percent higher than during the first three quarters of 2001. The average price for single-family homes sold during that period was $342,401 – an 11.6 percent increase from the $306,702 average selling price of the prior year, according to MAR. Meanwhile, during the same period, the average selling price for condos shot up 15.8 percent to $241,147 from $208,185.

On the other hand, the year wasn’t so good for landlords and rental property owners. In Greater Boston, in particular, vacancies rose considerably and landlords, anxious to fill their units, offered concessions unheard of just a few years ago, including rent-free months.

The softening rental market was one of the reasons real estate developers and property owners vigorously opposed one of the most controversial proposals to emerge in Boston in years – Mayor Thomas M. Menino’s unsuccessful effort to bring back some form of rent control. The proposal pitted affordable housing advocates against real estate developers, and despite the City Council’s rejection, Menino has vowed to bring back the proposal in 2003.

2002 was also the year when the gloves came off as housing advocates and real estate developers battled to save the state’s so-called anti-snob zoning law and get the largest housing bond bill ever passed.

The $508 million bond bill, which provides funds to improve public housing units and create more affordable housing, passed in the 11th hour, keeping advocates on the edge of their seats as they staged rally after rally and issued a flurry of press releases. Activists celebrated that win, and were also happy to preserve the Affordable Housing Trust Fund, a five-year $100 million trust that was set up to create and preserve affordable housing and was funded for the first time during the fiscal 2001 budget.

The state’s anti-snob zoning law also escaped the ax, but when Gov. Jane Swift vetoed a compromise bill that would have made some changes to Chapter 40B, advocates felt her action set the stage for an even tougher fight to save the law in 2003, although Swift later issued some regulatory – rather than legislative – changes to the law.

“The fact that Gov. Swift vetoed the compromise bill puts us in a more difficult situation,” said Aaron Gornstein, executive director of the Citizens’ Housing and Planning Association.

Mergers and Milestones

But many of the same features in the vetoed compromise bill have been put into effect via regulatory changes. The Department of Housing and Community Development approved regulatory changes, for example, that give communities a break from housing developments proposed under Chapter 40B if they increase their housing supply by 0.75 percent each year and if they develop specific housing plans. DHCD also expanded the definition of affordable housing to include such units as those for the mentally ill and mentally retarded.

Despite some of those major victories, housing advocates suffered some setbacks. Funding for housing programs was slashed by 25 percent, and a program that helps tenants pay back rent and keeps them from being evicted was eliminated. In addition, lawmakers approved the demolition Wattuppa Heights, 100 public housing units in Fall River, despite a veto from Swift.

While housing activists were dealing with those challenges, hundreds of local real estate agents faced major changes of their own when a national powerhouse swooped in and acquired a New England real estate firm. In August, it was announced that the Lexington-based The DeWolfe Cos. would be acquired by NRT of New Jersey, a subsidiary of real estate giant Cendant. DeWolfe was combined with the New England-based Coldwell Banker Hunneman to form Coldwell Banker Residential Brokerage, the largest real estate company in the region.

Yet in the age of mergers and acquisitions, one of the region’s largest independent and privately owned real estate companies celebrated a milestone. The year 2002 marked the 45th year of business for the Norwell-based Jack Conway & Co., but also saw the abrupt resignation of Carol Bulman, the daughter of founder Jack Conway who was once considered the heir apparent of the company.

While the happenings at Jack Conway and DeWolfe were big news, one major story throughout the year was, and continues to be, the lack of affordable housing. That’s why homebuilders and real estate developers were thrilled when Swift directed the Department of Environmental Protection to ease a septic system-testing requirement. In the summer, Swift told a group of homebuilders that she would order DEP to change the perk testing rate – the rate at which water percolates into the ground – which is used when a builder wants to install a septic system. Swift ordered that the rate be changed from 30 minutes per inch rate to 60 minutes, an alteration builders hope will open up more land for development and aid in increasing the housing supply.

On the national front, the real estate industry fought hard to keep banks out of the real estate business. The National Association of Realtors kicked off a multimillion-dollar campaign after the banking industry sought a regulatory change through the Federal Reserve Board and the U.S. Treasury Department that would allow banks to sell and manage real estate. NAR was very vocal in its opposition to the proposal and helped get a bill filed that would require congressional approval for any change that would allow banks to get into real estate.

“It would be a devastating decision if it were allowed to go through without further thought because what it would constitute is banks subsidized by federal dollars competing against Realtors who are clearly not subsidized,” said Casey. “It would be a gross inequity, I think.”