JUDY MOORE
Balanced market

With the arrival of a small snow squall last week, Bay State residents were forced to put hopeful thoughts of blooming tulips, warm rays of sunshine and other signs of spring on hold. In the residential real estate industry, however, the spring season – traditionally the period when buying and selling activity peaks – has apparently already started.

Unlike last year, when harsh winter storms and the uncertainty caused by the Iraqi war took a toll on home sales activity during the first three months of the year, this year’s prime buying and selling season has benefited from more favorable weather conditions, an improving economy and an upswing in consumer confidence, Massachusetts Association of Realtors President Judy Moore said last week.

“The market started much earlier this year,” said Moore, who noted that by the second week of January buyers were briskly making offers and properties were selling rapidly.

There have even been multiple offers on for-sale properties in a number of locations throughout the state since January, according to Moore. “The improving economy has had an effect on the buying and selling public,” said Moore, a real estate broker with Re/Max Premier Properties in Lexington.

Home sales in some parts of Eastern Massachusetts have spiked during the first three months of the year compared to the same period last year.

In Middlesex and Essex counties, representing nearly 90 communities including some Boston-area suburbs, 4,754 single-family homes were sold between Jan. 1 and March 17, said Newburyport Realtor Trisha Collins McCarthy, citing statistics from Multiple Listing Service Property Information Network. Those sales transactions are a significant increase from the 2,795 single-family homes sold during the first quarter of 2003. Sales of condominiums in those counties also rose to 2,938 this year from 1,445 during last year’s first quarter.

McCarthy, who is MAR’s Northern Region vice president, attributed the increased activity to the relatively mild winter and the low mortgage interest rates. “I think that between the weather and [the war in] Iraq, people were really nervous” last year, said McCarthy, a Realtor with Re/Max on the River in Newburyport.

Local Realtors agree that one key factor that has helped the housing market so far this year – and propped up the market throughout much of 2003 as well – is low mortgage interest rates. At the start of January, interest rates on 30-year fixed mortgage were at an average of about 6 percent nationally, according to HSH.com. By March 12, rates had fallen to 5.53 percent.

Since many economists have predicted that interest rates are likely to climb later this year, that’s pushing more consumers, particularly first-time homebuyers, to take the plunge and purchase a home. “Savvy buyers know not to wait too long because they may be impacted” by higher interest rates, said Moore.

The favorable rates are also encouraging sellers to put their homes on the market, knowing they will have a larger pool of buyers available.

The inventory of for-sale homes has been growing gradually, according to Moore. Statewide, there were 24,237 homes listed for sale as of January 2004, about a 3 percent increase from the 23,569 listings during the same month a year ago.

As of January, there was an 8.2-month supply of homes for sale in the Bay State, said Moore. Realtors consider a market with anywhere from a 7.5- to 8.5-months’ supply as being in balance with no discernable supply-and-demand advantage to either buyers or sellers.

While many homeowners have taken advantage of the low interest rates and refinanced their mortgages and others have taken loans to make improvements to their residences and therefore may not be as likely to sell their homes, that hasn’t really cut into the number of homes on the market, according to local Realtors. In Middlesex and Essex counties, the number of active listings during the first three months of the year has been about the same as last year.

“There’s always a certain element who love their [home’s] location and, given the price of housing, cannot afford to move, so they are putting their money back into their property,” said Moore. However, Moore said she hasn’t noticed those factors drastically affecting listing activity.

‘Starting to Move’

McCarthy, the Newburyport Realtor, said while the number of for-sale properties in Middlesex and Essex counties isn’t significantly lower than last year, she believes even more homes would be available for sale if older homeowners weren’t taking advantage of products like reverse mortgages.

In the past, elderly homeowners living on fixed incomes often had to sell their homes because of rising real estate taxes and other expenses. But lenders are educating older homeowners about the availability of reverse mortgages, loans that enable consumers to convert part of the equity in their homes into income without having to sell the home or take on new monthly mortgage payments, thus helping them to stay put.

In the Southeast region of the state, real estate broker Ronald Rusin Jr. said he has noticed an increase in listings within the last two weeks. Listings of for-sale homes in Bristol County, which includes communities like Fall River, Somerset and Swansea, have almost doubled in recent weeks, he said.

“November, December and January were very slow,” said Rusin, broker-owner of Re/Max Right Choice in Fall River and Southeast Region vice president for MAR. “Now the market is starting to move again.”

Rusin attributes the increase in activity to the seasonal nature of the business.

Last April and May, Rusin’s company recorded the highest amount of real estate transactions for the year. This year, Rusin said he has noticed that while buyer interest remains high, consumers shopping for homes aren’t as aggressive as they have been in the past.

“It seems buyers are more cautious than last year,” said Rusin, who added that home prices have started to stabilize.

Local Realtors are predicting that home price appreciation will ease this year, anticipating anywhere from a 3 percent to 5 percent increase in prices. With the slowdown in price appreciation, the residential real estate market is becoming a little more favorable for buyers.

But the most recent statistics released by MAR, reveal that the average price for single-family homes sold during the month of January – $399,332 – was already 7 percent higher than a year ago, while the average selling price for condos jumped 11.6 to $248,342.

As in Massachusetts, home price appreciation across the country is also expected to moderate in 2004. According to the National Association of Realtors, the median existing-home price is projected to rise 4.6 percent to $177,700 and existing-home sales are predicted to total 5.92 million this year, second only to the 6.1 million transactions recorded in 2003.