(NECN: Peter Howe, Boston) Mirroring a national trend, home sales plummeted 26 to 28 percent in July from a year earlier. Experts blame the end of a key tax credit — and predict this may be the beginning of a long buyer’s market in New England for homes and condos.
Like real estate agents across New England, Anthony Lamacchia of McGeough Lamacchia Realty Inc. was expecting to see a slowdown this summer after the $8,000 first-time-homebuyer tax credit expired. “A lot of the people who would have bought in May or June ended up buying in February, March, early April, so it created an urgency because of that need for an April 30 signed contract” to be able to qualify for the tax break.
Anthony Lamacchia of McGeough Lamacchia Realty Inc. was expecting to see a slowdown this summer after the $8,000 first-time-homebuyer tax credit expired. “A lot of the people who would have bought in May or June ended up buying in February, March, early April, so it created an urgency because of that need for an April 30 signed contract” to be able to qualify for the tax break.
The Warren Group, which publishes the authoritative “Banker & Tradesman,” counts sales slightly differently — including homes sold by owners, not just Realtors — and put the drop at 26 percent. The Warren Group said July 2010 Bay State home sales were the fewest in a July since 1990.
“We expected the market to greatly slow down following the expiration of the tax credit. The thing that did surprise us, it was a worse slowdown than we had anticipated,” Lamacchia said. He oversees a group of 10 agents who sell homes throughout eastern Massachusetts, southern New Hampshire, and northern Rhode Island.
While home prices were up in July from a year earlier, according to both The Warren Group and the Realtors, Valvo looks for sales volume and prices to drop the rest of the year. “I think we’re going to be seeing sizeable drops going forward again through the whole rest of this year and probably into early next year,” Valvo said. “The first-time-homebuyer tax credit clearly took lots and lots of people and pushed them into the market. When you’re going to give somebody an $8,000 gift to buy a house, it’s a great incentive.”
So what if you’re trying to get from ‘home for sale’ to ‘sale pending’? Experts say the key in this market is to be realistic — not greedy — about what your home or condo is worth.
“If you’re a seller,” says Valvo, “recognize that the market is working against you. Price your house accordingly.” He also says people should not buy a house as an investment they expect to make money on by quickly reselling. Instead, buy a house you want to live in for years.
Lamaccahia agreed that “you definitely want to price your home as well as you can from the beginning. One of the biggest mistakes that we see is people shooting too high from the beginning and then their home sits on the market for months on end, and what happens after months on end? Their value comes down” — often to the point that people wind up selling for even less than what they could have gotten months earlier if they’d come to market with a less aggressive asking price.