Press Releases

March 30, 2007

Waltham, MA. - The Bay State housing market enjoyed its best year ever in 2004 as historically low mortgage rates, an improving job market, and rising inventory levels helped boost home buying activity to record levels across the state, a new report issued today by the Massachusetts Association of Realtors® (MAR) shows. Home prices also rose for an eleventh consecutive year during 2004, with double-digit appreciation observed in both the detached single-family home and condo markets, an indication that housing demand continues to exceed the supply of homes in most market areas and price ranges.

In 2004, the MAR report found that sales of detached single-family homes increased 8.7 percent in Massachusetts, from 46,410 homes sold in 2003 to 50,441 this past year. The 2004 sales volume establishes a new state record for single-family home sales in a single year, eclipsing the prior record of 50,401 homes sold in 1998. Condominium sales also set a new all-time high in 2004, rising 26.7 percent to 19,710 last year to shatter the old record of 15,560 units sold during 2003.

"We've seen unprecedented demand for housing this past year, especially among entry-level buyers who are taking advantage of the increased purchasing power afforded to them through today's low mortgage rates to buy their first home," said MAR President Maggie Tomkiewicz, of m. macdonald real estate in Dartmouth. "With mortgage rates at their lowest level in a generation, it's now possible to own a home for the same amount or less per month than the typical rent payment."

The growth in detached single-family home sales was felt in all seven market areas of the state last year, with the strongest sales gains occurring in the greater Boston, Central (Worcester County) and South Shore regions, where sales rose 15.7 percent, 11 percent and 9.7 percent respectively. Sales also improved a healthy 4-6 percent in the Northeast and West regions, while more modest sales gains took place in Cape Cod and southeastern Massachusetts. Meanwhile, the growth in condo sales was concentrated in five markets - Cape Cod, central Mass., Greater Boston, the Northeast, and South Shore - with the Central, Greater Boston and Northeast regions all experiencing sales gains of 20 percent or more from 2003 to 2004.

"Condominiums are enormously popular right now because they are able to satisfy the housing needs of first-time buyers, empty-nesters, and second home buyers," observed Tomkiewicz. Last year, in fact, one in every four residential properties sold in Massachusetts was a condo, according to data from the MAR report.

In both the detached single-family home and condominium markets sales activity improved in all four quarters of 2004, with new single quarter sales records for each property type set in the three-month period from July-September last year when 15,603 detached homes and 6,217 condos were sold. And, while sales did moderate in the final quarter of the year due to seasonal market fluctuations, the fourth quarter sales pace remained at or near record levels for the time period.

Specifically, fourth quarter sales of detached single-family homes increased 3.6 percent to 12,274 units sold in the final quarter of 2004, the third highest sales total on record for an October-December period. Only the fourth quarter of 1998 when 12,696 homes closed and the fourth quarter of 1997 when 12,368 homes sold saw greater activity. Meanwhile, condo sales set a new record for fourth quarter sales volume this past year at 4,729 units sold, an increase of 27.8 percent over the comparable period in 2003. The prior record was set just last year when 3,700 condos sold in the fourth quarter.

The second half surge in home buying activity coincided with a steady decline in mortgage rates which peaked at 6 ½ percent for a 30-year fixed rate loan in May, but then dropped two-thirds of a point to an average of 5.83 percent in the fourth quarter. For the entire year, the average rate for a 30-year mortgage in Massachusetts was 5.99 percent, the first time the annual rate for a 30-year home loan has been below 6 percent in over 30 years. Last week the rate stood at 5.67 percent.

"In recent months, buyers have become increasingly more confident and motivated as the local economy has started to add jobs and rates for home loans have dipped back below 6 percent," noted Tomkiewicz.

In addition to today's attractive financing terms, home buyers also are finding a larger selection of homes to choose from in most markets. During the past year, the number of single-family properties (detached homes and condos) listed for sale increased 3.7 percent, from a monthly average of 37,429 listings in 2003 to 38,823 in 2004. It's the largest supply of homes for sale in seven years, dating back to 1997 when there was a monthly average of 39,264 listings statewide.

Despite a more plentiful inventory of homes available for sale, data from the MAR report show that housing prices continued to rise steadily across the state this past year to new record highs. In the detached single-family home market, the statewide median selling price increased 11.5 percent last year, from $305,000 in 2003 to $340,000 in 2004. In addition, the statewide median selling price for condominiums rose 15.1 percent, from $225,000 a year ago to $259,000 during 2004.

Healthy price appreciation also occurred in every region of the state this past year, both for detached homes and condos. Annual median selling prices for detached single-family homes increased 7-10 percent in the Cape Cod, Worcester County and Northeast markets, with even stronger price gains of 12-13 percent noted in the Greater Boston, Southeast, South Shore and West regions. In the condo market, annual selling prices rose 8-10 percent in the Northeast and Greater Boston areas, 11-13 percent in the Central, Southeast and South Shore regions, and 18-23 percent in Cape Cod and western Mass.

"Today's healthy price increases are consistent with a market in which demand has outpaced supply, and we think that trend will continue in the coming year as large numbers of immigrant buyers and baby-boomers in their peak earning years hit the market," said Tomkiewicz. "The good news for buyers is that we should see some moderation in price appreciation in 2005, especially if mortgage rates rise as forecasted," she added.

Notably, three of the top five years for home sales in Massachusetts have occurred since the start of this decade, yet the production of single-family homes has remained constant at approximately 13,000-14,000 units per year in that period.

"Housing has never been in greater demand, yet at the same time many of our local communities are taking steps to limit residential development. When you restrict supply, the result is higher prices. To preserve housing affordability we must increase housing production, especially for starter homes," Tomkiewicz stated.

Sales and price data from the MAR report reflect transactions occurring through Realtor®-affiliated multiple listing services in the commonwealth, and account for approximately 80 percent of all real estate sales in Massachusetts.

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