Mortgage holders who took out home loans at the height of the housing market are quietly walking away from homes in growing numbers in Massachusetts as the foreclosure crisis shifts into high gear. The crippling impact of foreclosures has affected few neighborhoods as severely in Boston like others in the U.S., but is projected to have a growing impact as the length of the crisis grows.
In Boston the constant drop in home prices slowed for a few months in 2011 as lower interest rates and more home buyers jumped into the market, despite sales being at the lowest rate in 20 years. Any sort of sustained recovery will have to wait until companies hire more workers back so employees can make home purchases.
The decline in home prices has at least slowed in Boston as the inventory of homes tightens, but additional foreclosures held-up by banks legal problems should hit the market to provide more discount priced homes to purchase. The influx of inventory will send home prices down gradually as lenders release them to the market at a slow pace. Boston home prices are forecast to drop another 3.5% in 2012.
Just up the road in Cambridge, the market should feel more of an impact from troubled sales as investor owned properties are formally reposed by lenders in larger numbers. Home prices are forecast to drop more as a result during the year, 3.8% on the average home.
New Bedford and Fall River are struggling through tough times with home sales both slowing and values declining. Bristol County’s drop-off bucked the state rise in sales for a time during the year, but was hardly any sort of major change. The decline in home sales represented only a marginal difference on a month to month basis.
Lower home prices coupled with near record low mortgage interest rates should eventually transform the market, but not before sending home prices lower in 2012 an average of 2.7% in New Bedford and marginally lower in Fall River, 2.9%.
Springfield has also met resistance in the housing mess with few home sales and declining prices. The difficulties in recovering from the economic mess are being waged throughout the state, and are especially tough in areas outside of larger inner-city areas like Boston, which holds the states majority of residents. Springfield home values are projected to decline an additional 3.1% during the year.
Worcester has generally been an exception to the rule for the state with more property sales, especially existing single family homes selling at lower prices. However, like the rest of the region prices are expected to sustain their decline in 2012, forecast to drop another 4.3%.
The largest drop in home values in Massachusetts, however, is projected to be on the Cape, where many New Englanders summer and home prices hit the highest at the peak of the market. Prices are forecast to decline an average of 4% during the year along most of the Cape, but should be off a bit more on the northern edge, projected to decline as much as 5% for the year.