Northeastern Market Flooded, Home Values and Sales Dropping

Posted in General, August 31st, 2006 |

New-home sales in the northeastern sector of the United States have dropped by more than 8% in May. The northeast is the only region of the country that did not experience a rise in housing sales, as most other areas gained between 3-6%.

Experts attribute this drop in sales to be the significant end up the swell in home values and the real estate market that had been rampant throughout the northeast in the past years. Being that the area is considered very desirable to live in, many homes there were bought up as property values skyrocketed. However, as we have to come to realize, this era is over.

What these decreased home sales lead to however is a subsequent drop in home values, which can be good news for those still considering purchasing a home in the northeast. In Massachusetts alone, the median price of a home dropped from $344,700 to $331,000 since May of 2005.

These statistics become especially indicative of the market condition in the northeast when compared with those for the rest of the nation. The nationwide figure for new home sales actually rose 4.6% in May, given the sales are still plentiful in other parts of the country. One of the reasons for the drop in home values in the northeast is also that the market is flooded with homes for sale as many are still trying to cash in on the purchases they made hoping the boom would continue.

Coupled with the rising foreclosure rate in Massachusetts reported on yesterday, it doesn’t look like the market in the northeast will be significantly improving for investors anytime soon. For homeowners, the problem of falling property values also means that those facing foreclosure won’t be able to sell at the prices they wanted to avoid a full foreclosure. With a flooded market it will be difficult to sell homes. However, with a strong economy and stability in the job market, many feel that the effects of the drop in the housing market will not become out of control.