Home Price Drop Blamed on Increasing Foreclosed Home Listings
In the second quarter of this year, both home sales and prices in Pioneer Valley, Massachusetts declined due to the growing foreclosed home listings.
Market data showed that prices of properties in the counties of Hampshire, Hampden and Franklin fell by 10.1 percent from April to June. The number of properties sold for the period also declined slightly compared with figures for the same quarter a year ago.
The median single-family home price in the three counties in Pioneer Valley for the second quarter was $187,000, lower than the $208,000 recorded in the same period the previous year.
Additionally, the volume of home sales declined by 2.3 percent to 1,083 from 1,109. According to industry experts, the price decline in the second quarter was brought about by the growing foreclosed home listings which offered low-priced properties and short sales. They explained that short sales involve distressed properties for sale that both homeowners and lenders agreed to sell at less than the amount of the total mortgage owed.
Experts said that majority of properties on foreclosed home listings were purchased by buyers who intend to improve them, and as result, improving the neighborhoods too. Meanwhile, investors who buy repossessed homes tend to resell them at higher prices.
The decline in quarterly numbers do not alarm industry experts as they take in some signs that home sales volumes are picking up. Last month, home sales in Pioneer Valley rose by 10.2 percent to 465, compared with 422 the previous year. Home sales volume in June was the third straight month of increases, prompting experts to say that the market is starting to gain back its normal seasonal
rhythm.
Meanwhile, the number of properties under contract in Massachusetts last month rose by 5 percent to 5,153 from 4,885 the same month last year. Experts noted a high demand for smaller properties in Hampshire County. They said that small homes are popular among first-time homebuyers and sales of this type of property may help boost the median price.
Home sales volume in Hampden County dropped by 4.6 percent to 752 from 788 while the median price declined by 9.2 percent to $172,500 from $190,000.
Statewide, home sales volume dropped 9.3 percent to 9.544 from 10,519 while median price declined by 9.9 percent to $292,700 from $325,000 due to the abundance of cheap properties on foreclosed home listings.
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