Melrose Home Sales Doubled Compared To Last Year To Date

It's been brisk business for Melrose real estate agents this year, thanks to a combination of tax credits for home buyers established in the federal stimulus bill and low mortgage interest rates.

Through May of this year, 83 single-family homes have been sold in Melrose, compared to 40 sold in the first five months of 2009, an increase of more than 107 percent, according to figures provided by The Warren Group. Statewide, sales of single-family homes are up 29 percent.

The median price of a Melrose single-family home hasn't changed much according to the Warren Group; through May, the median price is $391,000, only $500 less than the median price through May 2009.

Bill Donohue, owner of Century 21 Sexton and Donohue in Melrose, said his office had a "great" spring.

"It took a while to get started, but once it got going ... the $8,000 tax credit helped a lot," Donohue said. "I wish they'd bring it back and start it again. We need the boost."

Tax Credit Boosted Sales

The American Recovery and Reinvestment Act of 2009 — the so-called federal stimulus bill — included an $8,000 tax credit for first-time home buyers and $6,500 tax credit for repeat home buyers who signed a purchase contract on or before April 30 of this year. Last week, President Barack Obama signed a bill that extends the closing deadline for those purchases from June 30 to Sept. 30 to address "concerns that many homebuyers might be unable to meet the original June 30 closing deadline," according to the IRS website. Members of the military and certain other federal employees serving outside the U.S. have an additional year, until April 30, 2011, to buy a home and qualify for the tax credit.

The April 30 deadline for the tax credit led to a statewide surge in home sales and condominium sales in May, up 37 percent and 24 percent respectively compared to May 2009, according to the Warren Group.

May Numbers Show Sales Slowed Down

Melrose's May numbers aren't quite as staggering, where 19 single-family homes were sold, only three more than in the same month last year, and four condominiums were sold, actually five fewer than last year. Year-to-date, five fewer condominiums have sold in Melrose than last year through May, a total of 25, while prices have stayed fairly flat. The median price for Melrose condominiums this year is $260,000, which is $5,000 more than last year.

Still, Melrose has had a strong market so far in 2010 according to RE/MAX Heritage Broker Linda O'Koniewski, who said that beyond the "urgency and incentive" from the homebuyer tax credit, Massachusetts in general has had a stronger market than other areas of the country she's visited while traveling to conferences and seminars.

"They're still dealing with foreclosures and bad markets," O'Koniewski said. "I don't want to say it's the glory days — prices are still down from the top — but priced right and in good condition, sellers are feeling they're getting their money and buyers are being squeezed a little more on the good properties."

With regard to Melrose, O'Koniewski said RE/MAX Heritage is having a "record year" so far and called Melrose the "sweet spot" in the Massachusetts housing market.

"All the good things people love Melrose for and have made it a valuable city," she said. "We are really creating bidding wars."

Donohue said that the Melrose market has quieted down a bit, but noted that the first two weeks of July are traditionally slower.

"Melrose is still very desirable, a very strong market for homebuyers," he said. "Interest rates are as low as they've ever been, so I think it'll be OK for the fall."

Interest Rates Dropped More Than Expected

Jim Oosterman, Melrose Cooperative Bank vice president in charge of lending, said that interest rates have fallen even more than anticipated.

"We talked about seeing record low rates six months ago and a lot of people jumped into the market, thinking that was going to the bottom," Oosterman said. "Now we're seeing interest rates even lower."

Many of Melrose Cooperative Bank's customers have sought to refinance their homes due to the low interest rates, Oosterman said. Some of those customers have adjustable rate loans and are now refinancing with fixed rate loans that are even lower than their initial adjustable rate.

Oosterman added that customers have been more careful about adjustable rate loans in the wake of the subprime mortgage crisis, one of the primary triggers of the recent global financial crisis. However, he said that for some customers, adjustable rate loans or hybrid loans — where the interest rate is fixed for a certain number of years and adjustable for the remaining years — "can even work for some customers even better than fixed straight loans."

Commercial Market Hasn't Bounced Back

One area where the real estate market hasn't bounced back is the commercial market, according to Donohue.

"The commercial property market is pretty tough; both sales and rentals, it's hard," he said.

Melrose Cooperative Bank doesn't offer commercial lending, but Oosterman said he has seen people more cautious when taking out loans, focusing more on home improvements and other loans that increase the value of their assets, rather than more speculative purchases such as buying into a business or making consumer purchases.

"I think they're using their homes as an asset cautiously," he said. "As a conservative lender, we like to see our customers acting conservative financially."