Local realtors believe the time to buy is now

~ An in depth look at the state of the housing market in Canton ~

Like the rest of the economy, the housing market has been stuck in a prolonged slump, but local realtors are cautiously optimistic that the real estate industry has already bottomed out and those interviewed believe that the market is finally showing signs of stabilizing.

The winter season is typically a slow one for the real estate industry, but even so, the market is in better shape than it was at this time last year, according to Cheryl Tobias, co-owner of Century 21 Access Properties in Canton.

“I think we’ve pretty much seen the worst,” added Lorraine Mitchell, manager of the Canton branch of Jack Conway. “I think from now on [the market] will start to go back up again, probably on a gradual basis.”

A combination of low home prices, low mortgage and interest rates and a tax incentive for home buyers has created this “buyers’ market.”

Rick Tobias, the other co-owner of Century 21 Access Properties in Canton, said he could not “remember a time that’s as good to buy a home as today.”

Eagle’s Nest Properties owner Gilda McGonagle echoed this sentiment, calling the market at its present state “a perfect storm.”

“I don’t think any of us can predict [far into] the future, but the first half of the year looks good,” McGonagle said. “All the stars are lined up for a great climate right now.”

And if the housing market is beginning to turn the corner, perhaps other parts of the economy will follow suit and stabilize.

“The housing market drives everybody,” Janet Pratt, owner of Pratt Realtors, said. “People when they buy a house are going to buy furniture and they’re going to buy new carpeting. They’re going to put hardwood in —they’re going to be doing a lot of different things.”

Norfolk County Register of Deeds William P. O’Donnell in the Annual Real Estate Activity Report for Norfolk County noted that the county recorded 13,967 deeds in 2009, a one percent increase from 2008, providing additional evidence that “the slowest point in the market has been reached.”

But the slight increase in activity on the market did not coincide with a rise in the sale price of properties. The average sale price of deeds over $1,000 in Norfolk County was $505,992, falling six percent from 2008 to 2009, according to the Registry’s report. Meanwhile, the average sale price in Canton, $486,903, was even below the county average.

Rick Tobias pointed out that typically “the volume of sales increases first, and then the value of homes tends to go up from that point forward.”

Added Mitchell: “The prices were lower, not so much because the value went down, as it was because the properties that were selling [tended to be] first-time buyer homes.”

Mitchell said homes attractive for first-time buyers (typically lower priced homes) seemed to be “the busiest part of the market” in Canton. Part of the reason for this is the tax incentive for first-time buyers.

According to the Massachusetts Association of Realtors’ website, a first-time buyer can receive an $8,000 tax-credit. There are financial stipulations, however. A single buyer cannot exceed an income of $125,000, while a married couple cannot exceed $225,000. Additionally, the purchased home cannot be worth more than $800,000.

Current homeowners selling their homes and buying a new one can receive a $6,500 tax credit, as long as they lived in their previous home for five consecutive years during the last eight-year period.

“[These incentives] really have played a great role in getting the market moving,” Rick Tobias said.

“It fired up the lower-end market, all the first-time home buyers,” Cheryl Tobias added, noting that these homes generally sell for $300,000-$350,000. “I’ve seen a slower movement on the higher end homes.”

Overall, there were 75 single-family homes on the market in Canton as of last week, according to Pratt. The average selling price of these homes is $612,699, and the average time these homes have been on the market has been 143 days. There were also 32 condos on the market as of last week, with an average selling price of $266,000. These condos, on average, have been listed for 200 days.

“There’s no way the average home in Canton is [$612,699],” McGonagle said. “My point is we’re a little lopsided at the high end. Those are still on the market, whereas the [homes] at the bottom are flying off.”

In other words, the outliers (the million-dollar homes) are driving up the average listing price of a home in Canton. While these high-end homes are not being sold at the same rate as lower-priced homes, those interviewed stressed that any house could be sold as long as it was priced within reason.

The number of foreclosures fell 26 percent in Norfolk County from 2008 to 2009, according to the Registry’s report. In Canton, there were 11 foreclosure sales in 2009 as opposed to 12 in 2008. Local realtors agreed that while foreclosures have been more prevalent in nearby towns like Brockton or Randolph, that has not really been the case here in Canton.

In fact, according to the Registry’s report, 1,473 new mortgages were recorded in Canton in 2009, an increase of 40 percent from the previous year.

“These numbers show us that a healthy number of Canton properties have retained sufficient equity during these last few difficult years to provide owners with the opportunity to borrow at [2009’s] favorable interest rates,” Register O’Donnell wrote in the Registry’s report.

Just how long the real estate market remains stable and just how long it takes to return to pre-recession levels remains to be seen and depends on a number of ever-changing variables.

For one, the tax credit for home-buyers is set to expire April 30 of this year (a binding contract to purchase has to be in effect by this date in order to qualify). The tax credit, which began on January 1, 2009, was originally going to expire in November of 2009 before it was extended. It remains to be seen whether it will be extended again. And if it is not extended, it remains to be seen how it will impact the real estate industry.

While the tax credit may have provided a boost to the housing market, McGonagle saw it as more of a “quick fix” than as a permanent solution in terms of jump-starting the economy as a whole. She would have rather seen the tax credits be given to small businesses.

“Use the money more productively to fix the problem at its root, rather than throwing the money into a homebuyer tax credit that is not sustainable and doesn’t fix the underlying problem, which I think is the economy and unemployment and the state of small businesses everywhere,” she said.

Another variable to take into consideration is interest rates, which are low now, but can always fluctuate.

“If interest rates go higher it will take people out of the market completely,” Pratt said.

But at the present, the tax credit is still in effect and interest rates remain low, so the resounding message from local realtors is to buy. Cheryl and Rick Tobias believe that it is the “tail-end” of the buyers’ market, but just because it is a buyers’ market doesn’t necessarily mean that sellers come out on the short end.

“It’s all relative,” Cheryl Tobias said. “You’re not going to make as much as you would have made five or six years ago, but you’re not going to pay as much as you would have five or six years ago on your next purchase.”

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