BOSTON - Real estate agents in the Boston area these days are using a term they haven’t used in about a decade to describe the current state of affairs _ buyer’s market.
Across the region, the list of unsold properties on the market is growing, sellers are lowering asking prices, and open houses attract few, if any, interested buyers.
Agents say a long-predicted market correction appears underway as the gap between home prices and incomes has become too great to sustain recent sales levels.
Linda O’Koniewski, owner of Re/Max Heritage in Melrose, said housing prices are 5 to 10 percent lower now than in the spring and agents are telling sellers to expect lower prices than comparable sellers got just six months ago.
“All trends point to a correction period,” she said.
The reasons, according to industry analysts, include rising interest rates, slow job growth, and higher energy costs. Speculation that prices will fall is fueling the slowdown, and prompting sellers to put properties on the market before prices decline further.
It all leads to more supply, less demand.
The news may be good for buyers, but it is not good for the state economy. Real estate has been a bright spot in an otherwise sluggish state economy is the past few years, generating jobs and wealth.
“A weakening housing market will be a significant weight on the economies that have benefited from the real estate boom,” said Mark Zandi, economy.com’s chief economist. “It means fewer jobs in sectors such as construction. It short circuits equity withdrawals that supported household spending on home improvements, restaurants and vacations.”
The cooling market represents a return to normalcy, said Maggie Tomkiewicz, president of the Massachusetts Association of Realtors.
“The market was overheated,” she said. “A seller now needs to be more realistic.”
The association reported this week that the number of home sales in Massachusetts rose in September from a year ago. Median prices increased about 4 percent from a year ago, but dropped since August. But that data lags behind the market because it only reflects sales that have closed.
Data from listing services, which better reflect current conditions, paint a different picture. The number of condominiums for sale in Boston is up 50 percent from a year ago, while the number of price cuts has more than doubled, according to Listing Information Network, which tracks the city’s condo market.
The slowdown is reflected in the number of people showing up at open houses. Whereas, in the recent past, potential buyers would show up in droves, make quick offers, and even bid against each other to drive prices higher, now they are waiting.
John Ford of Ford Realty Inc., said open houses at a desirable and fairly priced two-bedroom condo in the South End for two consecutive weekends failed to attract a single person. In Rockport, just four potential buyers visited a three-bedroom Cape on the market since July despite three price reductions to $359,000 from $384,000.