The rising number of foreclosures is putting added pressure on the real estate market in the Merrimack Valley, but it may also be contributing to a surge in sales of multi-family homes.
"We are seeing the large return of investors in Lowell and Lawrence," said Dennis Page, president of the Northeast Association of Realtors
In Lawrence, sales of multi-family homes jumped 62 percent in the first quarter of the year, from 37 last year to 60 this year, a 62.2 percent increase.
The uptick reflected a steep drop in the median price of multi-family homes in the city, from $283,000 a year ago to $175,000 this year, a 38 percent decline.
Multi-family sales also rose slightly in Methuen.
Foreclosures drive down prices by increasing the supply of homes on the market at a time when demand has declined.
"It's difficult for the average homeowner to compete with banks trying to liquidate inventory," Price said. "It makes it more difficult for them to sell at full price."
Timothy Warren Jr., CEO of The Warren Group, publisher of Banker & Tradesman, said almost 3,000 homeowners in the Bay State fell victim to foreclosure during the first quarter.
While multi-family sales were up in some communities, sales of single-family homes were down, along with prices.
The number of single-family homes sold in the region during the quarter dropped 30 percent from the same period last year, from 602 sales last year to 422 this year, according to statistics for the Merrimack and Nashoba valleys compiled by the Northeast Association of Realtors
The median price of a single-family home in the region fell to $310,000 during the first quarter of 2008, down 8.8 percent over the same period a year ago,
Andover and North Andover were part of that trend, with sales down about 38 percent in both towns.
In Andover, single-family home sales dropped from 61 in the first three months of 2007 to 38 this year. Prices dropped from $580,000 to $550,000.
North Andover single-family sales decreased from 39 last year to 24 this year.
Chris Doherty of Howe & Doherty Realtors in Andover, said the numbers in the Andovers mirror statewide trends.
"We're not impervious to the general market forces," Doherty said. "We are being impacted the same as the rest of the market."
Single-family home sales were down less steeply in Lawrence and Methuen — around 22 percent in both cities. In Haverhill, single-family home sales were actually steady, with 68 sold in both 2007 and 2008.
Doherty said that's because prices have fallen more in the cities than the suburbs.
"The more expensive communities are seeing more of a slowdown," he said. "People in the cities are first-time home buyers."
Condo sales are down in both cities and towns, dropping 40 percent in Haverhill and 36 percent in North Andover
Market stabilizing?
Statewide, foreclosure deeds numbered 2,827 in the first quarter of the year, a 138 percent increase over the 1,186 filed during the same time period in 2007. Foreclosure deeds reflect the number of people who actually lost their homes to foreclosure.
In Methuen, foreclosure deeds went up from two during the first quarter of last year to 20 this year.
In Haverhill, that number went from 25 to 40. Lawrence saw the biggest jump in foreclosures, from 16 to 107 so far this year. Andover and North Andover saw a handful of foreclosure auctions.
According to the Warren Group, petitions to foreclosure in March rose 39 percent in the first quarter.
Petitions to foreclose represent the first step in the process, but do not always end in owners losing their homes. Some homeowners eventually sell their homes, refinance or otherwise find a way to halt the foreclosure.
Page, of the Northeast Association of Realtors, believes the market is leveling off.
"Things are stabilizing," he said. "We won't see any great drop-off (in sales) from here. It's a challenge ... and it won't turn around overnight. But it's a cycle we're going through. Compared to other parts of the country, we're actually in pretty good shape."
Doherty agreed, noting that real estate agents in his office are seeing a lot of traffic at open houses, though buyers seem to be biding their time before making an offer.
"There is a lot of showing activity and open house activity in the Andovers," he said. "It's just that people are not ready to pull the trigger. There is definitely traffic ... but there just hasn't been the follow-up activity of people writing up offers."
