Amherst housing market shows signs of softening

By Nick Grabbe
Staff Writer

Published on January 18, 2008

Amherst house prices have held steady while many parts of the country have seen declines over the last two years.

But now there are indications that the local real estate market is getting softer. Sellers have to wait longer before finding buyers, and many houses are selling at prices that are below their assessed values.

Scattered foreclosures

Despite many stories in the national media about the dire consequences of subprime mortgages, there have been only scattered foreclosures here, said Larry Miller, a Realtor with Jones/Town & Country.

"Not a lot of people are selling who have to sell," he said. "A lot of our people are protected because education is our industry. The stable economic base insulates our area from extreme ups and downs."

The average sale price of Amherst houses sold by Realtors in 2007 was $385,400, down slightly from $387,200 in 2006, according to Multiple Listings Service. Miller said he thinks the average is a more reliable indicator than the median, which increased from $318,900 in 2006 to $350,700 in 2007.

Houses within walking distance of downtown Amherst are holding their value better than property that's farther out, Miller said.

College towns around the country have fared better during the mortgage mess than Florida and California. A list of places with the fewest subprime home loans includes Ithaca, N.Y., Madison, Wis., and State College, Pa.

"It may be that professors tend to be more conservative" in their financial decisions, said Steve Feldman of Realty World/Sawicki. College towns also have stable employment, he said.

"If you're in a town with a Ford plant and a model is not doing well, your whole town gets killed," he said. "We're the last ones hit, we get hit the least, and we come out of it first."

Some other statistics from Multiple Listings Service show that the days are long gone of multiple buyers bidding for an available house, a common occurrence five years ago.

The average time a house was on the market before it sold jumped from 118 days to 176 days between 2006 and 2007, while in Hampshire County as a whole it increased more modestly, from 103 to 138 days. Meanwhile, the number of Amherst sales by Realtors decreased from 158 to 133.

Feldman said he's suspicious of the time-on-market statistic because it can be skewed by a few houses that sell after being on the market for a very long time. It also doesn't measure the number of houses that have been on the market for a long time but haven't sold.

A lot of sellers just don't feel the pressure to lower their prices to conform to what buyers are reading about a depressed market elsewhere, Miller said. But there are some houses on the market right now whose prices have dipped below their assessed value, which is the estimate that Town Hall puts on real estate for the purpose of calculating property taxes.

Take the house at 525 Station Road. In the 184 days it's been on the market, the price has dropped from $535,000 to $450,000, far below its assessed value of $480,400. "It's not the price, it's that buyers are hesitant to step forward," said Realtor Nancy Hamel, who has listed the house.

Or consider 1680 South East St., which Miller said is a charming house in a rural setting with nice grounds. It has been on the market for 253 days and the asking price is $349,000, while the assessed value is $364,000. Farther up the road, the house at 310 South East St. is on the market for $374,000 with an assessed value of $424,000.

The house at 12 Hawthorne St. has been on the market for 283 days. The price has come down from $789,900 to $714,900, which is less than its assessed value of $728,500 and less than the $750,000 it sold for three years ago.

High-end houses are the most difficult to sell in this market, said David Burgess, Amherst's principal assessor. While 10 houses sold in Amherst for more than $700,000 in 2006, only four sold in 2007, according to Multiple Listings Service.

Twenty Amherst houses sold for less than their assessed values in 2007, five of them in November and December, according to Burgess's records. The one with the biggest percentage disparity was 345 Strong St., which sold on Dec. 5 for $316,000 with an assessed value of $368,900. Miller said it's a nice house, but a steep driveway may have deterred potential buyers. The house at 9 Tuckerman Lane, with an assessed value of $440,600, sold on Oct. 31 for $395,000.

When Burgess puts new estimates on the value of houses for next year's taxes, his typical procedure would be to look at sale prices in 2007. Because of the changing market, he will ask state officials for permission to instead consider sales from July 2007 to June 2008, he said.

Meanwhile, buyers are trying to decide whether to make offers at far below asking prices, hoping to find sellers who are eager to unload properties.

And sellers are trying to decide whether to hold tight and keep their high asking prices even if they've gotten no acceptable offers.

"Realtors are trying to urge prices that are more realistic," said Feldman. "Buyers are not in a hurry to buy because they see the market going down and think time is on their side."