The real estate market started to show signs of stress in mid-2005, he said, when sales started to slow, although few paid much attention. Prices in the Clipper City, however, didn’t begin to drop for a while, he added.
“The basic truth, in spite of those who spout statistics, is that price follows volume,” Lischke said. “That means sales volume changes first, and only after that, do prices change.”
Following a period of strong sales, prices rise to meet demand, he said. And the reverse is also true: When sales stagnate, prices will drop eventually also.
Lischke’s findings mirror Warren’s sales and price data from 2006. During that robust year in real estate in the state, Newburyport sold 190 homes with a median sales price of almost $448,000. That differs significantly from last year’s 175 sales, with a median price of $375,000.
Lischke said with recent sales activity levels on the rise, for the first time in a long time, he’s optimistic the market is really on its way to recovery.
“It could take a year or so for prices to get back to where they were in 2006, but they will eventually,” Lischke said. “The pendulum is starting to swing.”