In recent years, the Massachusetts housing market has been – in a word – ridiculous. Prices of modest homes have not been in line with income. In other words, owning a home in Massachusetts has been unaffordable for many. As a way around this, mortgage companies (and brokers) came up with creative mortgages. For example, a borrower could pay interest only for a few years, while paying nothing towards principal. The thought of getting a 100% mortgage did not seem so daunting at the time because homeowners have believed that they could refinance later when the values of their homes increased with the market. Those prospects are looking slim.

Home prices in Massachusetts are falling and 2006 saw the worst one-year drop in prices since 1993. As reported in the Boston Herald:

The median price -- the point where half of homes sell for more and half sell for less -- dropped 5.8 percent, from $345,000 in 2005 to $325,000 last year, according to a report by The Warren Group, a Boston-based publisher of regional real estate data and other financial information.
That price had grown 12 straight years, beginning in 1994.
"You have to realize that that was a wonderful decade," said Timothy Warren, CEO of The Warren Group, referring to the last 10 years of home sales. "I think we have to take our medicine and realize that it can't go up forever."

For many (especially first time buyers) who bought in at the latter part of this “wonderful decade”, the medicine could be quite difficult to swallow. And even if you did not buy your home recently, you might be in a regrettable position if you refinanced into one of those creative mortgages and took some cash out.

A realtor told the Standard-Times that the market is not crashing at all. He “likened the market to being at the top of a pyramid, about to roll over into a plateau of moderation and consistency.” This is not a particularly good metaphor since the only pyramids I have ever seen with a “plateau” are those from the Mayan era, and what happened on those “plateaus” was rather heart-wrenching (pardon the pun). Also, I have noticed that the the other side of the “plateau” goes down.

Even though the articles end on an upbeat financially distressed homeowners need to be proactive. Contact a professional. Learn more about your options. Listen carefully and choose wisely. And don't assume that because people are whispering things like "soft landing" and "plateau" that the news will be any better tomorrow.