Over the past three years, prices on multi-family houses in Dorchester and Mattapan have plummeted, bouncing up and down around half of the peak prices they registered back in 2005 for most of this year. Condo prices have dropped as well, but not nearly as much, even though dozens of foreclosed condos have hit the market and sold for well under $100,000.
This seemingly strange turn of events means that within a particular price range, say around $250,000, a buyer could consider buying a condo, a single-family detached, or an entire multi-family house.
In July for instance, the median price of a condo in Dorchester - as reported by the Warren Group - was $230,000. For an entire three-decker, the median price dipped to $280,000. Those numbers exclude any property that has begun foreclosure proceedings, which often sell for much less and pull market prices downward. Dozens of multi-family homes have sold for under $200,000 in Dorchester this year.
As the credit market tightens up and sales numbers go down, the housing bubble is deflating unevenly across the neighborhood. The rifts in the fabric have to do with particular mortgage requirements, lenders tightening the belt and a slow-down in condo conversions.
"There are people that would love to buy the lovely deals that are available," said Justin Green of Just In Boston Real Estate, "but they simply can't get financing with them."
First-time home buyers - prevalent in the Dorchester/Mattapan market - can still get relatively low interest rates on home loans if they qualify, but there are several complicating factors.
One of the most worrying is that banks have grown leery of neighborhoods where some of the greatest deals can be had, the neighborhoods where foreclosures are high and crime, or the perception of it, is considered high.
Back in January, before they began to fail, Fannie Mae and Freddie Mac - semi-private banks that control the majority of the mortgages in the country - issued new regulations that dubbed certain neighborhoods "declining markets." Agents would plug in an address on a national database, and the bank could label the area declining. Within these areas, down payments would need to be higher in order to secure a loan, say 10 or 20 percent of the purchase price as opposed to the five percent required in other neighborhoods.
"It reeked of redlining," said Anthony Paciulli, president of Meetinghouse Bank.
The banks backed off the new regulations within 90 days after an uproar from community and banking leaders, but lenders still judge loan applications based on conditions in surrounding neighborhoods. Instead of drawing lines through neighborhoods, lenders are judging each location on a case-by-case basis.
"To put a stigma of 'declining market' on a neighborhood was unfair," said Paciulli. "We fall back on common sense We have the right to evaluate a neighborhood."
A second thing that keeps the average first-time buyer from benefiting from the lowest prices is missing condo associations. In buildings where foreclosed owners walked away from their condos en masse, their condo associations folded as well. Most banks require a functioning condo association in order to provide financing.
Cash investors, meanwhile, are out there as well, and given a choice, a bank will choose cash rather than take a chance that a prospective buyer's loan won't come through.
"They sell in bidding wars, they sell in a few days," said Green.
Meanwhile condos that fall in a lower price range and have associations, kitchens, bathrooms and all of their copper piping are in relatively shorter supply - even with mid-range options like the Carruth building on the market. Thus for first-time buyers, prices upwards of $200,000 are still not uncommon in Dorchester, even if fixer-uppers without associations are selling for as low as $60,000 just blocks away.
Also, according to longtime real estate observer John Anderson, unusually high-priced condo conversions like those that helped create the bubble in Dorchester's least popular neighborhoods are still artificially keeping condo prices higher.
His example: a three-decker at 672 Adams St. was bought for $435,000 on April 28 of this year, and its three condos were all sold in three days for $290,000 each, with mortgages from three different companies covering at least 70 to 80 percent of each respective sale. The same condo-converter, Lori Gordon and the Astoria Realty Trust (licensed on April 10), has since turned similarly quick turn-around deals at 19 Everton St. and 51 Torrey St.
It does appear, however, that some buyers are taking advantage of the low prices. A number of two-families have sold to owner-occupants with mortgages from reputable lenders across the neighborhoods, including some two-family sales the Reporter examined that went for under $200,000.
On the other hand, the city is actively working on distributing funds and energy into stimulating individuals, community development corporations and private developers to buy foreclosed properties, even to the point of pressuring banks to sell at lower, market-reality prices.
Where the market will head next is anybody's guess.
Some say the recent $700 Wall Street bailout bill could free up banks to sell foreclosed properties at lower prices, pulling median prices of non-foreclosed properties down as well, but the route U.S. Treasury Secretary Henry Paulson will take with his new found power is still unclear. If mortgage interest rates continue to rise due to the credit crisis, that too could add to a buyer's market - but only for those with cash.