Inventory Grows, Asking Prices Fall In Massachusetts
The Weston Town Crier has this report on the housing bubble in Massachusetts. “Inventory in Ashland has tripled from a year go with the median asking price coming down from $529,900 to $424,900, a 25 percent drop, the aftermath of a double-digit increase in the number of homes listed under $350,000.”
“In Framingham, double the number of properties listed under $350,000 compared to a year ago pulled the median asking price down from $459,900 to $439,900 from last year, less than a 5 percent decrease. More than double the inventory in Holliston, and four times the number of homes priced under $450,000, resulted in a 21 percent decrease in the median asking price, from $649,990 a year ago to $537,500 this week. In Hopkinton, where inventory is up 41 percent.”
“In Marlborough, a community where housing prices have traditionally been less than in surrounding towns, an 82 percent increase in the number of listings under $350,000 and a 91 percent increase in inventory, adjusted asking prices down by close to 2.5 percent.” “Asking prices in Newton remain stable as a 65 percent increase in inventory priced upwards of $800,000 balanced the few lower-priced listings. The median asking price is $945,000, down from $949,000 from a year ago.”
“An 80 percent increase in the number of homes on the market, coupled with a handful more of under $350,000 listings had little effect in Northborough. Prices there are down less than 4 percent, from $509,900 to $489,900.”
“Despite a 20 percent increase in inventory in Sudbury, the median listing price there is down about 5 percent from a year ago. The median asking price a year ago was $895,000 compared to $849,900 this week. An increase in homes priced under $400,000 in Waltham, coupled with a 44 percent increase in inventory, pulled the median asking price down 4 percent, from $479,900 a year ago to $459,900.”
“Double the number of listings in Wayland combined with a three-fold increase in listings priced under $450,000 reduced the median asking price by nearly 10 percent, from $775,000 a year ago to $699,000 this week. Median asking prices in Wellesley, a community where there is rarely a house listed for under $500,000, dropped nearly 22 percent this week compared to a year ago, the result of a 64 percent increase in inventory. The median list price a year ago was $1,577,975. Now, it’s $1,230,000.”
“The 57 percent increase in inventory in Westborough and a marked jump in the number of listings priced between $600,000 and $699,999 offset the surge in listings between $350,000 and $399,999 to keep asking prices just 1 percent lower than a year ago. Nearly triple the number of listings priced between $3 million and $4 million along with double the number of listings nudged the median asking price in Weston up 5 percent, from $1.995 million a year ago to $2.1 million this week.”
Its poping
In which case, St. Joseph will definitely help
Theory - buyers aren’t seeing the lower-priced properties as a “bargain” and first-timers still can’t afford them, so they’re not selling quickly.
Burn baby burn!
Even it will be sad to see a lot of decent people hurt and affected by this market change, I have to remember that no one forced anyone to buy RE during the bubble. Deep downside I have to admit, out of morbid curiousity and my fascination with economics and human behavior, that in many ways, this RE market change is some of the best entertainment in town. With the internet and the information age, its almost like watching it unfurl in real time. I know that I am sick and twisted.
It’s not a matter of if there will be a recession IMO, but how bad and severe it will be. Phoenix better hold on, because at least locally, its not going to be pretty at all.
gulp….
When I was looking for an apartment/house to rent around West Washington U in Bellingham, WA, last year, several apartment managers and landlords told me that they have tenants leaving Boston to teach at WWU. Bellingham WA is as far as you can get away from Boston in the lower 48 if you don’t want to move to California. It just shows how those Ph.Ds in their 30’s are fed up with Boston’s RE market.
Inventory has become irellevant. At this level the answer is infinite inventory. In my city there are now 7 SFRs listed at less than $500k. That’s infinitely up from the 0 last month. Of course they are asking $450/sq ft for these starter homes built in 1978.
Robert:
I enjoy your posts! I have a question. What do you think about the claims of the big public builders such as D R Horton and Pulte, etc. that regardless of what smaller builders do, and regardless of what RE does, they will continue to grow profits through “market share”, both organic and by means of acquisition.
This has been their “mantra” for 5 years now, but has not yet been tested.
Is this legtimate or just builder B.S.
Thoughts?
I’m hearing the same double talk from Toll too. It’s the new paradigm; 2+2=3.
The HomeBuilders are honestly (I know, I know) trying to manage the boom bust cycle of their industry and they have learned some lessons but they’ve never been tested like this before. The HBs are about to be screwed by things they aren’t expecting; there are too many homes for the foreseeable fututre. They are relying on some very temporary demographic trends to continue. The age of first time buyers has dropped and won’t drop any longer. The number of people per DU bottomed out with around the 2000 census. In my best analysis this appears to have not only stopped but decisively reversed; more people per home! Lastly the number of secondary/vacation homes are just not going to grow.
IMO the companies will still be decent businesses but their stocks will be toxic and the whole industry will shrink. I’d be afraid for the agressive growth companies because of this. TOL will still eek out small profits building custom high end with thin margins. It’s stock will crater when the true value of their owned and optioned raw land reaches their balance sheets however. Gawd do I sound like a three handed financial advisor or what? [On the other hand...]
The recent surge in building is exactly what should be expected. The HBs need to finish and sell anything that’s been started so they can lay off and also not be stuck with inventory. Market share is a useless metric in a shrinking market especially if it costs them assets at firesale prices.
so what’s the conclusion ?
2% or 10% drop
these numbers don’t tell me much
Gee go figure. Prices are down in the less desirable towns and up in the more desirable towns. Genious.
Some of these sellers are baby boomers heading South as buyers with 25% less in their pocket for a retirement house. Don’t for a moment think the FL and AZ sellers will continue to hold onto their high priced expectations.
I don’t see a bubble burst; I see a slide. Prices will start to slide when the cascading chain of interelated real estate transactions begins to reverse itself. It is at the top right now, and everyone is just standing around… waiting to crest the top of the hill and wondering how fast the ride down will be.
look at this Miami Inventory !!
It’s been noticeable that Phoenix AZ and Tucson AZ were becoming the high-inventory stars, as shown at:
http://www.benengebreth.org/housingtracker/
It’s good to see other States are now stacking up the inventory too.
It is interesting that AZ and FL, the two talked about Baby Boomer Meccas, are showing incredible inventory numbers in all markets…
I guess they will have plenty to choose from, but would guess at these prices they would choose a nice mountain or lake home in places like NC, GA, TN, AR, etc.
These ‘price drops’ are much more a function of changing inventory mixes than true one-on-one reductions in asking prices. It seems that cold-footed speculators are beginning to dump their low to middle priced properties in my area - the inventory has bounced nearly 5x in 8 months. But these homes are lower quality fix-ups. It’s the lower asking prices for these homes that is driving down median prices. The hard work of real prices drops is still far ahead of us.
This article is crap. Just lists a bunch of numbers going all different directions. I went on MLS and checked things out- all of these towns have less than 100 total SFH listed.
I would second the rise of sub-400K listing however. So what? Owners of 2/1 shacks have gotten lucky and will cash out. They can certainly skew the numbers if last year there were more expensive homes on the market.
Just more evidence that this year is different from the last few years, but no “pop” yet.
Mass is not headed for a pop in SFH’s until the boomers begin to downsize. They still own a majority of all the SFHs out in the suburbs. Most don’t even think or believe they will have to downsize. As the smarter ones figure it out one by one, then this 25 year bubble will pop.
For the next few years I see a very very slow market with a decent amount of house auctions.
Boston used to suck in lots of young adults that stayed here after graduation. However recently this is not the case because the job opportunities are not what they once were and the cost of living just keeps increasing.
I agree, but with one caveat. Older boomers I know are not downsizing. They are either buying more expensive, adding to the empty nest, or getting a second home.
I definitely agree that Boston is NOT attractive for the after college crowd.
Where were you a few months ago when Boston bashing on this blog was as it’s height?
The question above was ‘how much will prices drop in Boston?’
As I said yesterday my guess would be 15-17%o condos perhaps a wee more-depending on location and quality of the product. Last ime in the early 90’s bust SFH in metro Boston fell around 27% condos around 35-50%. I feel Boston and New England will suffer a fairly decent recession in the next year or two. In Connecticut- another poster said that Hartford had the lowest amount of invenory in Connecticut- just under 4K- Inventory has gone up- but not the astronomical amount as in other areas. We had our housing recession in the early to mid 90s and it was a dilly- this time here prices could drop 10% or a wee more. Nonetheless New England will suffer becasue of the excessive amount of speculation, debt, massive overbuilding and ‘creative financing’. No one will be immuned- only here the fall will not be as hard or deep.
I agree prices will fall but the volume will also take a very large hit. The condos in Boston are headed for decent correction especially the tenements conversions. These mutifamily houses are 75+ years old with a 2-6 owner condo association. Just thinking about that in a down market makes me cringe.
According to Zillow, House prices in some regions in CT went up 30% in the second half of 2005 alone. I hope that the price decline reverses more than that markup. Last spring there were few homes on the market, or at least that was my perception. A spot check of the homelisting/population ratio suggests 1:150 or so. Not a buble, but not a weak market, either.
I think Zillow is wrong- housing prices from the period mid 2003-mid 2005 went up close to 30%- but prices peaked last summer. Also housing here in the greater Hartford metro area was seriously undervalued for years from the drop/hit we took from 1989-1996- we just recouped some of those huge declines- RE in central Connecticut is considered ‘faily valued’ currently (6% over fair value)- even after 4 years of solid rises for both SFH and condos. Consider the fact that Santa Barbara is over 80% ‘over valued.’
Apologies for the OT, but they’re coming!
I received this today:
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CME and TFS Brokerage invite you to a special launch event and cocktail reception for CME Housing Futures and Options on March 21, 2006 at the Waldorf Astoria Hotel in Midtown, New York. The featured speaker will be Robert Shiller, the Stanley B. Resor Professor of Economics, Department of Economics and Cowles Foundation for Research in Economics, Yale University, and Chief Economist of MacroMarkets. Professor Shiller, along with representatives from CME, TFS, and MacroMarkets, will discuss the Case-Shiller Home Price Indexes and new trading opportunities with CME Housing Futures and Options. In addition, Dennis Gartman, author of “The Gartman Letter,” will join the panel discussion to add this perspective.
Tuesday, March 21, 2006
3:00 p.m. - 7:00 p.m.
Waldorf Astoria
Duke of Windsor Suite
301 Park Avenue
New York, NY
wait, the shiller thing is introducing a new futures market product? to make this little bubblebursting prediction game trade-able? Please excuse my utter ignorance…
I was just fascinated to see the house prices in these MA towns, having lived there from 82 til 91 and seen a bubble burst, but the run-up had not gone on this long or this nuttily. To imagine that the median house price in *Waltham* (went to uni there) is at 450K is just amazing. It might take some time to happen but how in hell are such prices sustainable? not unless suddenly incomes start going up at a big clip, which people believe will be true?! really defies reason. if financial companies need to scale back to deal with a crash in lending and such, won’t boston-area be extra-screwed?
cheers!