Buyers Wait For Lower Prices: Massachusetts
The Masssachusetts realtors have this August report. “Sales of single-family homes and condominiums declined in Massachusetts for a fifth consecutive month in August compared to the same period a year ago, while downward pressure continued to be applied to selling prices due to softening demand and a steady gain in the supply of unsold homes, according to data issued today by the Massachusetts Association of Realtors.”
“In the detached single-family home market, sales fell 21.6 percent, from 5,395 homes sold in August 2005 to 4,229 this August. Last month’s sales total is the lowest August home sales volume in over a decade, dating back to August 1995. Additionally, condo sales decreased 18.5 percent in the past year.”
“‘The market has lost some steam simply because many buyers are waiting to see if prices will go lower, while sellers have been reluctant to adjust prices and, in many instances, are choosing to delay their home search until they have been able to reach agreement on the sale of their own home,’ said MAR President David Wluka.”
“Indicative of these market realities, the report found that inventory levels continued to increase in August, from year ago levels. The number of residential listings rose 20 percent over the past 12 months, from 53,877 homes and condos on the market in August 2005 to 64,735 homes and condos for sale this past August.”
“‘Until supply and demand are in better balance, we will continue to see modest price corrections,’ stated Wluka.”
“Indeed, with the inventory of homes and condos for sale still near record levels and properties staying on the market longer this year, downward pressure on prices continued to intensify last month. Across the state, the median selling price for detached single-family homes declined 6.1 percent in August, from a record high median of $375,000 in August 2005 to $352,000 last month. It’s the largest annual price decline since January 1993.”
“Separately, in the condo market, the median selling price slid 3.3 percent in the past year, from $287,500 last August to $278,000 in August 2006.”
“We’re now in the midst of the strongest buyer’s market since the late 90s,’ Wluka noted. ‘Up until the last several weeks there’s been little reason to act with a sense of urgency, but with mortgage rates back below 7 percent, sellers more readily willing to adjust prices, and inventory still plentiful, buyers would do well to jump in the market and negotiate hard.’”
From the talking points. “Single-family home sales have now decreased in the Bay State for 10 of the last 11 months compared to the same period a year earlier. The slower sales pace reflects the fact that many buyers are attempting to ‘time the market,’ waiting for the right moment to buy. Many continue to hold out for lower prices, believing a larger market correction may come.”
“The supply of single-family homes on the market rose for an 18th consecutive month in August. Inventory, as stated in months of supply, also rose from 7 months last August to 10.4 months of supply in August 2006.”
“The number of condos for sale has increased 28.4 percent in the past year, from 16,211 units last August to 20,807 in August 2006. Inventory, as stated in months of supply, also has risen in the past year, climbing to 9.9 months of supply this August from 6.3 months of supply in August 2005.”
“The median home price has declined for seven consecutive months, the longest such period since prices fell for 13 straight months from March 1992-March 1993.”
From the Warren Group. “The Massachusetts housing market slumped again in August as the number of single-family home sales fell by 19.8 percent and the median home sale price dropped by 8 percent, according to a report released today by The Warren Group.”
“‘The August numbers show that the market slowdown is taking hold and shows no sign that it is going to turn around anytime soon,’ said CEO Timothy Warren Jr. ‘We are clearly going through a market correction that is long overdue, considering the 10 years of unbridled sales and price increases Massachusetts has experienced.’”
“‘In the long run this may be healthy for the Massachusetts economy, making its housing more affordable and the pricing more competitive with other areas of the country. This could help the Commonwealth attract new jobs and retain its existing employment base,’ he said.”
Posted yesterday, but relevant:
A tale of two years…I tend to ask friends in different areas of the country how real estate is doing in their areas. This from a friend in MA, near Boston:
2005: “Average prices have been going up consistently 5-10% each year since 2000. That shows no signs of easing. There have been no ridiculous jumps like you’ve had in CA (well, 1999-2000 was a 15% jump)… …at the low end, below $800,000, I still think the market here is solid. ”
A year later:
2006: “Housing market took a turn for the worse. It is decidedly flat to
negative in price with lots of inventory. Hopefully at this point all
speculative selling has been driven out.”
I find it hilarious that someone would consider the low end to be anything below $800K. Have you any idea what the payment is on that?
If you go ‘old school’ (20% down, fixed, 30 year, full amort.) : $3900 a month.
If you go ‘post modern’ Option-ARM : A buck fitty.
Pretty sure that $3900 is just PI, not even PITI, right? PITI would be more like about $5K
so if your mortgage is 5k, you need another 5k to live comfortably, depending on how many kids or cars, or toys or girlfriends, you have. and saving for retirement or rainy days, another 2k. so that’s 12k a month after tax. so that’s 144K after tax income, that means you got to make 200k a year to live in a 800k house, which is a crack house in east LA in this market. congratulation, you’re a doctor or lawyer and living in a crack house. god bless america and the re bubble.
Posted “Pretty sure that $3900 is just PI, not even PITI, right? PITI would be more like about $5K ”
Hate to Butt in but you are right at 6% 30 year fixed PI ONLY payment = $3,900.00 per month add Ins add Property Taxes…. I would recon an easy 5K per month using the 28% rule Your gross income yearly needs to be $175,000.00. Or a mear $14,500.00 per month if your CC and car etc debt is in line…. Hey!!!! WHAT ME WORRY?
LOL….LOL ….LOL
“Pretty sure that $3900 is just PI”
Yes, that was just PI.
With TI, you’re right, prolly $4.8K or more…and add in maintanace, etc….
“and saving for retirement or rainy days, another 2k”
Nope, the house equity *is* the retirement savings.
Wow, I almost said that with a straight face!
I find it hilarious that someone would consider the low end to be anything below $800K. Have you any idea what the payment is on that?
Posted I find it hilarious that someone would consider the low end to be anything below $800K. Have you any idea what the payment is on that?
Hey Mac…. Keep em’ comming I am rollin’ here! LOL LOL
Currently there appears to almost no market in the Boston region
Posted “Currently there appears to almost no market in the Boston region”
I hate it when that happens.
Currently there appears to almost no market in the Boston region
People are bailin’ out of New England at the rate of 250k per year.
This Liberal Socialist Paradise has ceased to become economically relevant.
Good luck to the greedheads.
They’ll be greeted with open arms, LMAO.
Unfortunately it’s gonna be a long wait when the only incoming purchasers left are the immigrant hospital laundry and fast food workers. Don’t think they can pony up that $3800k per month for a $750k note.
Seller’s will be sucking wind in the bay state for a
I had a chance to move to atlanta a few years ago. I’m 34 and many of my peers have moved out of NE and have long since bought homes and live middle class lifestyles. Meanwhile me and my family are stuck here in this incredibly unaffordable area. I’m not even in MA, I’m in southern NH. Even if houses go down i still ahve to contend with 5 grand in property taxes and a crappy economy full of baby-boomers who can’t retire. I should try again but I blew that onechance a few years ago. Your right about the young leaving . IT’sgoing to look like the land of the living dead in 10-20 years around here.
NH-
Northshore is becoming one big geriatric ward. Older boomers who inherited service businesses from their parents are retiring-and nobody can afford to come in and fill the void.
Just getting a flat tire fixed is a fookin’ nightmare.
Plus the business which are still around, are so arrogant, they think they’re doin’ you a favor by providing you with whatever it is they’re in the business of doing.
Then all the immigrants manning the real shite jobs-give ya the sneer and evil eye when they hand over the bag.
The place is 100% disfunctional.
But what more can you expect in the land of the Big Dig and $100k MassHighWay toll booth takers.
5 Grand in property taxes is pretty cheap in Southern NH for a newer house. A lot of folks I know pay 8-12 for property taxes.
This is our way of saying “Go Away. You’re not welcome.”
NH Native
In the last Mass downturn, NH took a bath. All those second home ski condos and lake houses got dumped first. My parents were renting a condo near Manchester from a Boston owner that was upside down on the loan, and were paying less than the costs by quite a bit. He couldn’t afford to declare bankruptcy due to his job and Boston house. Down the road, condos that in the initial sale went for 100K, the next set for 120K, after the crash were bought by the state for public housing for 15K. Ouch.
Living in the UK at the moment, (talk about a bubble) but still have a house in Rochester, New York. Any housing news?
Doorstep auctions - not pretty.
From an 25 Sept 06 AEI editorial (via Bloomberg News) on the housing collapse and one’s commute.
“The bond rally late last week signals that investors now believe the U.S. economy is heading for a rough patch. With companies flush with cash, this can only mean one thing: The drag from the housing-market slowdown is turning deeply troubling.”
http://www.aei.org/publications/pubID.24937/pub_detail.asp
“Payback: This time it’s for real.”
Gee, I sure hope he is right about the significance of the commuting/location factor. His point makes sense - trouble is - sheeple rarely ever behave rationally. Still in the end it stands to reason that it will come down to location cubed.
The problem with the “move to the city” idea is that the public school systems in urban environments are uniformly horrible. If you have kids, whatever money you will save by not commuting you will spend on private schools for the kids.
“‘In the long run this may be healthy for the Massachusetts economy, making its housing more affordable and the pricing more competitive with other areas of the country. This could help the Commonwealth attract new jobs and retain its existing employment base,’ he said.”
This is about to become the story of a nation. I look at the worst offenders in the Bubble economy and I cannot see them attacting companies to move new jobs into those areas for a decade. While there is usually organic job growth, I believe some areas are so disconnected from wages that there will be a net outflow of jobs for years to come.
I’ve accepted that my prediction of a bottom in 2008 is now completely wrong. As I see the “landed wealthy” holding out for $1.1 million for homes that should be going for $400k to $600k… I see a lot of people holding out for more and paying the piper later. Ugh…
I do hold by my prediction that Joe Sixpack will know by “the ides of October” that home prices are dropping. Part of the reason I believe that this month (September 2006) is the lst month that has a chance of being a strong selling month. Expect to see lots of news on how we’ve just returned to a normal slow winter selling season…
Neil
I don’t think that MA really became affordable in the last downturn. Not sure what will happen this time around. It’s not only the high real estate prices but the traffic, insurance and taxes, taxes, taxes.
“‘In the long run this may be healthy for the Massachusetts economy, making its housing more affordable and the pricing more competitive with other areas of the country. This could help the Commonwealth attract new jobs and retain its existing employment base,’ he said.”
This is about to become the story of a nation. I look at the worst offenders in the Bubble economy and I cannot see them attacting companies to move new jobs into those areas for a decade. While there is usually organic job growth, I believe some areas are so disconnected from wages that there will be a net outflow of jobs for years to come.
I’ve accepted that my prediction of a bottom in 2008 is now completely wrong. As I see the “landed wealthy” holding out for $1.1 million for homes that should be going for $400k to $600k… I see a lot of people holding out for more and paying the piper later. Ugh…
I do hold by my prediction that Joe Sixpack will know by “the ides of October” that home prices are dropping. Part of the reason I believe that this month (September 2006) is the lst month that has a chance of being a strong selling month. Expect to see lots of news on how we’ve just returned to a normal slow winter selling season…
Neil
C.A.R. numbers are out.
Ventura county median price is higher than orange county. Has it been like this always?
I’ve lived in Boston for 30 years. The run in prices in the last five years dwarfed the frenzy that ended here in 1989. The prices I’ve tracked in my neighborhood over the last two years indicate that prices have fallen from 30-90% over assessment to MINUS 10% to 5-10% above assessment.
In other words, the Boston market is AT LEAST 33% off peak already. This, before the auctions start. I went down a couple of more streets around my neighborhood and saw a dozen new four sale signs.
Its different this time…..not at all like 1990 and that wasn’t too good either.
However, I do agree with the fact that falling home prices around here will benefit the Boston economy, you couldn’t much start or grow a substantial business without paying a fortune for talent, just to give them a shot at owning a home.
We’ve gone through a massive misinvestment of capital into housing. The aftermath will be a better economy but there is going to be a lot of pain in the interim. A lot.
The Arizona numbers don’t reflect what is really happening on the ground either. Thanks for the update.
not at all like 1990 and that wasn’t too good either
F8ckin’ ‘a right it’s not. ‘90/’91 will pale in comparison to the coming apolcalypse.
The fraud and corruption this time around is incomprehensible.
Unless you were actually in the “system” you can’t fathom how bad the fix is in between crooked L/O’s, shyster real estate agents and corrupt appraisers.
I saw it all.
Trillions have been lent on shit housing and bad ideas.
I can guarantee you-the financial minds do not exist to solve the problem this time around because it is so enormous.
Orange County according to CAR
$698,080 Median
-1.8% MOM decline
-2.5% YOY decline
5.2% MOM Sales Volume
-32.4% YOY Sales Volume
—————————————————-
Oh Garrrrrrrrrrrrrrrrrry! Time for a revised prediction?
Here’s the whole article for the folks out there (especially Gary Watts…lol)
House prices down, Realtors say
The median price of an Orange County house showed an annual price drop for the first time in a decade, according to the California Association of Realtors tally.
By JEFF COLLINS
The Orange County Register
House prices in Orange County showed an annual decrease for the first time in a decade, the California Association of Realtors reported today.
The state Realtors group, one of two key bodies that track Orange County home prices, reported that the median price of an existing single-family detached house here was $698,080 in August.
That’s 2.5 percent below the house-price median of $716,300 reported for August 2005.
The last annual price drop reported by the state association was in July 1996, at the height of the housing bust that gripped the region in the early 1990s.
DataQuick, the other major market tracker, had reported that single-family homes showed an annual price gain, but was up only 1.5 percent from August 2005.
DataQuick, which uses different data and methods for price tracking, reported that the median price of a single-family house was $685,000 in August, while the median price for all homes – including existing condos and all new residences – was $633,000.
Sales also were down from year-ago levels, according to the statewide association, falling 32.4 percent.
Statewide, home sales decreased 30.1 percent in August compared to the same period a year ago. The statewide house-price median was up 1.6 percent from a year ago, rising to $576,360, the association reported.
“We experienced the greatest year-to-year sales decline last month since August 1982, when sales fell 30.4 percent,” said state association President Vince Malta. “This is another indication that we’re in the initial stages of a long-anticipated adjustment in the market.
Sales also fell in the nation as a whole in August for the fifth straight month, the National Association of Realtors said in a separate report.
The U.S. median price fell to $225,000 for an existing home sold in August, 1.7 percent below August 2005. It marked the first year-over-year price decline in more than 11 years.
I spoke to Gary, he says buy now you don’t want to miss that massive 15% climb into Christmas.
And it gets worse …
after factoring in the impact of inflation on the August numbers you get a -8.0% YOY decline in the real value (after ajusting for inflation) of the median home in The OC.
“‘Until supply and demand are in better balance, we will continue to see modest price corrections,’ stated Wluka.”
How does Wluka know that the price corrections will be modest — does he have a better crystal ball than anyone else? My crystal ball, though presenting a somewhat cloudy picture, suggests substantial price corrections are in the works, because this time is different.
‘The market has lost some steam simply because many buyers are waiting to see if prices will go lower.’
‘The median home price has declined for seven consecutive months, the longest such period since prices fell for 13 straight months from March 1992-March 1993.’
‘If?’ The market’s dropping and they say if. Who wants to jump in front of a falling market with one of the largest purchases in a lifetime?
I think his crystal ball is actually a snow globe. He’s in the “snow job” business after all.
“‘The August numbers show that the market slowdown is taking hold and shows no sign that it is going to turn around anytime soon,’ said CEO Timothy Warren Jr. ‘We are clearly going through a market correction that is long overdue, considering the 10 years of unbridled sales and price increases Massachusetts has experienced.’”
David Lereah says prices will bottom out next year — 10 good years followed by 1 bad year. But the Bible says seven good years will be followed by seven bad years (Joseph’s interpretation of the Pharaoh’s dream). Which seems like a more credible source, David Lereah or the Bible?
http://www.reformation.org/joseph-before-pharaoh.html
The trouble with that is you have to SAVE up grain to survive or seven years. We’ve been SPENDING during the good times, we have no SAVINGS for the bad times.
Now whenever we need to, we eat the house.
Or burn the legs of the chair we sit on in order to warm the house.
“The moon sized meteor hurtling towards earth would be good for the economy said CEO Timothy Warren Jr. Thousands will be needed to fill in the smoking crater.”
LMAO!
Double LMAO!!!!!!!!
Homes Sales in State See Steepest Fall in 25 Years
U.S. Median Home Price Suffers 1st Slip in 10 Years
By Jesus Sanchez, Times Staff Writer
1:34 PM PDT, September 25, 2006
California existing homes sales in August suffered the biggest year-over-year drop in nearly 25 years while the national median home price posted its first decline in more than a decade as the housing market showed more signs of erosion, according to figures released today.
Statewide sales of existing houses plunged 30.1% in August from the same month last year to a seasonally adjusted annual pace of 442,150 properties, according to the California Assn. of Realtors. That was steepest year-over-year decline since August 1982, when sales tumbled 30.4%
The California median sales price for existing homes rose an anemic 1.6% in August compared to the same month last year to $576,360. The median price is where half the homes sold for more and half sold for less.
——————————————————————————–
FOR THE RECORD:
Home Prices: An earlier headline posted on this story incorrectly stated that the median home price had hit a 10-year low. —
“Some areas of the state already have experienced year-to-year declines for more than two months,” said CAR chief economist Leslie Appleton-Young in a statement. “This is in stark contrast to the past several years when there were constant double-digit increases. The long-term trend remains to be seen.”
The FB’er train is really picking up speed NOW!!!!!!!
Stories of housing trouble abound in all forms of the media now.
You can start to sense the “panic” which is emerging.
One idiot commentator made the claim that a falling value structure should immediately be stopped by the FED Reserve…Oh excuse me…a free market on the way up-government to the rescue of the financially f*cked.
Like all of this media babble and “expert” commentary is some sort of great revelation.
LMFAO…All and all I haven’t heard anything which hasn’t been discussed and analyzed many time over by the posters here on Ben’s Blog months ago.
Everything the media could possibly say about the real estate bust has already been discussed six months ago on this blog, but not all the media outlets have gotten around to saying it yet.
Boy GS, You are so right!
I constantly point that out to the few that are starting to comment about things they hear on MSM. Seven months ago (when I first started reading) and probably before posters were predicting these occurances.
The thing that still seems relatively in the dark for John Q. and the MSM is the monstrous credit bubble and the foreign bag holders that may be getting nervous. And that that is why our FED is increasing interest rates.
People can’t refi when the comparables are 30% lower then what they paid for there property 1-3 years ago…
It’s over in MA… plus the winter is coming!!! Who really wants to catch a falling knife.. I went to a couple of open houses over the weekend..talk about nobody around there were 3 names on the sign in sheet… No cookies however…
No cookies?….I will now boycott all open houses!!…Was there
any juice?
No juice either, just candles burning….
I want more than cookies now. I want a nice buffet lunch, maybe some flank steak and an impudent Chianti.
What Gripes Me The Most!! The biggest focus by the RE know it all’s are how much SALES have declined. It is always sales are down down down down!! Month after month. Why don’t they say much about the prices of properties? May be they will soon as “prices “fall ,fall,fall,fall, !!!
Were the candles burning at both ends
“‘In the long run this may be healthy for the Massachusetts economy, making its housing more affordable and the pricing more competitive with other areas of the country. This could help the Commonwealth attract new jobs and retain its existing employment base,’ he said.”
In the long run, we are all dead.
- John Maynard Keynes - (Dead white male)