“Buyers Adopt Guarded Approach” In Massachusetts
The Boston Herald. “Massachusetts is facing what looks like its worst autumn real estate market since 1996, with no clear signs that prices are bottoming out. ‘I think we still have some more to go on the downside,’ economist John Bitner of Boston-based Eastern Bank said yesterday after the Massachusetts Association of Realtors reported housing’s weakest September in a decade.”
“MAR said just 3,435 Massachusetts houses changed hands last month, a 23.9 percent plunge from September 2005 and the lowest September volume since 1996. The group also said the median house fetched $341,000, down 5.3 percent from a year earlier and 9 percent below the market’s $375,000 August 2005 peak.”
“The condo market recorded an even sharper slowdown, with the number of units changing hands declining 27.8 percent, the biggest annual drop since April 1995.”
“At the same time, the number of unsold houses and condos listed for sale hit 63,956. That’s up 14 percent from year-ago levels, and trails only April, May, June and August as the highest unsold inventory on record. ‘The larger selection of homes to choose from, combined with the extra time it now takes to sell a home, should keep downward pressure on prices for the next several months,’ MAR President David Wluka said.”
“Tim Warren of market-tracker The Warren Group said a ‘market correction is taking hold, and we expect it to continue into 2007.’ Warren yesterday reported that third-quarter Massachusetts house sales posted their steepest quarterly drop since 1987.”
“Bitner said he expects Massachusetts prices to fall another 4 percent or so going forward. Bitner said the Bay State lacks two key ingredients needed for a housing turnaround: population growth and a local economy that’s expanding more quickly than the national average. ‘We don’t have the wind behind us of a rising population, nor do we have a stronger-than-average economy,’ he said.”
The Milford Daily News. “‘Buyers are driving hard bargains, and owners who have to sell are being forced to lower their prices,’ said Tim Warren.”
“‘Today’s market reflects the more relaxed, even guarded, approach adopted by many buyers who are waiting to see if prices have bottomed out,’ said David Wluka. ‘Sellers also have become more cautious, with many opting to delay their home search until they’ve reached agreement on the sale of their own home.’”
The Worcester Telegram. “In Worcester County, home sales slid 24.63 percent, to 2,084 units sold in the third quarter this year, while the county’s median sales price fell a little more than 9 percent, to $256,574, said The Warren Group. Condominium sales in Worcester County dropped 17.3 percent, to 763 units, while the median sale price fell 17.3 percent, to $201,500.”
“Terry Egan, editor of Banker & Tradesman, said the softening market is a correction that will likely extend into the next year. Massachusetts saw a decade of record housing appreciation before the market slowed early this year.”
“‘That’s not peering into a crystal ball,’ he said. ‘We’re extrapolating numbers that we’ve extracted so far. That’s what the statistics are showing us. It’s accelerating rather than receding. We don’t expect it to end in the near future.’”
“The largest percentage drop in sales was in Nantucket County, down nearly 57 percent. The county, which comprises only the island community of Nantucket, the smallest market of the state’s 14 counties, had 80 home sales in the third quarter of 2005 and 35 in the same time period this year, according to The Warren Group.”
“The second-highest sales drop was in Suffolk County, down 34.4 percent. ‘You are seeing some regional variances in numbers,’ Mr. Egan said. ‘Overall, we’re seeing some market corrections across the board in Massachusetts to varying degrees. Some areas are seeing home sales and prices dip to greater extent, where the run-up was greatest, around Metro Boston, especially.”
“Mr. Egan said the recession in the early part of the decade was mitigated by a robust housing market. The question now is whether the strong economy will help pull the housing market out of its downturn, he said.”
“‘During the first part of this decade, housing was the bulwark of the economy, and kept the recession short and mild,’ he said. ‘The question is if a strong economy can keep the housing market correction shallow. If the job market remains strong, incomes remain strong and stable, more than likely, this will remain a correction rather than something deeper.’”
The Boston Globe. “Wluka said buyers, sensing an opportunity, are ‘negotiating hard.’ One of his clients looking at condos in various projects ‘wanted to know the selling price of every condo sold in the past two years’ in each project. ‘I gave it to him,’ he said.”
“Real estate specialists said the market can’t fully rebound until the excess supply of homes is reduced, a process that could take months or years.”
The market needs a rising population with wages that can support higher prices. The next Governor will probably be of a mind that will not reverse the current trend of population outflow and the lack of good job growth.
I’m not familiar with MA politics but “Bitner said the Bay State lacks two key ingredients needed for a housing turnaround: population growth and a local economy that’s expanding more quickly than the national average.”
Did’nt MA lose a lot of high paying jobs as a result of the dotCom bust? Where are the new high paying jobs to support these price levels?
“Did’nt MA lose a lot of high paying jobs as a result of the dotCom bust? Where are the new high paying jobs to support these price levels? ”
India. Pakistan, Malaysia, China, Egypt, Russia.
Any Questions?
Run a search on Dice for Boston. Plenty of tech jobs… I’ve seen Software QA managers up to 120K, Senior Java programmers to $100, and Oracle DBA’s ranging from $80K-120K depending on if the job required E-Business Applications and/or RAC. Check out Harvard for employment… plenty of tech jobs and the pay is good. They also have something like $5 Billion for an endowment so no worries about that.
Is it easy to find a high paying IT job in Boston? No, you need the right mix of skills and experience and a good network of contacts. Most of these gigs require at least 7-10 years of IT experience. As far as I’m concerned, that’s the way it should be. Work hard, make smart decisions after careful, thoughtful planning, and get rewarded. Not everyone is “entitled” to a six figure gig.
Is there competition from cheap overseas labor? Sure, but most of it is at the lower end… i.e. I need a team of junior DBA’s to maintain users/objects/tablespaces in my corporate databases. A monkey could to do that work. Now ask them to set up a 3-node Oracle RAC linux cluster with RAW & OCFS running Oracle Financials. Good luck.
Indeed, but that 120K now is really equivalent to how much in 1999 at the height of the Tech Bubble. I know that I am comparing Apples to Oranges in the timeline, but my guess is that a really good Oracle Engineer would have commanded at least twice as much. Lynux was really not on the horizon back then (at least out of the \. community), much more likely to run on Solaris, but I digress.
The fact is that in real terms wages have dropped in MA, and those tech positions are competing also with cheaper locales in other parts of the country, like Atlanta, Texas, SC, NC, or even god forbid AZ…
If I am offered a job at my current salary in NC, or SC, I would not hesitate to take it, and with it the MUCH lower cost of living, and better climate…. The reason those jobs are still open here, are because it is very hard to fill those jobs with qualified labor that actually knows what they are doing, and will not find work someplace cheaper to live, or choose to stay here and stagnate…
I’ve seen Software QA managers up to 120K
hmmmm…let’s see-$120k x 2.5 = $300k as the amount you qualify to borrow buy a house.
That $300k will get you that converted garage on a slab in Dorchester noted in another thread.
Throw in another $50k and you can get a shitbox in Lynn, and take your chances on get beaten into a coma on your way to the corner store to buy some bread by some aspiring wannabe gang-banger.
All true… my thinking is that as jobs become harder to fill, compensation will improve until demand/supply are closer to equilibrium. Should work out well as housing prices fall and wages increase, as long as there isn’t a wider economic downturn.
My plan is to try and stay ahead of the curve technically speaking and live as conservatively as possible financially. That’s the sacrafice we need to make since both my family and my wife’s is local and we’re all pretty close, so moving isn’t an option.
Funny that you mention NC, btw. The person I replaced at my current job left Mass to work for a competitor in NC. Same pay, much lower cost of living… supposedly bought twice the house he had here for half as much. Trust me when I say I’ve thought about relocating South. If housing here took a 50% hit, I wouldn’t complain (at least as long as I was employed).
“Massachusetts is facing what looks like its worst autumn real estate market since 1996, with no clear signs that prices are bottoming out. ‘I think we still have some more to go on the downside,’ economist John Bitner of Boston-based Eastern Bank said yesterday after the Massachusetts Association of Realtors reported housing’s weakest September in a decade.”
Gee Northeastern Troll, it sound like Mass is different and prices are plateauing. Whatcha think today?
Oh great… Chicken Little, err I mean GetStucco is back. Don’t you have some children to scare with your horror stories of the impending collapse of everything?
GetStucco,
What in any of my posts makes you think I’m not hoping for a 25%-30% decline in real estate prices in Mass? I just don’t agree with all the doomsayers that Mass is headed to hell (unless you’re an FB about to be foreclosed on). There are plenty of states that are going to have it worse than us (how about MI, NV, FL, & CA for starters).
At some point in the next four or five years I’ll be purchasing an SFH. The more weakness in sales and pricing now, the more house I’ll be able to buy/build when the time comes… and as far as my investment property goes, I bought for income, not appreciation. I covered my butt, GS. No overextention here… find some other “troll” to harass.
The problem is that the state remains a high-cost area to do business
and the politics there will continue to support it as a high-cost area to do business.
I agree that labor costs are higher, but so is labor in New York, Seattle, London, etc. The difference between high cost areas and the low cost areas of the US is in the quality of the labor pools to draw on.
I agree that our politicians need to be more cognizant of the competitive landscape to attract and retain more business investment, but the question is really much bigger than just Mass… how can the US compete globally on wages without being protectionist in trade?
Large tech companies can open offices in areas where the
cost of living is lower and the quality of life is higher. I work at a company that did this in the 90s for my location and it is a nice mix. Companies can also hire workers that telecommute though not all jobs can go that route.
MA has some unique cost problems that you typically don’t
see in other states. The Big Dig is emblematic of their
political infrastructure costs.
“I need a team of junior DBA’s to maintain users/objects/tablespaces in my corporate databases. A monkey could to do that work. Now ask them to set up a 3-node Oracle RAC linux cluster with RAW & OCFS running Oracle Financials. Good luck.”
Ironically, you’ve strengthened my point Northeasterner. By raising the bar so high; you leave no room for newbies to enter the IT market and work their way up the food chain. And at that experience level, you are only going to attract more of what Boston already has: a maturing workforce. As a result, more and more younger families are going to look outside the area for other opportunities…
You probably right in that respect. Boston is a tough place to be starting out entry level…
MAZZ has had a lot of financial services jobs aka Fidelity, Putnam, Fleet Bank, et. el…
However, Putnam has been slammed by an after hours trading scandal and is up for sale; Fidelity is insidiously bailing by shipping jobs to lower cost housing markets; and Fleet is long gone having been bought by BofA who is just waiting for the most opportune time to move the whole shebang to NC.
New England now has no major commercial bank. So WTF does that say?
Also throw in the buy-out of Gillette by J&J with jobs movin’ to Ohio.
The writin’ is on the wall. Mazz is a BAD DEAL.
The whole rotten Northeast economy would collapse if everybody didn’t have a spouse who was special ed teacher.
Pinch-a-penny has already stated he would relocate out of Mass given the right opportunity and I’m stuck here for the foreseable future… what about you, hd74man? What’s your plan as far as owning/residing in Mass?
“The whole rotten Northeast economy would collapse if everybody didn’t have a spouse who was special ed teacher.”
You might want to consider the following before you write off all special ed kids. One could end up being MAs saving grace.
From
Wired Magazine: The Geek Syndrome
Issue 9.12 - Dec 2001
Steve Silberman
“It’s a familiar joke in the industry that many of the hardcore programmers in IT strongholds like Intel, Adobe, and Silicon Graphics - coming to work early, leaving late, sucking down Big Gulps in their cubicles while they code for hours - are residing somewhere in Asperger’s domain. Kathryn Stewart, director of the Orion Academy, a high school for high-functioning kids in Moraga, California, calls Asperger’s syndrome “the engineers’ disorder.” Bill Gates is regularly diagnosed in the press: His single-minded focus on technical minutiae, rocking motions, and flat tone of voice are all suggestive of an adult with some trace of the disorder.”
NE-
I am in Mazz to see my 84 year old parents thru to the end.
Not my choice-but it’s the way it is.
I will have to sell the family homestead as there is no way I, or any of my brothers or sister could afford to run the place.
My wish would be to have a summer home in NH and a winter abode in Kentucky/Tennsesse.
I have lived in New England all my life-and it distresses me greatly to see it suffer.
Ya know some study group did a “happiness” ranking on northern/southern NE residents.
Nashua was the demarcation point.
Interestingly, the people to the north had like double the happiness rating as those in the south.
Vermonters smoked everybody in their affinity for their state.
So much for the illusions of the urban sophisticates.
My kids school has 18 classroom teachers and 12 special ed teachers. And can not afford to keep a librarian or full time phys-ed teacher. I think some of that can be blamed on Federal mandates, but I am sure there are some extra state regs that oblige this as well.
You might want to consider the following before you write off all special ed kids. One could end up being MAs saving grace.
I doubt it.
The article is a plant by special ed interests making big $$$ off terminally f*cked people.
Vast sums of money in this country are now spent on the weakest links.
It’s taking us all down the financial toilet.
The pattern in MA is unmistakably the same as the National pattern including places like CO, FL, CA and so on: the dotCom bust followed by a hopeful we can get through this attitude combined with a volley of refis, hews, speculation, and frolic home price appreciation culminating with a scary realization that there is no major economic stimulus to support home prices.
Now, the OMG where is the bottom of this market journey begins…….
It’s my understanding that part of Patrick’s platform for office is to allow illegal aliens in Mass to get driver’s licenses and attend public University at in-state tuitions.
Sounds to me like the Dems have solved Mass’s population problems… just legitimize all the illegals in the state who probably aren’t being counted in census data. Pull them out of the underground economy such that later generations will be fully integrated into the system: paying taxes, buying homes… shouldn’t take more than 30 years or so.
Any thoughts?
OT- on Today this morning a Kiplingers person told sellers not to sell right now unless they must. To wait until Spring because it will be better. They also said that interest rates will not go up…..
oh brother!
Damn, the memo changed again. First it was January…now it’s Spring.
Keep on dreaming, folks.
I almost think its criminal - people should sell asap and drop the price if they need to sell. Not wait until its worse.
I remember the january memo
the corcoran biaaatch was on that
or maybe it was the Early show - they are all the same to me - they all suck! I do not want to misquote
“They also said that interest rates will not go up…..”
I agree. With the economy in recession by spring the rates will go lower and prices will go even lower. The situation will get to the point where most sellers would have no need to sell. They will simply mail-in the keys.
The housing market would not behave in an isolation to the macro economy. Housing was the economy, as far as the growth was concerned, for the past 4 years. Now, the housing will take down the economy and the economy will take down the housing further…
Jas Jain
The Fed Governors have been hawkish in October and have hinted that additional rate increases may be needed. This is quite different
from what they were saying for the last couple of months.
The previous conventional wisdom was that we could see rate drops this year or early next year. The current thinking is that we hold for quite some time or even raise rates.
Please remember that the primary tool of the Fed IS propaganda.
FOMC = Foul Open Mouth Committee!
American People are being ruled over by propagandists, economic as well as political.
Jas Jain
Please, this is getting tiresome. For better or worse America is a free country. We pick our political leaders in as free a fashion as anywhere in the world, in world history. If they don’t do the job, we change.
Exactly what would be the “better” way? Pick some “experts” to run our country? Like the French do with their school for bureaucrats?
Life isn’t perfectible. Sometimes LOTS of people make bad decisions at the same time (like this housing bubble).
It is sad and unfortunate that much harm will ensue but the alternative is to reduce freedom, choice and innovation.
Maybe you, Jas Jain, believe the entire world is stupid (compared to you). Maybe you are right. However, I’ve met quite a few brilliant people. I’ve known many of them to make quite incredibly stupid decisions of one sort or another from time to time.
Again, maybe you Jas Jain, are perfect but most of the rest of us, whatever our talents, have a modicum of what’s known as “humility”. That is, we live with the fact that despite our best intentions and best efforts we will sometimes make mistakes. Happily, America has been a place, historically, which has managed “mistakes”, whether collective (the Great Depression) or with individual leadership (Jimmy Carter) reasonably well and at least reasonably well compared to other nations, cultures or empires.
Consider giving your lectures on how stupid we all are a rest. Fine, I admit I’ve been stupid at points in my life, happy now?
But guess what Jas, I’ve had my moments of clear insight as well and right now, I’m getting an insight about you that is about as clear as anything I’ve ever been right about in my life.
Sorry, but you are oblivious to the fact that the system is getting worse fast. Elections are a Scam because the choices are controlled by Crooks. Do you deny that?
Once Crooks control the candidates…
Vote all you want! I am merely exposing blind faith in the system.
Jas Jain
The “faith” isn’t blind. You are not some “prophet”.
Maybe the current political leadership is totally crooked, maybe a little crooked, and maybe it isn’t at all. I don’t know. Things go in cycles (even in prophecies). They go too far and they get corrected.
But I don’t get your ranting about “blind faith”. Any adult knows that politics attracts many an unattractive person. Such is the case in many walks of life….like the priesthood even or corporate life….or real estate.
But not every politician is crooked, not every priest is a predator and not every person in real estate is evil either. Recognizing the fallibility of human beings in every facet of life is hardly “blind faith”. And if you think there is something better than the flawed yet free market system we now operate under, please enlighten us. Oh and if its socialism, don’t waste your time.
the Fed knows they have to raise; they’ve just been playing cute till after the Nov elections to help out the GOP.
After the bubble bursted in Japan 1991, they tried to lower interest rates down to zero in 1999 (see PDF: http://www.mof.go.jp/jouhou/soken/kenkyu/ron080.pdf ) but that didn’t help the home/land prices: it continued to go down until last year, when few pockets of prime real estate finally rose in price (that’s 14 years to hit bottom). [Who knows: if US economy tanks, Japan's won't be unaffected.]
Thanks for the link…
Wrong as usual Jas with your perma-bear views. You must be Macy’s best customer for all the mattresses you need to hide your money.
Housing is NOT the economy, it’s about 1/3 of total investment. The economy can well endure a housing slowdown so long as employment stays robust. Employment stays robust so long as foreigners provide us with cheap financing.
The economy will slow in due time, but it won’t be due to housing. Most likely due to higher rates stemming from higher inflation.
Jas Jain, where the f*ck did you learn Economics - at the Bangladeshi Institute of Management?
Recession in the spring? Do you mean Spring of 04 or 05 or 06, the last times you predicted recession?
Ahhhhh, you didn’t specify the year this time…cunning…
The latest Kiplinger’s includes a story mentioning Dolf de Roos as a real estate expert. For a different (and, IMHO, more credible) perspective, see:
http://www.johntreed.com/DeRoos.html
Wow. Reed absolutely destroys DeRoos in his critique. Bookmarked it for whenever a naive relative might bring up the subject.
Kliplinger’s is a freakin’ joke.
My father subscribes.
They can only peddlin’ their namby-pamby nonsense to growing senile Greatest Gen types.
Kiplinger’s Personal Finance managing editor, Fred Frailey, wrote an excellent article last month on the housing bubble: “Buyers have gone on strike, but sellers don’t know it yet. Think of Wile E. Coyote running off a cliff… in the housing market, like the stock market, matters get carried to extremes.”
But Seattle realtors said people only buy homes when the weather is bad!
“wait until Spring because it will be better.”
You do that Sparky.
It’s already ‘Half Way Better’ here in So Cal…
two key ingredients needed for a housing turnaround: population growth and a local economy that’s expanding more quickly than the national average. ‘We don’t have the wind behind us of a rising population, nor do we have a stronger-than-average economy,’ he said.”
Thanks to our relaxed border policy - our population is growing larger by the hour. There is diffinately a strong breeze starting to blow on our backs.
That’s only while the economy is good: when things turn sour, even the illegals will be emigrating, back home.
Besides, if you check u-haul quotes, it’s much cheaper to move into Calif than out: When we moved from Austin to L.A. in July, we got a quote that was about 10x cheaper than someone moving the other way. Today [for Oct31 reservation] it’s $663 vs $3389 [5x cheaper to move into Calif]….
“Thanks to our relaxed border policy - our population is growing larger by the hour.’
The problem is that the three groups who wanted the relaxed border policy are not in favor of these new “Americans” making enough money to buy the overpriced homes of Boomers
Business which wants cheap labor and cheap labor does not buy $500,000 houses and if they do buy them they need 4 families in one house which soon turns the house into a less then $500,000 house
Welfare bureaucrats who need poor people to justify their jobs, well off people don’t need welfare bureaucrats.
Various ethnic lobby groups who want to acquire political power in the name of these immigrants but they can only hold onto that power if the immigrants remain poor since if they make money they don’t need the ethnic lobby
“Thanks to our relaxed border policy - our population is growing larger by the hour.’
And Nancy Pelosi and Co. are luvin’ every minute of it…
“And Nancy Pelosi and Co. are luvin’ every minute of it”
And Teflon George, the devider, not the uniter, and his pedofile cohorts have done exactly WHAT about the border over the last 6 years. Oh, I forgot, a 700 mile fence unfunded. I guess Haliburton is not into fence building?
Haliburton is too busy building FEMA camps. Check this out. Which list are you on? The Red list or the Blue list?
http://video.google.com/videoplay?docid=277826260716604258
Bush & co. is just loving every minute of this. His policy is no policy at all. Just more mumbo jumbo for the great unwashed.
While it’s true that Bush and the Republicans should have done more, the fact remains that the Dems have been blocking any meaningful policies through their Senate, and the Republicans have let them have their way for their own reasons.
In my opinion about 95% of them have no other concern than getting rich (ala the brewing Harry Reid scams and I’m sure many others) and we’re all responsible because we haven’t thrown them all out. (how’s that Jas? I love the mountains in CA)
I think term limits for all areas of the governement. Ben Jones for President!!!!
I agree 100%. I think we need to change the law for the Senate by increasing the term to 8 years and limiting Senators to 1 term. Change the House to 4 years and also limit to 2 terms. There is absolutely no reason why our Senators and Representatives should not have term limits…
And don’t even get me started on the whole two party system…
“That’s not peering into a crystal ball,’ he said. ‘We’re extrapolating numbers that we’ve extracted so far. That’s what the statistics are showing us. It’s accelerating rather than receding. We don’t expect it to end in the near future.”
Reality is starting to smack people in the faces; it’s about time!
“Damn, no matter how many times I shake the Magic 8 ball it keeps coming up sell”.
“Shake it again”.
It’s about time “experts” put down the crystal ball and started looking at some facts.
“That’s NOT peering into a crystal ball”
Who the hell does this guy think he is! Not using a crystal ball….
whoa, Zandi said it was bottoms up !
$ 3995 for the truth
with no clear signs that prices are bottoming out. ‘I think we still have some more to go on the downside,
I believe this is what is known as “rearranging deck chairs on the Titanic”
LOL . Why are people in the news trying to call the bottom and than call a rebound for the second quarter of real estate 2007 ? Now we are going to hear, “Get in now before the rebound real estate market of 2007.”This ploy to create urgency is never ending with the people in the real estate industry/prediction game .
I went to a new home tract last weekend and the agent told me the same thing ,”Get in now before it goes up next year ,it’s a great time to buy .”
The mania is gone in real estate and any amount of wishful thinking isn’t going to change that or make real estate appreciate or change the fact that real estate needs a major downward correction that has not fully taken place yet .
They have to create urgency. It’s the foundation of the housing market right now “buy now or be priced out forever”.
If people realize that they are not going to be priced out forever, and realize that renting is 1/2 to 1/3 the cost of ownership in many bubble areas, what do they risk by waiting? Nothing! All they are doing is putting money in the bank for when they are ready to buy. That is not going to work at all for the REwhores, so they need to keep this sense of urgency around the housing market.
Its just like when you buy a car; “This deal is only the table for the next 24 hours”. Yeah, great, I will be back next week, let’s see what the deal looks like then! They need you to buy, they cannot survive without it! Therefore, their only option is to keep the sense of urgency.
If you could go back to the car dealer in a month, and the car was 5% less, why on earth would you buy one today (when you could rent it for 1/2 the cost of buying??). It’s a “fundamental truth” to RE pros that prices must go up again. What they don’t realize (or want to know) is that we have many years before that happens.
I’m not from Boston, so I have to ask a question of the natives: is there a credibility gap between the Boston Herald and the Boston Globe? Yesterday, the Globe gave this quote from Mark Zandi of Moody’s Financial:
“If the price declines aren’t over, they’re pretty close to
over”
So which is it? The Herald says that the decline has just started, the Globe says the decline is over. Someone has their head up their butt. Is it the Globe or the Herald?
For those of you who may defend the Globe by saying that the paper just quoted Zandi and did not proffer its own evaluation, remember that the Globe did not question Zandi’s statement, which would be incumbent on the Globe if they believed Zandi was wrong.
Moodys is also fond of telling the financial world that the mortgages Fannie Mae and Freddie Mac guarantee are backed by the US taxpayer, even though there is no legal grounds for such a claim.
But look at the evidence they are “too big to fail”:
1) FNM stock price has hit a permanently low plateau.
2) FNM gets a pass on filing financials.
3) FNM former execs get sham investigation and de facto immunity from prosecution.
It seems that this company is above the law of the land and the laws of economics and finance as well.
i know the herald had a conservative bend, and the globe much more liberal… perhaps this is what is at work here?
The Boston Globe is a huge cheerleader for the real estate biz.
They are total sell-outs.
The real estate section on Sunday’s is now bigger than the entire paper. They’re not gonna compromise this ad revenue.
And the little side story blurbs are written by 20-something female twits who don’t have a clue.
You’ll get no unbiased commentary from these schmucks.
IMO, the Globe is generally a higher-quality paper than the Herald.
But NOT for real-estate coverage. The Herald does a MUCH better job cutting through the real-estate-industry BS and stating the obvious, which is that the market is soft and heading down.
There are occasional exceptions, and once in a while Kimberly Blanton will write a decent RE article over at the Globe, but for the most part, the Globe RE articles always try to be “balanced”, which is to say that they include half the truth on one hand, and totally ridiculous happy happy sunshine real estate agent talk on the other. Great job, only halfway polluted.
The Globe included the same article about price drops today.
The Herald is a trashy tabloid that has gone through multiple unsuccessful makeovers in the past few years, but has some good, smart reporters. The Globe has a reputation for deciding what its readers should see and not see, though it also has good reporters. The woman who wrote about the Moody’s report has been otherwise excellent on the housing crash.
The Globe tends to prop up the RE industry more but, to their credit, they’ve been having a number of stories at least addressing the issue. The Herald is more biting in its work (they have far less RE advertising as well).
The Globe was happy just to find a Zandi who would go “on record” with such a fatuous claim. The market here is down at least 20% from peak and likely will fall another 20-30%. Why? Much more supply than ever before, people moving out (not in), prices at unaffordable levels for median incomes and anyone who does not own a home now in MA either couldn’t qualify before or didn’t want to take the risk. In a falling market, those qualified buyers will likely wait and, with credit regulations getting tighter, the unqualified will probably stay unqualified.
If you are selling a property in MA today, you have a big problem.
This is a graph of Massachusetts Home Prices as reported
by MAR
MA Home Prices
I think it has decisively turned to the South.
DO you know, have they always publihed lines for both average and median prices, as opposed to just median?
Countrywide Financial Earnings: The Good, The Bad, The Ugly
John Succo
Oct 24, 2006 9:52 am
CFC missed numbers, both on top and bottom-line.
The Good:
Countrywide’s (CFC) banking segment performed well, with pre-tax earnings increasing 33%.
Capital markets performed well, with pre-tax earnings increasing 42%.
The company announced a share buyback program, usually the last resort of the desperate.
The Bad:
CFC missed numbers, both on top and bottom-line.
Mortgage banking was the big culprit.
It declined 40% for the quarter and 20% for the nine month period.
MSR and retained interest valuations charges, net of hedge, were responsible for a $173 million negative swing in the quarter.
It would look even worse if a $51 million hurricane charge from 3Q ‘06 was exed out (meaning real earnings production was way down).
The Ugly:
On-going trends do not look good. Despite claiming that 4th quarter should show a turnaround, the company is:
Reducing headcount.
Spending a lot of time talking about expense management.
Despite declining credit quality and decreased loan loss provisions, the company added at least three cents to earnings.
Loan delinquencies were up 33 basis points.
Lowered guidance, substantially.
All-in-all, we have another disappointing report from a mortgage lender. Despite all the bad news, however, it could be expected that the reaction is somewhat muted as the stock has been trading down and is trading dirt cheap (8x out-year earnings).
Steve Zausner contributed to this article.
Position in CFC
WAPO has an article about even more risky laons taken out as a percentage in 06
wow, like rates or prices could possible bail out buyers
One thing most folks dont notice is that RE in MA is going down faster BECAUSE regulators are really going after the toxic loan lenders and make it very difficult for people to qualify for them. SENSIBLE. Without the herd of sheeples with EZ money from the bank house prices are bound to fall faster and faster as it has been happening in MA. MA population is fleeing to other states , especially the young graduates who cant afford to live in MA due to ridicolous house prices, taxes etc. Who is going to buy your 100 year old POS for 500K ?,answer: nobody . What goes around comes around.
The only examples I have heard of was a Cambodian ring up in Lowell, and a recently wrapped up case of crooked property-flipping in Springfield. These are marginal markets where discrete sets of crooks ran scams that affected certain neighborhoods.
If the overall market is being reformed, that is great, but I have not heard or seen anything about it.
RE: recently wrapped up case of crooked property-flipping in Springfield.
I went out with a woman who was part of a 4-person team doin’ multi-unit appraisal’s in Springfield.
All were unlicensed females
They would go to the property-make an inspection; take some pic’s; cobble together some comp’s to rubber stamp the value
needed by the originator; and collect $100 bucks from the hack-shop operator who would then sign off on the appraisal report as if he had done the entire thing.
He in turn would bill the lender $800/$1000. depending on the number of units.
Fookin’ illegal as all hell.
hehehe…your state regulated appraisal industry in action.
The scary thing is that it might have been legal so long as the comps were legit.
T.-
Ya gotta disclose if somebody participated in the preparation of the appraisal report to include exactly what it was that everybody did.
The hackshop operator signing these reports would be keel-hauled and hung from the yard-arm if the state standards board every got wind of what he was doin.
If Fannie found out, they’d make the wholesaler buy all the loans back.
Very, very serious shit.
I live in MA. Things will get much worse in the years to come, no doubt in my mind. “David Lereah” should be behind the bar, this guy is a shameless lier.
–
“Mr. Egan said the recession in the early part of the decade was mitigated by a robust housing market. The question now is whether the strong economy will help pull the housing market out of its downturn, he said.”
Only in a Financial Fraud economy, driven by lies and manipulation, could such charlatans can make a decent living. Why produce when lies will give you a good living?
I know, we have the best system. It is never lost on me.
Jas Jain
Ma is in worse shape that what is currently discussed. A lot of people have been hanging on to that lifesaver called home equity. A lot of good long term companies died at the hands of the dot com explosion. Most people that worked at tech related jobs felt the pinch either in pay cuts, layoffs, or reduced benefits. Companies cut drastically not only to survive, but to maintain a semblance of profitability. Lots of outsourcing to India and China, with some of that starting to come back, as the quality of outsourced work is suspect at best, and downright dishonest at worst.
Ma, is becoming an ossified state where nursing homes, and “senior” activities are the only ones doing well. Large companies are moving out of state, and the only response from the legislature is to approve Bulgers’ pension, and buyouts of the upper echelons of guberment bureaucracy.
I will not buy an overpriced POS here, and If I can, I will get a job out of state, taking my income, and my wifes income away from the money grubbing socialists in power around here.
Sounds a lot like Florida.
The most bearish people I know are all in Massachusetts. The ITulip folks and Off Wall Street ones for starters.
Tx: It is possible that the people at MIT might have talked with mr Bernake and are not the least impressed with him, and are scared out of their cojones with what he is doing????
It is possible that the people at MIT might have talked with mr Bernake and are not the least impressed with him
Doubtful. He got his degree there in ‘79, and spoke @ commencement in 05.
That’s funny you say that; I’m also in MA, am uber-bearish, and know many local uber-bears, too. (And it’s not because of the people I associate with; it’s quite coincidental.)
I grew up and lived in MA for 25 years. Have been in NH for the
last 19 or so. The difference in quality of life was amazing. I had
just assumed that everyone paid a ton of money in taxes, auto
insurance and all of the other ways that MA nickles and dimes you.
People there just put up with it unless they get a chance to go somewhere else.
I’m a MA native, and having lived in CA and NY, I can tell you there are worse places….
The problems in MA have nothing to do with taxes. States with stronger economies have much, much higher tax burdens.
It’s the real estate, stupid. If you’re not a boomer, you absolutely cannot afford to live here. $400,000 is considered a “starter home.” Excuse me, when you were 25 or even 35, could you borrow and make payments on 400 Gs for your first place? That’s why people are leaving.
High real estate costs also make it a bitch to start or expand a business. Opening a new restaurant takes 2-4 million or more. Construction costs are also ridiculous here, driven up by the Big Dig.
I think we need a huge surtax on sales of properties over $1M. That will lower the entire market.
MA has always had issues with taxes. Even when real estate prices were far lower.
Very aptly described, P-a-P.
Somehow I don’t think you’re gonna get hired by the Boston Globe though.
LMAO, not trying though!!!! Not “liberal” enough for them!
Here are a couple examples:
Newton: Chestnut Hill MA • List: $1,100,000 • Sold: $900,000 • 70385173 [Assessed: $1,007,100]
Colonial • 0.36 Acre(s) • 9 Rooms • 5 Bed(s) • 4 Bath(s) • 1 Half Bath(s) • Sold date 9/29/2006
.
.
70348162 Newton MA • List: $649,900 • Sold: $610,000 • 70348162 [Assessed: $655,100]
Colonial, Garrison • 0.24 Acre(s) • 7 Rooms • 3 Bed(s) • 2 Bath(s) • 1 Half Bath(s) • Sold date 9/29/2006
I have not been able to pull up historical values for these, as the listed book/page infor gets no result from the registry. My guess is that we are looking at 2004 prices here, with another 20-30% off the peak (summer 2005) to go.
As an anecdotal illustration, if you go into the Registries you will find them dead, dead, dead. Nobody there but some very bored civil servants. They used to have closings standing up in the corner at times, now there is little but empty tables as far as you can see.
newton and chestnut hill are sweet- ,but MA has
Libs
regs
green weenies
neg pop growth
very negative for biz…………
These are things that do not deter the surgeons, financiers and white shoe lawyers (not to mention the inherited wealth) that buys in these neighborhoods.
These highly paid professionals are all that is left, now the the end of the Big Dig gravy train has put the tradesmen and cops back into the lower middle class. Independant businessmen have all left, or are holding on against bankruptcy… Even the best funded franchisees are not lasting more than a couple years. Franchisors are just rotating a new round of suckers (unemployed folks with retirement savings to sink into a franchise) every year.
I understand in some parts of the country an investor can purchase and run a franchise and not face certain doom.
Recall all those articles about young people leaving Mass. because they couldn’t afford housing, and businesses leaving because they couldn’t find workers?
That’s the buyers folks. The housing market will turn around when prices fall to levels they can afford. It could happen tomorrow if the price correction was fast enough.
Businesses are leaving because they cannot afford to pay what a normal person would require to live in MA. Health Insurance is one of the largest costs that companies around here have, and if not provided, are assesed a comparable tax by the state.
Another issue is that even if you could hire someone for the chump change that companies are offering, there would be no way that they can actually eat, live, and get to work. Choose two of those. That is what a lot of new employees find. 1500 one bedroom rents in Boston, no parking, and small kitchens… 1500 Rent in the exurbs with parking, a kitchen, but either 1 hour train rides, or 2 hour drives, and then no parking at work.
Average income of 42K is good for starving, and living in a second floor tenement in a ghetto. Ma, is trully and royally dead unless we start attracting new business, and getting all innovative again. Not going to happen, as innovation is being killed by regulation, and by lack of interest from the investment community.
The broader economic picture you’ve painted in this and your previous post is the reason why most bubble watchers probably did’nt repurchase homes or buy into the RE only goes up argument.
As the RE driven economy unravels, however, it’s ironic that some economist are predicting a soft landing. I don’t think anything has changed in the broader economy outside of housing since the dotCom bust; so, I ask, “where is the growth going to come from?”
I left MA after working in Cambridge for 5 years for these very reasons. As an engineer with a masters degree (non-dot.com related work), I wasn’t earning enough to even think about buying a house within an hour’s drive to work, and that was back in 2003. Needless to say, when I decided to return to school for a Ph.D., I headed down to TX. Auto insurance and rent were cut in half. Even on a graduate student’s stipend, my standard of living is higher here in TX that it was in MA when I was working full-time.
MA has some really nice universities (that’s where I earned my M.S.), but they are not going to be able to retain the educated workforce graduating from those schools with the cost of living so high. And how can the MA companies compete for high-tech, educated workers when they only pay 5-10% more that companies elsewhere (e.g., TX, NC, …)?
There were a lot of things that I enjoyed about Boston, and I’d be open to return there someday - but the housing and other cost of living expenses will need to drop significantly first. And I don’t see how that will happen without bringing down the rest of the MA economy with it.
Its costs a comparable amount to live in Boston as it does New York, and Boston doesn’t have Wall Street. Its a great intellectual hub and a fun place to visit, but the city is far too expensive for any new industries to consider staying or returning.
Unless it was for grad school, I can’t think of anyone who would consider relocating to Boston.
“Unless it was for grad school, I can’t think of anyone who would consider relocating to Boston.”
I agree. I took a job in Cambridge specifically because of the number of schools in the area - many of which tailor their programs to working professionals. Getting a masters degree part-time while working full-time was exhausting, but worth it - an advanced degree with no student loans or other debt.
Of course, once the degree was in hand, there wasn’t much reason to hang around.
I rent (brand new house $1,800).
The numbers for MA don’t tell the real story. I talk to a lot of real estate agents in my work. Many of them already have second jobs. Some have gone back to their previous occupations. Their feeling is that all the buyers are gone. The agents want to lower prices but their sellers can’t.
These sellers are, of course, up to their eyeballs in debt, both mortgage and credit cards. Then ones that don’t have their house on the market are fighting like hell to keep their houses. They cannot afford to rent (no first, last & security deposits). All the ones that are getting kicked out by the banks are going south – NC, SC & GA. If they had a job here they would have paid their mortgage.
Both insurance and taxes are going up, a lot. I believe MA will actually fair worse than many other states. The housing stock that is here and sold for way too much is bad housing: old and almost impossible to repair without complete rehab.
I not possible to know how the RE market will decline. There are waves of types of owners that will fall into fatal trouble at different times. Undoubtedly, there will be a false bottom in spring of ‘07. Some fools will believe. Then a worse crash will start when the season ends.
I also speak to a lot of investors. I go to local clubs just to see what’s going on. There is one guy “Bob” that bought a 3 Family on the north shore with the intention of converting to condo’s. He spent 5 months with paperwork. If it was used as a rental, the rents would only cover one-half the mortgage. He paid about 700K! If he put 150K to convert it, he would have made about 140K. Now he has to either do the conversion, or sell it with a big loss now. Chances are he will convert it, try to sell it in the spring, and take his losses then. Many investors/flippers are caught with dead in the water projects. They will suffer as they should for their extreme greed and stupidity.
In the end, it will be the banks / feds that will absorb the losses. Owners cannot lower their prices enough. The amount of homes with mortgages low enough to sell is very small. Those people will wait (until the market nears bottom).
It seems that people with too much real estate or political power will suffer in the years to come.
I watch with zeal.
Welcome to Bush’s “ownership society”.
The republican party is trying to sell us the great job they have done since more people “own” homes than at any time in history.
Also, the economy is great since 5 Dow Companies have boosted the index, while the rest have languished.
It’s sickening, and I’m a registered Rep. Should have stayed an independent.
“It’s sickening, and I’m a registered Rep” Dicky Morris made the quote of the day on Hannity and Combs. The Republicans have a really massive 72 hour get out the vote effort but there is no guarantee who the Republicans will be voting for.
Diogenes — “…and I’m a registered Rep. Should have stayed an independent.”
Is it too late to switch back? Even if your reversion is not useful for the poll registry, it’s never too late to do what you believe in. Wish I could talk you into considering the Libertarian Party. I’ll recruit any Republicrat I can, though Independent is better than nothing.
This is the link to the archives of articles written by Dr. Ron Paul. He is a 100% pure libertarian, though he was elected as a Republican. I lionize him and am far from the only one on this blog who does. I would be happy if we had just one more like him in Congress, then one more the next time.
http://tinyurl.com/3abrq
“In the end, it will be the banks / feds that will absorb the losses.”
With respect, isn’t that, “In the end, it will be savers, bank-stock owners and taxpayers who will absorb the losses.”?
Yes,
The banks and the feds “R” us. Even though the mortgage backed securities (a.k.a. junk bonds) are not technically backed by the fed, they will back them anyway. It will come out of what’s left of the middle class, not the wealthy. Retirement will actually become a luxury that most cannot afford.
I wonder if the genius who bought a 3-family on the North Shore even bothered to run the numbers rent wise… Rent that cover 1/2 a mortgage is not an investment, it’s speculation. I have no sympathy for an FB who loses his shirt on a deal like that. No one forced him to buy at that price. Seven months of paperwork and his only exit strategy depends on the condo market appreciating or losing tons of money?
Stupid money chases after stupid investments. I hope this guy has the funds to feed that beast month after month…
“genius who bought”,
His was exploited by the ones who run “REI” (real estate investor) clubs all over the country. There is no logic for what he did, only greed, now fear is present. He is not alone.
Many of these investor clubs feature “gurus” who made their money in a different market. It took no brains at all to buy retail, then sell for a higher retail in a boom market. He was the greatest fool.
Hopefully, the owner he paid 700k to went to FL and paid too much themselves!
I won’t blame the REI clubs or the realtors or the mortgage brokers/bankers or the FED. It is individual greed pure and simple. Anything else is just the blame game. Why is it so hard for us as a society to take responsibility for the outcomes of our actions?
Honestly, does this guy not have a basic survival instinct? A little voice in his head saying “Maybe it’s not a good idea to take on $700,000.00 of debt”… or however much he actually mortgaged.
When I bought my 4-family in 2003, I started my offer at 15% below asking, finished at 7% below asking, and then knocked another 1.5% off the contract price for inspection related issues… this on a property that was actually cash-flow positive with a cap rate around 8%. The entire time I was in the process of purchasing, a little voice in my head was going “I am paying way too much for this property. The seller is laughing all the way to closing… Should I $hitcan this whole transaction?” I was afraid to death of losing money/opportunity cost on a transaction less than half what “that genius” paid for his beast of a 3-family. And I was actually going to live in one of the units…
I’m starting to think we need a recession just to get people grounded in reality again.
Sorry, just realized when I posted, I bought the property mentioned in my post in ‘04, not ‘03…
I wonder if the genius who bought a 3-family on the North Shore even bothered to run the numbers rent wise…
He probably bought on an Income/Expense Statement prepared by his Realtor-whore.
It’s taxes and insurance for these bozo’s.
“What do mean I’m suppose to include a charge for Reserves for Replacements?” (while busily calling the selling broker to see if the mortgage broker will get another appraiser who is willing to play ball and cook the numbers)
Whew…some real savy, knowledgeable posters on this thread.
Bravo to Ben for pulling them all together.
Jas Jain, where did you learn Economics, at the Bihari Institute of Management?
Recession in which year? 2004, 2005, 2006 like the previous recessions you have “forecasted”?
HedgeDude,
I know your industry is suffering, but please lay off the alcohol — your posts are starting to repeat themselves.
REI Clubs
I will re-phrase what I said. The 3 Fam guy was enabled by the rei clubs, mortgage broker, realtors, appraisers & seller. Someone can have terrific greed, but it takes help, encouragement and false paperwork to go through with such a bad deal. He is not a bad guy, he was partly conned. Most cons use the mark’s greed. He should have had a voice inside that told him to cancel the deal.
He certainly did not run any numbers as a rental. It’s all been a push to develop as condo’s: regardless of the glut. The surplus existed before he even bought.
There are others who really just wanted to “own the American Dream” and with extreme ignorance obtained trashy, destructive mortgages. You cannot blame them for being greedy. It is a dream that turns into the American Nightmare when an Option Arm turns into an Option Arm & Leg.
This whole “as long as we gain population, add jobs and wages go up, the market will rebound” arguement is crap.
The Mass. real estate market took off during a time when the state was losing population, jobs, and wages were stagnant, so obviously the fundamental basis for the run up in prices had nothing to do with the strength of the economy. The economy was tanking at the time. It was cheap money, loose lending practices, speculation, herd mentality and the willingness for people to financially overtexnd themselves that created this bubble.
Now intereste rates are rising, banks are tightening their lending strings, speculation has waned, buyers are being cautious and more people are finally realizing that, hey, real estate prices do not ALWAYS go up as just about every realtor, flipper, investor, builder, etc. has been preaching for the last 5 years. As a result, we are seeing prices drop, and they will continue to drop until they get back more in line with historical levels.
My model still predicts a 50% decline in MA from the top. It has begun. Nothing will stop the decline now, except for HYPERINFLATION, and then the value will still be dropping in real terms.
Say goodbye mass-holes. The potential buyers left are all like me. We do not need to buy. We will only buy if prices collapse by at least 50% from the top.
Who are you actually saying goodbye to? All the FB’s who bought at or near the peak? Between my family and my wife’s, more than half of the home owner’s in our family own their property outright, with no HEL/HELOC. Of my friends who are home owners, most bought 3-4 years ago and at a cost basis lower than many even at that time because they bought from family. I think you are greatly underestimating the number of people in Mass who are not financially overextended as well as the pent-up demand to buy a decent home here (i.e. not a started home)…
Maybe you’re right about real estate taking a 50% hit, but I wouldn’t hold my breath waiting for that entry point, it probably will never come. Think about all the investment dollars waiting on the sidelines from hedge funds, investment groups, foreigners etc that saw the eventual decline coming years ago and have been waiting on the sidelines… You honestly think your the smartest guy in the room? There is alot of very smart money out there.
TESTING