November 21, 2006

Massachusetts Is “Still In A Slide”

The MetroWest Daily News reports from Massachusetts. “For Realtors, it was the slowest, or, at least, ,more relaxed,’ summer in a decade. Single-family home sales plunged 23.4 percent during the July-to-September quarter, further shifting the market to the buyer’s side as prices continued to soften.”

“Condo sales also dropped sharply over the summer, sliding 22.3 percent compared to a year ago. The report yesterday from the Massachusetts Association of Realtors shows the housing slowdown continuing for a sixth consecutive quarter.”

“‘The more relaxed sales pace during the third quarter is the result of a waiting game buyers and sellers have been engaged in over the past year,’ said David Wluka, the association’s president. Buyers are waiting to see if prices will go lower, while sellers are still reluctant to reduce what they’re asking for.”

“Selling prices fell ‘modestly’ over the summer, dropping 4.9 percent in the single-family market and 2.5 percent in the condo market.”

The Boston Herald. “The Massachusetts housing market’s downturn is accelerating, with sales volume plunging at the fastest pace since 1990 and prices dropping at their steepest rate in 13 years, new figures show. ‘We’re still in a slide,’ Chief Economist John Bitner of Boston-based Eastern Bank said.”

The Telegram. “A continuing slowdown in the state’s housing market has pushed Central Massachusetts sales down more than 25 percent in the quarter ended Sept. 30 from the same period a year ago, while the median selling price for this part of the state dipped almost 4.5 percent to $290,000. It was the lowest summer sales quarter since 1995.”

“Housing sales dropped the most in the southeast portion of the state, down 40.4 percent, while the northeast saw the biggest drop in selling price, off 6.1 percent. Condominium sales fell the sharpest on Cape Cod and the southeast portion of the state, with declines of 33.8 and 36.1 percent, respectively.”

“Some, like William and Kim M. Repa of Southbridge, pulled their home off the market after being unable to sell. The Ripas put their home on the market in October 2005 for $249,000, when the housing market seemed stable, Ms. Ripa said.”

“‘We actually dropped it $10,000 and the agent offered to give money back from her commission. We had an offer, but they wanted us to move out right away,’ she said. ‘They got nervous about the time frame and backed out,’ she said.”

“‘We decided to take it off the market and put it on in the spring,’ Ms. Ripa said. ‘We’ll do some cosmetic work. The house is paid off, so it’s not like we have to move.’”

“Carol Allard Vancil, the agent who worked with the Ripas, said another seller she worked with in Sturbridge had a house on the market for $440,000 in the spring, then dropped the price to $399,000. After another six weeks, the sellers lowered the asking price to $374,000, and got an offer for $30,000 less, even though the property was assessed at $400,000.”

“‘People look at the assessed value, but that’s not what sets the price. It’s the buyers,’ she said. ‘Houses are selling, but the price has to be right. It’s not ‘location, location, location’ anymore but ‘price, price, price.’”

The Boston Globe. “Many empty nesters are being forced to wait for a real estate market upturn, agents and developers said. Falling sales of single-families in Massachusetts have produced a glut of houses for sale, enough to last 13 months.”

“‘There’s a lot of reevaluation going on,’ said Mark Lippolt, executive VP of one of the state’s biggest agencies. ‘The reason is a slowdown in the market.’”

“‘I can’t tell you how many times I’ve heard this story,’ said (Broker) Paul Turcotte. ‘All these people in the suburbs want to move into the city, but they’re hung up because houses are staying on the market so long.’”

“Denise and Patrick Famolare got their deposit back on a condo at Spicket Commons. The Famolares had hoped downsizing from their four-bedroom, four-bath town house along the Saugus River to a two-bedroom condo would cut their mortgage payment by $800 a month.”

“They had one buyer for their home, listed last December for $419,000, but he withdrew his offer days before the spring closing. Before they pulled the house off the market recently, the asking price was $329,000. ‘No reasonable offer will be refused,’ she said.”

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Comment by Houstonstan
2006-11-21 08:35:44

Hey I could be the 1st poster here. I guess I should say something profound. Uhm…

Comment by Ben Jones
2006-11-21 08:58:37

How about, ‘Why don’t any of these articles say what the inventories are?’

The only mention I found was the 13 months supply.

Comment by STL Engineer
2006-11-21 10:04:04

Reno Gazette Journal Says prices down 13 percent. “The worst is over…. blah blah…” How do you know? “I predicted this decline… ” Really? When? “February will tell us whether the bottom is reached” Really?, I thought you said the worst was over?

Comment by crispy&cole
2006-11-21 10:10:57

These clowns are running scared with their - “its over” crap. YOU CAN”T CALL A BOTTOM IF YOU NEVER ACKNOWLEDGED THE TOP!!

Comment by Louie Louie
2006-11-21 10:27:52

Agreed! The shills are running for cover. Very few were even talking about a RE bubble. Prices are still way out of wack.

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Comment by Reno Girl
2006-11-21 10:37:44

Did you see their reply to why Nevada was missed yesterday in the AP release about home prices falling in 38 states? I still think that they didn’t wante to have their uppity piece today followed by yesterdays’s dismal news. From the Senior Editor:

Since several of you have been asking for an explanation, here’s what happened:

As soon as AP (the Associated Press) moved a piece on housing prices yesterday, I posted it. The first version is as you see it on the site — it didn’t mention Nevada. We didn’t edit the story in any way. This is quite common, as AP updates particular stories throughout the day.

When they sent along the updates later in the day, I didn’t spot the addition of Nevada to the story. By that time, we were working on our own story, which you can see here:

So we did cover the issue, but I apologize for the oversight with the AP story yesterday. I also apologize to BanteringBear, who was trying to point out to me yesterday via email that there was a newer version elsewhere.


Comment by sf jack
2006-11-21 11:23:27

Exactly, crispy. You said it.

And how about a Swonk quote to complement all those remarks?!

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Comment by crispy&cole
2006-11-21 11:27:55

I just don’t think we have what it takes to prick the bubble… I don’t think prices are going to fall, and I don’t think they’re even going to be flat. ”
- Diane C. Swonk, chief economist at Mesirow Financial in Chicago, New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05

Comment by sf jack
2006-11-21 19:37:24


Comment by Jayman1957
2006-11-21 08:41:52

I drove by a sign I submitted to the Housing Blog photo section back in March.The sign reads “NO MONEY DOWN” If you scroll way back you will find it.Here in November it is still there.
I just can’t believe anyone would be stupid enough to buy a home here in Mass. right now, but there are actually a few selling.I often wonder if it is just a matter of a few years before they realize they can’t afford it.

Comment by az_lender
2006-11-21 13:10:05

It might be just a matter of a few months before they realize there is a huge financial risk involved. When I consider Mass SFH down 23.4% yoy for the 3rd quarter, I do wonder who the 76.6% idiots are, but then I realize that includes sales contracts written in May and June when a lot of people had less reason to be very aware that the market was getting totally constipated. They may have thought they were getting good deals.

Comment by jetsonboy
2006-11-21 08:58:18

It is interesting in the case of MA where their prices are now stagnating at the 300k mark. This is less than half the price in CA, and in a state that has a similiar income level. People in CA would trip over themselves in order to have the ability to pay 300k for a house. Yet in MA, the game is over. Please please please do the same thing in CA!

Comment by bottomfeeder1
2006-11-21 09:25:51

mass has very high property taxes no?

Comment by Boston Bruce
2006-11-21 13:14:59

Taxes in Massachusetts are not particularly high. 30 years ago they were, but a lot has changed since the days of “Taxachusetts.”

My wife’s suburban townhouse has a market value (actual comparables from summer 2006) of $325,000 and taxes of about $2800. Just before we got married I sold my downtown Boston condo last spring for $360,000. The RE taxes were $1800 per year with a primary residence exemption. Without that exemption taxes would have been around $2700.

By comparison with Maine, where I’ve inherited my parents’ home, taxes are higher. The house valued at $80,000-100,000 in Maine has annual taxes of $1800.

Comment by DinOR
2006-11-21 09:26:59


Oh and another thing or two. People (typically) in NE have one other little thing most CA’s don’t have. SAVINGS! In many cases their parents live in a home that’s paid for and has been for years. Uh that’s the opposite of will be paying on it for years?

Also they drive cars that are much older and have cash value in life insurance policies and parents that can actually afford to make 529 contributions to their grandkids college. Yes, even a lot of blue collar people.

Look, I’m not saying all CA wealth is fake but folks from the Yankee States just lead more sensible lives financially (wether or not they know it!)

Comment by passthebubbly
2006-11-21 09:28:37

“Waste not, want not” isn’t just a saying.

Comment by DrChaos
2006-11-21 09:52:43

And they have the lowest divorce rates too.

Isn’t it obvious? All that fuzzy-headed politically correct liberal elitism and high taxes cause those really horrible disasters like fidelity, thriftiness, sensibility, education, solvency, not to mention high wages and married gay people increasing property values with their revolting and sinful application of architectural taste.

Wouldn’t it be better if we’d all be like Alabama instead?

Comment by Thomas
2006-11-21 10:11:54

“And they have the lowest divorce rates too.”

Interesting point, but you need to control for *all* the differences between Mass. and Alabama, not just the fact that one is a precious right-thinking enlightened utopia and the other is a hellhole of mouth-breathing moralistic simpletons (or whatever). Massachusetts also has:

*a much older population
*a much wealthier population
*a much lower marriage rate
*different ethnic makeup

All of those things contribute to a lower divorce rate. Obviously, you can’t get divorced if you never get married. More younger people in the “dangerous” early years of marriage means more divorces. Also, not all social, religious, and ethnic groups have similar incidences of behavior traits. The largest religious group in Massachusetts, for example, is Catholics, who disfavor divorce more than Protestants. Having a higher percentage of historically disadvantaged minorities also tends to increase the rate of dysfunctional behavior as well.

All I’m saying is that you need to compare like to like. You can’t compare Massachusetts in the aggregate to Alabama in the aggregate, because they’re substantially dissimilar cultures, whose differences can’t just be chalked up to the liberal/conservative distinction.

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Comment by jetsonboy
2006-11-21 10:21:20

teresting point, but you need to control for *all* the differences between Mass. and Alabama, not just the fact that one is a precious right-thinking enlightened utopia and the other is a hellhole of mouth-breathing moralistic simpletons (or whatever). Massachusetts also has:”

-what a bunch of uneducated crap. If MA is full of people that should have the educated fortitude to make exacting comments, then you sure disproved it by making the above statement.

Comment by Thomas
2006-11-21 12:08:35

Irony can be a little too subtle for some people…

Short version: Dude, I’m on your side. Massachusetts sucks beans.

Comment by Louie Louie
2006-11-21 10:39:06

Well now
Wasnt Ronald Regan a Californian?
Did California have more GOP Governors who were fiscal conservative?
Did not tax payers pass Prop 13 in 1978?
Many California corporations are not looking for goverment handouts or tax breaks.

The liberal lable on California really is just — hype. There really isnt much there compared to eastern states.

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Comment by passthebubbly
2006-11-21 11:00:27

Aw heck, McCain would take California… easily.

Comment by Louie Louie
2006-11-21 11:09:17


Comment by Tulkinghorn
2006-11-21 12:00:56

The critical distinction is that people in Massachusetts delay marriage and delay childbearing. When you see a man in his late 40s or early 50s pushing a pram it is his first-born in there, not his grandchild.

People who marry at 30 have a much lower rate of divorce than people who marry at 20. Is it values, economics, education or culture? Argue about it as you will.

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Comment by CashOnlyPlease
2006-11-21 10:18:32

Are you saying that cash value life insurance policies are “sensible”?? They are the second biggest financial ripoffs out there, after IO ARMs of course.

Comment by Louie Louie
2006-11-21 10:33:13

Very odd. My observations are different. The many that came to the SF Bay Area from the east coast are very big on over bidding on RE property and overspending. They act like JEd Clampet. Natives like myself hardly overspend. We are way to laid back.

Comment by Neil
2006-11-21 09:29:17

California will always have an odd price premium. That said, the current price premium requires a contortion of logic that cannot be sustained. How far down will California go? With a median income at $56k, that suggests $300k could be seen again.

Wait for 2Q 2007. Its going to be ugly here. Brokerage layoffs, Realtors ™ will be in financial distress, and companies are considering moving. The ARMs are already impacting the market. Once this snowball gets going, we’re going to have an avalance all the way to the beach. The number of $1M+ flips staggers me. This is going to end uglier than the previous recession.


Comment by SFer
2006-11-21 09:36:54

I hope you’re right and I honestly can’t wait.

In looking at the Dataquick numbers, I noticed that the median home price in lots of areas is over $600K, yet average mortgage payment is under $3,000/month. Only 3 ways this happens:

1) $300K down payments - unlikely;
2) I/O loans or some other “affordability” product - definite;
3) Borrowers leveraged to the gills through combos of firsts and seconds, some portion of which is toxic - bingo.

Comment by Robert Coté
2006-11-21 09:45:34

There is #4 which you missed:

4) People who bought 1996-2000 for $160k-$300k with $1000-$1500 payments living in houses momentarilly valued at $600k-$1.2m.

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Comment by SFer
2006-11-21 09:47:07

Good point. Assuming they didn’t HELOC into a Range Rover.

Comment by Louie Louie
2006-11-21 10:26:17

Im down south of SF in SJ-SC and see the same thing.
Its all I/O plus a prayer!

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Comment by vioviv
2006-11-21 09:50:01

Agree. There will always lots of wealthy celebutante/old money/foreign moguls who will want a piece of the Beverly Hills dream, but they aren’t going to prop up the inflated values in West Hollywood or Highland Park or the formerly middle class areas of Los Feliz or Rancho Park. I don’t see some dissipated Hohenzollern scion or Paris Hilton’s second cousin paying top dollar for a 2 bd/1 ba bungalow in Mt. Washington.

I think the trend is for a massive outflow of LA’s middle class. I’ve lived in LA for 15 years now, and yes, traffic has always been bad. But right now, traffic is choking this city to death. In the past four years, the time it takes me to complete my 9-mile surface street commute to work has DOUBLED. My four back-up shortcuts have been discovered by legions of other harried commuters.

Plus, the entertainment industry is cutting back like never before. There are fewer prime time scripted series, so fewer highly compensated writers and showrunners and grips and wardrobe designers. The studios have cut back to the bone on their production deals, so there are half as many $200K/year “development” execs out there. Animation jobs are being exported to South Korea (even North Korea is getting into the act) and India, and with more and more states offering major tax rebates on production (like New Mexico and Louisiana, and more recently Illinois and Connecticut), you’ve got an evacuation of below-the-line dudes to these places. My wife recently produced a movie in Louisiana and half her crew were evacuees from CA.

And who the hell is going to move to LA in the near future? Anyone considering a job transfer is going to take one look at the housing costs and refuse to move.

I don’t see how anyone can think LA’s future looks bright for the middle class or even the upper middle class. I’ve been enormously fortunate in my career, and my household income exceeds the median by a factor of five, and yet I’m living in a rental house, driving a 10-yr old car, and saving every penny I can get my hands on. And the first chance I get to get the hell out of LA (and I love LA), I will take it.

Comment by Andy
2006-11-21 10:15:52

I agree with you about LA. My commute time to work, which is mainly on surface streets and previously unknown shortcuts has steadily gotten worse over the last 4 years or so.

I think that a lot of people like me - younger people who aren’t really rooted here with families etc, are going to leave the second they land a job anywhere else. I know I am. I bet many parts of Southern Cali are going to lose their middle class.

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Comment by david cee
2006-11-21 10:54:14

Hey, vioviv. Sounds like you need a good financial planner.
Over the last 10 years, with any sort of decent income, you might have invested conservatively and have a nice standard of living today, like a newer car. What have you been doing with your money?

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Comment by Left LA Behind
2006-11-21 22:18:37

Don’t be so fast to make judgments like that. Remember where you are.

Up until this year, I was in the same relative position as vioviv. I was enjoying a $1XX,XXX a year entertaiment business job, living in a rent controlled aparment with an unobstructed ocean view, and driving a 6 year old car (paid for new, in full).

Could I have afforded to “buy”? Yes. And in cash. Did I need a financial planner to tell me this? No. Common sense told me fundamentals were WAY out of line.

I’ll answer that “what have you been doing with your money” query - 1) saving 2) investing and 3) enjoying some amazing travel that none of my “landed” friends can enjoy.

Comment by passthebubbly
2006-11-21 11:03:03

And the first chance I get to get the hell out of LA (and I love LA), I will take it.

Considering how much you should have saved up, you should be able to move anywhere else in the country and work at Burger King (figuratively speaking) without a problem right now. Seriously.

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Comment by Robert Coté
2006-11-21 09:42:10

CA has half the property taxes and none of the weather. It doesn’t explain everything but it does explain a lot of it. I grew up in MA and moved to CA right after college. Between the tangibles and intangibles there are good reasons for CA to be more expensive. That said, the difference is no longer enough to justify the current price differential.

Comment by IllinoisBob
2006-11-21 09:53:32

Wait a minute, CA taxes low ? Only if you didn’t buy recently. If you do, then you will get WACKED !

Comment by Thomas
2006-11-21 10:15:20

Not to mention that CA has the highest top income tax rate in the country. And the rate hits 9.3% at $40,000.

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Comment by Robert Coté
2006-11-21 10:27:10

1% of $600k in CA beats 3% of $250k in Jersey.

If you gave me my house today taxes alone would be larger than the combined mortage plus taxes that I pay now. Yes, buying recently creates a larger tax bill but this is a known and voluntary commitment. Contrast this with other states where taxes are arbitrary and involuntary.

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Comment by yogurt
2006-11-21 12:26:45

buying recently creates a larger tax bill but this is a known and voluntary commitment

And Californians wonder why the only people who move into the state are illegal aliens. Any state which effectively stops productive people from moving in is destroying its future.

Comment by az_lender
2006-11-21 13:25:50

Lived in Mass over 20 years, CA about 15. When I moved out of MA, they still had that insane 12% tax (from the first dollar) on unearned income, now reduced to 5% I believe. Traffic IMO is far worse in Bos than in LA. In LA there are so many alternate routes, you never get seriously stuck. Weather is the obvious big difference. Mass has lousy winters AND hot sticky summers. Wonder if the availability of large, extended families of immigrants to buy Calif houses is part of the reason for the price difference. Clearly the boom in weird lending practices was centered in Calif, but who knows whether that’s cause or effect. I’ll say this at the risk of annoying lots of people: middle-aged persons educated on the east coast tend to have much more knowledge outside their own fields of specialization than middle-aged persons educated on the west coast. Does that imply fewer FBs? Dunno.

Comment by MA_Renter
2006-11-21 14:18:19

Why shouldn’t unearned income be taxed more heavily than earned income? People who actually work to make money shouldn’t be punished because of it.

Comment by michael
2006-11-21 22:27:58

People that create companies and jobs along with certain kinds of workers tend to get more unearned income. If you tax that unearned income heavily and don’t have otherwise very good reasons why people need to be in your state, then companies will move out.

Comment by MA_Renter
2006-11-22 07:06:44

That’s why the tax should be done on a federal level, with no differential rates between earned and unearned income.

Comment by Jetsonboy
2006-11-21 10:06:26

I too am a transplant. I lived in MA for 3 years and originally came from Nashville. Indeed- compared to TN and MA, the weather is amazing in CA. The job market is very diverse and somewhat robust at the moment. Admittedly, I can understand why CA would be permanently more expensive. I too would be willing to pay more to buy here… if prices were at all close to being reasonable. I meet a lot of people here who seem to be drunk on the notion of making their house their life. They attach their jobs, life, wives, kids, and success to one thing- the day they sign the line and start paying on a mortgage. It’s all anyone talks about around here. At lunch, at parties, or even on the train. Houses. Houses, and the money they paid in 1989… 1995… 2000… 2004.. and so on. People seem to be so accustomed to paying practically every penny they make for what?- a house.
I’ve been here for 7 years so far. Somehow I have yet to catch the bug that most of my fellow Californians have: “gotta getta house… gotta getta house. All I see is the big picture that many seem to miss, which is what is the quality of life like here now? I can’t help but feel that once you look past the drunken haze of eternal sunshine, uber-liberl attitudes, and wine country, the experience for most people in their everyday lives is actually pretty crappy- plain and simple.
The longer I live here, the more I appreciate the decent standard of living that I had when I lived elsewhere and wonder if most Californians are aware of the existence of another world where you can live an honest, regular, comfortable life without putting your neck out on the chopping block or pray every night before bed that housing prices will fall…

Comment by Robert Coté
2006-11-21 10:22:35

You see the real California. The housing obsession is an abberation based upon demographics and recent history. I’d never come here now either. Too crowded, too expensive, too socialist, too corrupt, too shallow. I came here at a time when I could achieve a decent quality of life. A lot of those doors are closed to newcomers now. California is mostly a victim of success.

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Comment by jetsonboy
2006-11-21 10:30:26

At the end of the day, I can’t help but think that the house-obsession could potentially by bad for CA’s economy. It seems that people are concentrating more on their houses than work. When was the last time you were somewhere and heard someone say: ” hey- I just had this great idea that will make lots of money!” or- “I did this at work today.” I rarely hear it.
It’s just a damned house. One small element of your life. The reason I’m here is simply because I’m fascinated by stupidity, and the California housing market seems to be eternally fueled by it and by fear of those drunk on the notion that stepping a toe outside the border will yield unwieldy rednecks and nasty beasts.

Comment by garcap
2006-11-21 10:37:28

“Too crowded, too expensive, too socialist, too corrupt, too shallow. I came here at a time when I could achieve a decent quality of life. A lot of those doors are closed to newcomers now. California is mostly a victim of success. ”

Are talking about California or the entire US? :)

Comment by Robert Coté
2006-11-21 10:47:26

California basically doesn’t make enough things anymore. Couple of reasons for this. Defense contracting got gutted by Clinton. Business unfriendly environment. The Hawaiian/Mexican concepts of aloha time/manyana among a small but visible component. NIMBY. Demographics. Leading the nation (again) in sociological trends like the loss of a middle class.

Sure a housing-obsession is detrimental as are all obsessions but again this is just a case of California leading the trend. Some of us have gone on to new horizons. Low living expenses, minimal real estate exposure, ready for the next wave.

Comment by CA Guy
2006-11-21 11:16:05

Robert, you always make some good points in your posts. Like you stated, California continues to shoot itself in the feet with its income taxes, unfriendliness towards business, lack of fiscal responsibility in Sacramento, NIMBYism, etc. etc. I just wonder when it will eventually catch up to us. I was born here, and on my father’s side the lineage has been in CA since the 1890s. For a state with so many blessings, it is sad to watch it be squandered. When you stop and actually give it honest thought, quality of life here is not all that great, and there are no indications that improvement is on the horizon.

Comment by Louie Louie
2006-11-21 11:21:18

” Defense contracting got gutted by Clinton. Business unfriendly environment. ”

That does not explain why we had a tech meltdown in early 90’s. Even before Clinton came to office.. many Bay Area Tech firms closed manufacturing and shipped it Far East. The idea of outsourcing or offshoring jobs has been around for a long while.


Because unlike Hollywood or many other industries our products are constantly being discounted due to heavy competition from other global leaders. A movie ticket or US auto will has always increased, the cost of your new PC or ERP is 1/10 of what it sold 10-15 years ago. We create deflationary products. Its all about competition.

Comment by Anthony
2006-11-21 10:31:05

Sounds like my story. Been here nearly six years and would like to go home to the Midwest.

My wife and I have decent jobs, but since we work in Government, I would make the identical salary back home, but would have a much higher standard of living. I am fast becoming intolerant of the materialistic, entitlement attitude of California…even though in actuality, we are living more “richly” than these fools with their debt-ridden lifestyles.

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Comment by Louie Louie
2006-11-21 11:08:15

I was born/grew up in California, went to UC system and always worked here. I still dont get why you as an Eastern are putting a premium on living here.

I get tired of hearing of people coming to the state “put a premium” on living in Cali and then talk about the high cost of living.

We have a high cost of living because you guys come here and create it yourself. We natives did not create this. Your own egos did! Your to blame!

Comment by david cee
2006-11-21 10:50:03

Mass is losing population, So. Cal is gaining population, legal and illegal.

Comment by Tulkinghorn
2006-11-21 12:08:19

Mass is losing population in spite of increasing illegal immigration. If you take them out of the picture you would half-way depopulate certain towns and cities.

Comment by Bill in Carolina
2006-11-21 08:59:11

“They had one buyer for their home, listed last December for $419,000, but he withdrew his offer days before the spring closing. Before they pulled the house off the market recently, the asking price was $329,000.”

That’s a very significant (22%) haircut, if they even get their $329K.

Ben’s article also talked about empty nesters not being able to sell so they could downsize. I’m in a mostly retiree community here, and noticed several houses that had sold and came back on the market. The number of sales here was close to zero for about 8 months, but now a few are moving. The inventory of homes on the market remained pretty steady during that time, and the number is now down slightly.

Haven’t noticed much in the way of price reductions here, but prices are so low compared to Florida and the DC area that I can’t imagine them going down very much.

I still think the bottom will be reached nationally by mid-2007. But since prices are tracked using YOY statistics, it will be well into 2008 before people realize it. Prices will remain flat for as much as a year after hitting bottom, and the climb back up will be very slow.

Comment by jetsonboy
2006-11-21 09:14:48

Hey Bill,
I assume you are talking about activity in NC?

Comment by Army No. Va.
2006-11-21 10:29:59

I wouldn’t bank on a bottom on 2007. No other downturn under even much less bubbly circumstances ever was so short or shallow. When we move through and past the 2 pages of RTC foreclosures in many cities’ Sunday paper stage and they begin to shrink to a 1/2 page, then we are at the bottom. The other indicator is that no one is talking about real estate any more (they are sick of the subject) and you can buy for 80% LTV and PITI 25% under rental rate, especially in the cookie cutter suburbs.

Your mileage will vary depending on location, quality and supply.

Some areas may never recover back to these prices short of Latin American style inflation.

Maybe some kind of unprecendented government intervention will change this…e.g., forgive all underwater debt upon sale of primary house and minimal credit hit legislation for just primary residence foreclosure.

Comment by WT Economist
2006-11-21 09:01:46

“I can’t tell you how many times I’ve heard this story,’ said Broker) Paul Turcotte. ‘All these people in the suburbs want to move into the city, but they’re hung up because houses are staying on the market so long.”

A little hint. There is a young couple in the city who want to move to the suburbs. They earn, say, $80,000 per year between them. So if you price your home at $240,000, three times that amount, you can sell.

But you won’t. So their moving to the Sunbelt.

Comment by Arizona Slim
Comment by crashmaster101
2006-11-21 18:52:56

Yes! You hit the nail on the head. 3xhousehold income. In Mass that about $250K. So that’s what it currently will take to sell house in this state. Not condos, those should be about $150K.

Comment by jetsonboy
2006-11-21 09:16:09

“little hint. There is a young couple in the city who want to move to the suburbs. They earn, say, $80,000 per year between them. So if you price your home at $240,000, three times that amount, you can sell.”

-excellent point. Many of us young couples don’t give a rats Ass about living in the city. We just want houses we can afford.

Comment by Catherine
2006-11-21 09:21:04

In my area (N. AZ) the inventory is huge. What is somewhat surprising is that after a very brief lull, (in late Sept/early Oct) inventory is back up at a brisk pace. People HAVE to sell. Either they are upside down or have two properties they are carrying. I know of a very young couple, moved to Phx, bought a house last year, now moving back here, ALREADY bought one here, without selling the Phx house. Dumb. They’ll lose both in short order. They are one example of many. The realtor bulletin board on the MLS is full of “owner very anxious…make any offer”, “huge price reduction and 10% commission to selling office!”…
That magical spring selling season is becoming a joke/myth, because most people cannot wait that long to try and get out….plus, many of them already went thru the LAST season and still haven’t sold. It’s pushing the already mind-boggling inventory to new heights.
And, the vacant land listings have surpassed the residential listings…this is an aberration most people thought they’d never, ever see, in this land of “not making any more land, you know!”.
As many here and in the MSM have said: 2007 will the year of a very very remarkable breakdown.

Comment by Arizona Slim
2006-11-21 09:26:24

Here in Tucson, I know people who fall into the “bought new house/still need to sell house they’re living in” category. Believe me, they’re not much fun to be around these days.

Comment by SFer
2006-11-21 09:42:27

Looking forward to seeing my family in AZ over the holidays. Last time I was in AZ the only thing I heard from people was “I just bought my house 12 minutes ago and already made $450,000!! Have you bought yet? Now is the time to buy!!”

Guess I won’t have to hear much of that around the Thanksgiving table this year, huh?

Comment by phillygal
2006-11-21 13:22:51

Bact to usual chitchat this year:
“Pass the mashed potatoes please…great stuffing, Mom - new recipe?…How about those Cardinals!…Is anybody underwater on their home loan yet….oops.”

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Comment by txchick57
2006-11-21 09:32:27

Hey, Catherine. I’m not privy to that MLS bulletin board but I’d love to see it if you can cut & paste a few pages. I’m stepping it up now trying to find something there.

Comment by Catherine
2006-11-21 09:45:03

will do, will try to do it right away, on the ones that look savory and to your style, but I’m leaving for the rest of the week soon, unplugged…in a cabin…only me, 12 or so insane pilgrims/relatives, and a turkey.
They get the dead turkey, I get the Wild Turkey.

Comment by txchick57
2006-11-21 10:00:44


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Comment by Chrisusc
2006-11-21 10:05:26

I haven’t had Wild Turkey in a long time. About 10 years ago or so, my Aunt and Father turned me on to martini’s (the real ones, not the phoney chocolate or apple crap that my sister drinks).

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Comment by Calm bfor the storm
2006-11-21 09:45:09

Here are a couple of forclousure websites in Mass. and Rhode Island . and Looks like here in New England we are in for quite a “soft landing”.

Comment by michael
2006-11-21 09:58:27

No, it’s not a soft landing. It’s a “relaxed” landing.

Comment by Anthony
2006-11-21 09:50:16

Inventory in northern California continues to drop — down to about 680 from 792 earlier this year in Humboldt county. Sellers are pulling their homes off the market, but still enough GF’s show up to buy the few that are priced below comps.

It really appears Florida is ground zero for the bubble…people in California have, overall, far more equity to ride this thing out for the short term…plus people are far more foolish in California that they’ll actually buy an overpriced POS.

I’m about ready to throw in the towel and move out of state rather than wait years and years for property values to decline in Cal. I certainly refuse to buy anything here at these prices.

Comment by SFer
2006-11-21 09:58:48

I would disagree with that equity notion. People who bought in 2001 or earlier likely have equity, providing they haven’t squandered it on vacations and cars, etc. But most people I know who have bought in the last 2 years have leveraged it to the max with minimal down payments. Plus the published stats on LTVs are skewed, if I understand correctly, because only 1sts are reported and not 2nds.

Comment by shadash
2006-11-21 10:15:50


Who are these people willing to loan out cash with no sound financial grounds?

The more I find out about how mortgages work the more angry I get.

Comment by Anthony
2006-11-21 10:36:29

Those who bought prior to 2001 are whom I am referring. We all know that the people who bought from 2003 onward don’t have any equity.

It never ceases to amaze me…people who hold a depreciating asset like a house for six or seven years EXPECT to make many hundreds of thousands of dollars on it, and in many cases do. This insanity is indigenous to California.

Comment by Andy
2006-11-21 10:24:41

Judging by all the Hummers and Benzos I see, I’d bet that many people here are pretty leveraged-out and have much less equity than any sane person would want.

Comment by michael
2006-11-21 09:57:13

MA faces a pretty big budget shortfall which the new Governor will have to deal with. The outgoing Governor refused to use the rainy day fund and went for a bunch of budget cuts a few weeks ago. The MBTA recently raised fares. And there’s a battle over tolls that the new Governor will have to deal with.

The new Governor has basically said very little about what he’s going to do though I’m pretty sure that cutting taxes isn’t among one of the options under consideration. So there is some uncertainty over how MA is going to look in 2007. And business typically hates uncertainty.

It is possible that MA gets Federal money with
the Democrats now in power. But the excesses
of the Big Dig may make that a lot harder than
in the glory days of MA politicians.

A lot of MA residents have come north of the border and have pushed up prices here. NH is
still seen as a place of refuge for MA residents
in addition to the sunbelt.

Comment by John Law
2006-11-21 10:03:04

it should be noted the true shock of the housing bubble. if a $300,000 house is down 5% to $285,000 YOY, that’s not an accuarate gauge of the impact. that home was supposed to appreciate in most people’s mind by 10-15%. the true loss is that YOY most people thought the house would be worth $345,000 and not the $285,000 it’s worth now. that’s more than a $50,000 dollar swing. now, multiply that by 3 houses on an I/O loan that you can’t rent out to cover the mortgage costs.

this bubble is unlike anything we’ve seen. at least in stocks you lose money you had invested and nothing more(usually).

Comment by Chrisusc
2006-11-21 10:07:02

That’s the thing about leverage. It can make you rich or it can cut your throat.

Comment by UnRealtor
2006-11-21 10:11:04

The housing bust goes fully mainstream: today’s Oprah will feature desperate sellers who can’t find any buyers.

Really, saw the promo last night!

Comment by Craven Moorehead
2006-11-21 10:36:05

I saw that promo too.

Comment by phillygal
2006-11-21 12:03:34

Oh, well it’s official then. Saint Oprah proclaims it is so.

Comment by AE Newman
2006-11-22 20:11:30

Posted ” Oh, well it’s official then. Saint Oprah proclaims it is so.”

Ben once these “saints” get a grasp of what you have said for years. They will read you and “claime” it as there own. I can see the “steam roller ” now…. every turd talking about the decline in RE.

Comment by Chrisusc
2006-11-21 12:33:50

The interesting thing will be what Oprah says/concludes that the despreate sellers should do. If her “r.e. expert(s)” recommend that they lower their prices until they get a buyer, then the hurt is on. Because millions of people consider her word the gospel. So in terms of the housing bust, it could be a good thing, sort of like when she cold-cocked the meat industry by stating that she wasn’t eating red meat anymore.

I don’t like or dislike Oprah, I am just saying that she has clout with a lot of people.

Comment by phillygal
2006-11-21 13:01:37

You make a good point. What will the Oprah Effect be? Will it affect the Spring Bounce 2007? Or will it create a statistically significant Oprah Bounce?

Holy Crap this could be serious. I hope someone from this blog watches that show.

Comment by bradthemod
2006-11-21 12:55:09

Casey Serin has a gift for all you under your chairs. A key to his foreclosed properties!

Comment by Left LA Behind
2006-11-21 22:33:05

Anyone who hasn’t looked at his site recently - he posted screen shots of his online banking statements. What a baffoon. Example : $5 at Starbucks with an immediate $33 overdraft fee = a $38 cup of coffee.

2006-11-21 10:15:14

Breaking News (i hate how msm does this)

CNN has a banner right now on their website declaring the White House is lowering its gdp due to the housing slump. Bens little snowball keeps rollin down the mountain getting bigger and BIGGER. Look out below.

Comment by housegeek
2006-11-21 10:29:50

OT, and sorry if posted before, but here’s a WSJ crack-pipe poll of economists who say the worst is over for housing mkt.

what is missing to me here is the how of the story- if the market is going to bounce back from these incredible inventory levels, and back into line with incomes, how do these sages think it’s going to do that?

Comment by Norcal Ray
2006-11-21 11:10:09

Laugh at the economists and put your money with the big time financiers.

Comment by ric
2006-11-21 10:30:13

Another reason we all hold mortgage lenders in such high regard…

Comment by Chris
2006-11-21 10:33:16

“For Realtors, it was the slowest, or, at least, ,more relaxed,’ summer in a decade.

I personally wouldn’t call it a ‘relaxed’ time if my earning prospects were plummeting and I was losing customers by the double digits.

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