Boston Housing Bubble ‘A Little Bit Slow Right Now’
A columnist at the Boston Herald thinks local realtors are missing something. “The amazing thing about the real estate market is that it’s never in a slump. Just ask any Realtor. ‘Strong?’ Frequently. ‘Red hot?’ Sometimes. And on all other occasions it’s ’soft,’ ‘flattening out,’ ‘a little bit slow right now,’ and, of course, ‘just starting to pick up again,’ especially for ‘the right properties at the right price.’”
“Which is pretty much where we are now.”
“Recently I had lunch with a young businessman who is trying to sell his South End condo. This guy’s place has been on the market since July. He’s even cut the price 20 percent, to around $400,000. And every month he writes another check to the mortgage bank. You’re starting to hear more and more stories like this around town.”
“The way to measure a slowdown isn’t in average sale prices, because higher-end properties keep selling well in almost any market. It’s in the volumes. The facts? The number of condos sitting on the Greater Boston market has doubled in the last 12 months, to 6,569. The number of single-family homes has jumped 60 percent. Among the hardest hit neighborhoods: South Boston and the South End.”
“‘It’s become a buyers’ market, because of the amount of inventory,’ admits Susan Kieley, a real estate agent in Southie. It’s just one of those cycles we have to ride out,’ she adds.”
“Realtors have a variety of ways of dealing with a slowdown. Last fall, a Boston Realtor seriously tried to blame the after-effects of Hurricane Katrina. ‘This is the Boston market we’re talking about?’ I asked. This year, expect to be told it’s the election.”
Thanks to the reader who sent this in.
Saying it’s a “buyers’ market” is just another way of saying buy, buy, buy. What do realtors care, as long as they are closing deals? Yes, they’d rather do it at the ghiest possible price, but c’mon folks, these people are looking at the end of the road. Soem more deals at a little lower price must sound pretty good right now. They are just hoping that the buyers will come out of the wood work at keep the party going.
And to the comment that “It’s just one of those cycles we have to ride out” I wonder if that’s what she told buyers a year ago. Did she say “the market is great, but it will change.. this is just a cycle”? I doubt it.
People, I dont want to be mean, but there isnt much difference between realty and selling cars. You say what you have to.
BubbleTrack.blogspot.com
“The way to measure a slowdown isn’t in average sale prices, because higher-end properties keep selling well in almost any market. It’s in the volumes. The facts? The number of condos sitting on the Greater Boston market has doubled in the last 12 months, to 6,569. The number of single-family homes has jumped 60 percent.”
I keep track of inventory daily on zip for San Diego, Phoenix, and Las Vegas. Here’s an update:
4-3-06:
San Diego 18,252
Phoenix 40,012
Las Vegas 18,348
4-14-06
San Diego 18,759
Phoenix 42,561
Las Vegas 19,124
In only 11 days, San Diego and Phoenix still up relentlessly, Phoenix astronomical. San Diego and Phoenix are about the same population. Las Vegas is smaller so inventory per capita is much larger than San Diego. It’s fun to check the figures every day and log significant and steadily higher numbers.
I had earlier predicted that we’d see PHX inventory hit 50K by this summer, but it now looks as if we’ll be hitting that dubious milestone in late spring.
IMO, a bursting bubble in RE is more about exploding inventory levels than sticky, but declining prices. Observing these numbers, we’ve had a nasty pop.
Article on the front page of the Northwest Vally AZ Republic was sales are down but price remains level. I don’t know what this guy is smoking because three of the five houses in my neighborhood have reduced their price 10K to 20K and still not selling. Heck, just go onto Craigslist for Phoenix and put in reduced for a search word. Pages and pages of listings.
Over 200 houses a day added to Phoenix inventory - Wow!
More telling would be avg. $/SF. I would estimate that this number has fallen by 20% from the peak for PHX.
Yeah, prices are rising, but I can’t sell my fuc@king house!! Great news! Tell it to the bank.
Price it right, and it will sell. I caught the tail end of a story on NPR the other night talking about fancy and excessive open houses. The great quote was something like “You can have the greatest open house in the world, but if the price isn’t right you’ll just have alot of people who know that you have an overpriced house for sale.”
Yep! High price is because thats what they owe on the loan, not that they dont want to dump it at a lower price, they cant, so prices will be sticky till the “Foreclosue Bomb Drops”
Equity bandit Bostonians as well as New Yorkers are coming up to Maine in droves. They are keeping our inventory down and are largely responsible for creating higher prices up here. They think nothing of spending $400,000 or more on a house. It’s though they’ve descended from Krypton, where the gravity is 1000 times greater.
Inventory of SFH’s in Portland (04101-3), Falmouth, Cumberland and North Yarmouth from Realtor.com:
9/6/05 352
9/19/05 394
9/29/05 400
11/3/05 425
12/5/05 406
1/3/06 407
2/2/06 395
2/11/06 352
2/18/06 348
2/24/06 345
3/4/06 343
3/12/06 343
3/18/06 341
4/4/06 351
4/11/06 361
Natives have become nothing more than second class citizens in their own state, with a MA cost of living paid for with Mississipi incomes.
You can thank the Democratic Socialist legislature and that dipshit for governor Baldacci for making ME the highest tax state in the country while bein’ 38th in per capita income.
Despite the modest influx of flatlander’s, the state’s in an economic death spiral.
Yes, the boundaries do extend north of Ogunquit Beach
Can’t pay the bills waitin’ tables in a 10-week tourist economy.
I’ve seen the For Lease signs in the Old Port
Even the Phoneix called Portland, a financial clip joint filled with a masses of underemployed 30-something’s.
Nothin’ more now than Appalachia of the North.
The newbies will soon tire of the political tedium and the weather.
My wife just returned from visiting relatives in the NY adirondacks and it’s starting to get nasty between the natives and the NYC/NJ/CT maggots. A local guy got so fed up with the traffic in front of his homestead created as a result of overdevelopment and the inflow of NJ/NYC scumbuckets, he’s been spreading 50 pound boxes of roofing nails on the road and standing back and watching the fun. Novel idea I’d say. Good for him.
So what happens to his native neighbors who drive the same roads?
My in laws sold their home on 4th lake in the 90s. Their grandfather had built the place himself. (I think the family still mourns the loss) Not relaxing anymore w/cig boats on such a relatively small lake plus the taxes were higher than their primary residence….The people coming into the area didn’t have respect for others either. (You’re supposed to tie one on at Daker’s and nurse a quiet hangover the next day. Not blast metal at 10am so people on the other side of the lake can hear you)
4th lake/lake luzerne and stony creek are no longer the woodsy type places I knew them to be just 5 years ago. The traffic is horrendous; roads are filled with overgrown 4wheeled behemoths. Slobbish overweight heathens swarm the area “taking” what they think they are owed.
It’s become a truely ugly place.
I have been told that I could get high six figures for my house on the ocean in Nova Scotia by New Yorkers and a local realtor. I think if I refused 800K and said, “no, I need a million for this,” some idiot would pay it. However, the place is not for sale (I inherited it with a zero cost basis because it was paid off long ago) which really bugs the realtor because it sits empty half the year (rented the other half) and she sees an easy commish of what, 50K for doing nothing? If I wanted to sell it, I’d do it myself. Why pay some lazy troll to stick a sign in the yard and collect her money.
“Among the hardest hit neighborhoods: South Boston and the South End.”
Surprise, surprise, surprise, said Gomer. Traditional, working-class neighborhoods with Beacon Hill housing costs.
The ghettos in my neck of the woods have shot up just like Southie - this article will be reprinted, with the names changed, by the Washington Post, in due time.
Northern Virginia inventory is still relentlessly marching forward. It’s almost starting to shock me at this point.
April 15, 2005 Listings 3,477
March 14, 2006 Listings 13,177
April 14, 2006 Listings 16,337
Meltdown….
Well, the South End’s status has improved and has gone progressively upmarket. In the 1980s boom we saw part of that trend but it was still quite sketchy on the wrong side of Tremont. But in the latest boom we saw deep South End and Roxbury sell for top dollar.
I still wouldn’t leave in Southie, Roxbury or most parts of Dorchester if you paid me. There have always been nice pockets like Savin Hill (Stab-n-kill) with some grand old homes. I am sure that they went off the charts.
“The way to measure a slowdown isn’t in average sale prices, because higher-end properties keep selling well in almost any market. It’s in the volumes”.
Median price is better than average and Price per square foot is valuable also. If motivated builders start giving away bigger new construction at prices once fetched by smaller homes, prices stay flat, when in fact, the market is softening. Price per square foot would catch this, although it wouldn’t catch builder perks such as upgraded fixtures.
This has been like watching a train wreck in Super-Slow-Motion. You see it coming, given the Perfect-Storm confluence of events, & know the outcome in advance (despite all the soft landing rhetoric), but it’s transpiring at a rate that makes watching paint dry look like a NASCAR race…
Here is a $2 million FSBO in Bakersfield? LMAO!!!!!!!!!!
http://www.bakersfieldmls.net/index.cfm?fuseaction=home.showPropertyDetail&l=137566
Wow. My dad used to live near there. I can’t conceive any reason why that house would be worth even half that price. What do these people do for a living???
I wonder how all these hardworking induhviduals making 25K a year in the construction trades as a painter, or roofer, managed to buy a 400K condo in southie, and pay for it? Maybe an ARM and a leg? What are all these intelligent, dedicated, and highly educated construction workers going to do when there are no more roofs to shingle, and owners to stick up?
MA lost a lot of jobs in the tech bust, but replaced it with construction/RE/Mortgage/Hedge funds since. A lot of big dig construction jobs paid spectacularly. Those are gone, with the days of the .com era. What is in the wind for MA? A Recession, or a deep depression? Enquiring minds want to know…
I think it’s called Creative Destruction. Cold winters ahead, that’s my forecast.
wonder how all these hardworking induhviduals making 25K a year in the construction trades as a painter, or roofer, managed to buy a 400K condo in southie, and pay for it?
They were all previously workin’ as truck drivers and laborers on the Big Dig, making $85/95k a year.
Why do you think that project originally estimated @ $2 bil balloned to $29.5 billion. It was a total pig-fest.
BTW-don’t tell New Orleans residents-but I read in National Geo that would have been the tab to make the levees Cat-5 prove…
Oh, well-The Boston burghers will now have a green space in which to go have their dogs relieve themselves.
“The amazing thing about the real estate market is that it’s never in a slump. Just ask any Realtor. Last fall, a Boston Realtor seriously tried to blame the after-effects of Hurricane Katrina. ‘This is the Boston market we’re talking about?’”
Bubblefucius say:
Bird caught in Tigers mouth can not escape, Truth caught in Realtors mouth have same problem.
Good one rainman… Gurgled up some coffee thru my nose. Keep ‘em comin’
I really hope you are saving these blurbs for a nice little book with accompanying illustrations. I’d buy it for $7.99 at my local bookstore when this bubble has been completely deflated. You wouldn’t want to do it until the wounds are pretty much healed though or bubblefucius be hung from a gallows made from granite countertops. Good stuff and keep going hit or miss!
great rainman…
Make a book online: http://www.lulu.com
yes, those would be great scattered in a book on the bubble when it’s finally played out! love this one especially…
I’m going to start scrolling the comments after every story just to look for a Bubblefucius line. Totally classic.
Kind of reminds of a line my brother used when two of his roommates in college were debating about how many toilet paper squares needs to be used (why they were arguing about this, I don’t know). My brother simply said “There’s an ancient Chinese proverb that says: He who go to bed with messy bottom, wake up with stinky finger.”
Bubblefucius say:
Your compliments like house, both much appreciated.
Condo conversions, and you still have burglaries…………..
The attitude of the media certainly seems to be changing. Just a month or two ago the articles quoted the spokespeople for the real estate industry without any analysis. This article says right up front that a realtor will never admit that there’s a slump.
And at http://www.sfgate.com the real estate columnist (who is admittedly a bit of a flake) writes about how her childhood memories of two years in Ghana were much better than her memories of living in Carmel. Her point seems to be that high-priced real estate doesn’t make a place any happier.
The real estate zeitgeist, at least as reported by the media, seems to be changing by the day.
I enjoy pointing out that the SF Gate Real Estate columnist bought a house in July 2005 and was HELOC’ing out of it by October.
Last night on HOUSE HUNTERS , the host actually said it was a buyers market . As we know, HOUSE HUNTERS has always been so positive about home ownership . Apparently it’s one of HGTV most watched shows .
Fast forward to 2008 and the house hunters go driving around from one block to the next seeing boarded up homes with foreclosure notices stapled to the front doors. Naaa, show is getting cancelled along with Flip This&That…
To be replaced by “Flip That Burger”
Was that the one with the family in rural Pennsylvania looking to get out of “Hooterville”? I watched that last night. They selected the most expensive house, which was “at the top of their budget”, and it was interesting that they were able to pay a price that was ~$13K below asking. Even more interesting that, after buying the house, they appeared to have gone on a spending spree - including TV’s for every bedroom and a car.
Cash out at closing on a 125% mortgage, for those unforeseen “extras”. No worries…
125% mortgage the ultimate suicide
Yep, that was the one . They actually disclosed that they got the house at a reduced price .
Yeah, it seems like on the more recent episodes the buyers have been a lot less worried about their offers being accepted. No more talk about tight markets and multiple offers.
Maybe, just maybe, if they show reruns from 2004 and early 2005 often enough, they can pump the market back up for that mythical soft landing bernanke is predicting?
USA Commercial Mortgage Co., Las Vegas, and certain affiliates have announced a filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code and the naming of a new chief executive officer.
________________________
Let the floods begin!
I also sent Ben an email today of another lender who will be out of business at the end of this month.
Too bad it’s not Countrywide. Never has any company deserved to bite it more than those azzwipes!
Too bad it’s not Countrywide. Never has any company deserved to bite it more than those azzwipes
You’re forgetting Ameriquest…now there’s scum.
Yes indeed, the problem is that all these little guys are not public and not shortable, and when they fold, Countrywide picks up some of the business remaining in the area.
Even though the mortgage pie is shrinking, Countrywide picks up so much of what’s left that their business is increasing dramatically.
That’s why it’s still too early to short CFC.
I’ve owned Countrywide stock since 1995 when I read about it in John Dessauer’s newsletter. He was all over that. That sucker did NOTHING for years then shazzam, made up for it in the past 3.
Good article. In my neck of the woods (suburb 35 miles or so west of Boston), the market appears to have ground to a stand-still since the fall. I saw 5 to 7 houses for sale the next street over, in November. Every one of them is apparently still for sale.
The house across from us went on the market “FSBO” in late winter for 499. It is still available, and the owner recently suggested we buy it for 450. We declined since we have no desire to “move up”. Even if we did, this place has a pool (which we don’t want) and no real backyard (which we do). My wife, who has a good memory for recent local transactions, this it’s “worth” 420. I get the feeling these folks are chasing the market down, and will be stuck unless they start pricing aggressively. Meanwhile, they’ve already purchased land elsewhere, built their “dream home”, and moved on while this property sits empty.
This is quite a shift from early 2005, and all of 2004. I’ll never forget those “FSBO” signs going in and out of people’s front yards in 24 hours. Everything sold for asking or better.
I’m seeing the same thing 20 miles north of Boston. I’m in Salem, and ‘inventory’ is creeping up and stuff is not moving. Most of the housing stock in Salem is garbage and the prices are seriously disconnected from reality.
Yeah, but you’ve got that new “Bewitched” statue (snicker)
to suck them touristas in from the mid-west.
I am seeing a lot of houses bought in the last couple of years (2003-04-05) on sale again, at basically the same price, with little or no movement. Checking with zillow, a lot of these houses were sold by long time residents who paid 20-30% of the sale price.
Now these owners are stuck, and if they need to sell, they compete against old time residents that have a long way to go before being in the red…. That is if they are not HELOCed or HELed out of the market!!!!
It is going to get interesting around here really quick…
Updated inventory and sales price today…
http://www.benengebreth.org/housingtracker/
Moon Jour,
The place (499k) is not worth $350,000.
Offer $275k. Better yet, ask the FDIC what they would get through resolution trust or whatever the next bank bailout scam wil be called. I am thinking 35 cents on the dollar for outstanding loan(s).
And enjoy the looks.
ilsm, good advice. I’m thinking 250 myself, for a bottom unless it’s an FB situation, distress sale etc. The place is above average quality-wise, so a bit north of the reasonable 3x median family income around here seems right. Our current house is smaller and just about average, so I’d say 200 for that (current bubble price is 350+, that’s what folks are *asking*, anyway - nothing’s moving). This is a paid-off, small-footprint house in a reasonable school district, so we’re just not motivated to upgrade.
Plus, I’m a confirmed “Peak Oil” nut. I have no intentions of buying anything bigger, unless prices get ridiculously low and the size premium vanishes - or heaven forbid, goes negative. The risk from out-of-control energy costs going forward is just too high. 1500 sq ft (plus a heated basement) is plenty for a family of four, even with frequent guests.
35 cents you specuvester try 10 LOL
Real Estate sales (unlike stock) is completely unregulated. You can say whatever you want, make just about any promise or representation with absolutely no recourse. That’s why an idiot like a Gary (”It’s in the Bag!”) Watts can guarantee a 15% a year price appreciation for OC homes and not lose his RE licsense for saying it.
Try doing that as a stock broker!
If a stock broker said that, they would be ‘under investigation’ and likely to have a stint in the local ’state’ or ‘fed’ resort.
Gary Watts can stick it up his big fat wazoo. Hope to read about his bankruptcy due to speculation and losses. Then he can work as a tour guide in Death Valley during the summer.