June 27, 2006

Massachusetts Buyers ‘More Relaxed’: MAR

The Massachusetts realtors have the May numbers out. “Sales of detached single-family homes fell for a second consecutive month in May from the same month a year earlier, declining a modest 2.9 percent to 4,055 homes sold in May 2006. Sales have decreased for seven of the last eight months compared to the same period one year ago.”

“The supply of detached single-family homes on the market rose for a 15th consecutive month in May, climbing 26.9 percent over the past year from 36,259 homes for sale in May 2005 to 46,019 this May. Inventory, as stated in months of supply, also rose steadily from 8.7 months last May to 11.3 months of supply in May 2006.”

“Not surprisingly, with the spring market at it’s peak, listings are up from April as well, when there were 42,667 listings available for sale.”

“The number of condominiums for sale has increased 47.5 percent in the past year, from 15,287 units last May to 22,555 in May 2006. The median price of $286,000 is just 0.7 percent below the record high median selling price of $287,900 set in July 2005.”

“The statewide median selling price for detached homes declined a modest 1.2 percent over the past year to $352,700, from $357,000 in March 2005. Although this marks the fifth consecutive month that the median price has been flat or decreased modestly from the same month one year earlier, there is little evidence to suggest that significant price declines will occur in the Bay State housing market.”

“The more moderate sales pace reflects a more cautious approach to home buying on the part of consumers brought on by rising mortgage rates, rising energy prices, and a sharp increase in inventory levels, which has enabled buyers to take a more relaxed approach to the home search process than in prior months when supply levels were tighter.”

“Speculation about a housing ‘bubble’ in the local market also has prompted some buyers to put off their home search or turn instead to the rental market, and that’s led to some softening in demand.”

The Lowell Sun. “Lowell’s vaunted condo market has slipped a bit, according to Warren Group numbers. Sixty-seven condos were sold in the city in May, down 25 percent from 89 in May 2005 , for the year, 240 condos had been sold through May, as opposed to 348 in 2005. The median price dropped from $209,900 to $195,000 over the year.”

The Cape Cod Times. “Sales of single-family homes and condos in the Bay State declined last month. However, sales slid a little more dramatically on the Cape. Sales of single-family homes were down about 16 percent. Sales of Cape condos sank just over 24 percent, going from 149 in May 2005 to 113 last month. The median condo sale price went from $255,000 in May 2005 to $250,000 last month.”

“Meanwhile, Nantucket sale prices took a hit. The median single-family home sale price was $850,000 last month, down 37.50 percent from $1.36 million in May 2005.”

“Looking ahead, Warren CEO Tim Warren expects the condo and house markets to continue weakening slightly throughout 2006, and likely through 2007 as well. ‘I think things are going to slow down, and people just need to get used to that,’ he said.”

The Boston Globe. “Real estate agents said house price declines in Massachusetts indicate sellers are realizing that years of rapid price appreciation are over, and they are becoming more willing to lower asking prices because there are so many homes on the market.”

“‘They’re listening to us now,’ said (broker) William Wolfe in Wilmington. ‘They’re not saying, ‘Let’s try a higher price.’ We’re telling them there’s a lot of competition out there.’”

“May was the final month of the crucial spring selling season, and real estate specialists predicted it will take months for the housing market to work through the surplus of properties now on the market. ‘We’re going to have large inventories and longer times on the market for another year or maybe two years,’ Warren said. ‘When there are fewer sales, you’re going to see the prices start to drop.’”

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Comment by Ben Jones
2006-06-27 12:47:55

Warning: The links on the MAR site are PDF’s.

Comment by asgardragnarok
2006-06-27 13:05:18

Warning: The links on the MAR site are hazardous to your belief that there is no housing bubble.

Comment by rudekarl
2006-06-27 13:10:18

“…there is little evidence to suggest that significant price declines will occur in the Bay State housing market.”

As a follow-up to this individual’s analysis, I’d suggest that there is little evidence to suggest that any of these sellers will be able to sell their homes at their current prices. I haven’t checked, but I think there might be a great deal of evidence that when home prices drop 50-80%, homes may begin to sell again in the Bay State housing market.

Comment by michael
2006-06-27 13:27:47

“Lowell’s vaunted condo market has slipped a bit,”

Someone has a pretty wild sense of imagination in the writing department.

Comment by Ben Jones
2006-06-27 13:32:25

That was kinda funny. Do you remember the post I did last year, when Lowell condo developers were pushing brochures and drinks on yuppies in Boston; inside the bars!

Comment by MsTerra
2006-06-27 14:16:22

Yeah, I was just going to post - Lowell has a “vaunted” condo market?

However, they do have a “castle” that I have my eye on. The seller wants $2 million. If he comes down to the neighborhood of the tax assessment on the property, ~$800K, then we’ll talk. ;-)

Comment by Tulkinghorn
2006-06-27 14:46:56

Hate to get all lexical on everybody, but the use is quite apt, perhaps unintentionally so:

Vaunt \Vaunt\, v. i. [imp. & p. p. Vaunted; p. pr. & vb. n.
Vaunting.] [F. vanter, LL. vanitare, fr. L. vanus vain. See
To boast; to make a vain display of one’s own worth,
attainments, decorations, or the like; to talk
ostentatiously; to brag.

Comment by John Law
2006-06-27 13:48:11

Plunge Protection Team CONFIRMED!

Comment by Moopheus
2006-06-27 14:38:58

Nothing in the Post counts as “confirmed.”

Comment by John Law
2006-06-27 14:50:02

we know rigging is nothing new. CBs rigging the gold market has been confirmed. we know about the old london gold pool. then you have the Plaza Accords. they interferred in what was real money- gold and silver. the Federal Reserve fixes interest rates. why not the stock market?

Comment by Inspired
2006-06-27 15:09:25

Yep it was the PPT team that has got us where we are today!

The all and mighty powerfull OZ without the Greenspan $ dollar devaluation has caused a 9% rally from the 2001-2 lows. You may confirm this by comparing the DJI to itself in any major G7 currency except the Yen. My particlular favorite is how our Canadian friends have lost 40% of their money since 1999.

As such it is PPT, who will be the big bag holders…..hold onto your hats boys and girls because when a primary dealer blows up on those trillions of USD deriviatives..OZ will be exposed as nothing more than a “smoke filled room of the twenties”, where they bid up US Steel for a month or two!, only to watch Rockies company fall with the market to 10 cents on the dollar.
Look out for those “yelpen stretchers”, they can be killers.
Who knew better than they that when everyone goes down in flames they will seek BK or Federal govi help! And the investor will be holding their bag of worthless contracts.

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Comment by jayman1957
2006-06-27 13:56:29

The Bubble is back on!!! A house actually sold in my neighborhood just 15 minutes away from the Vaunted Lowell condo market!!
I think HBO did a drug special that was filmed in Lowell a few years ago. Get some blow and a condo!!

Comment by jayman1957
2006-06-27 14:18:19

Crack Street:Lost Lives of Lowell was the title Crack and a condo please!!

Comment by Judicious1
2006-06-27 14:30:29

“Looking ahead, Warren CEO Tim Warren expects the condo and house markets to continue weakening slightly throughout 2006, and likely through 2007 as well. ‘I think things are going to slow down, and people just need to get used to that,’ he said.”

Even those who recently bought with a fixed-rate mortgage and a down-payment (a novel approach) stand a good chance of becoming upside-down in the next few years. I hope they bought a home they really like - they will likely be there for a while.

Comment by memphis
2006-06-27 14:34:17

The plunge protection team isn’t going to be able to stop the dominos if the GSEs fail.

Somewhat off-topic, this is from a few threads down on Ben’s blog, but I’m surprised it isn’t THE topic for today:

Fannie Mae insolvency possible, official says
ASSOCIATED PRESS - 27 June 2006 - St. Petersburg Times

The massive portfolios of government-sponsored enterprises such as Fannie Mae and Freddie Mac could become insolvent in a period of “significant interest rate movement,” U.S. Assistant Treasury Secretary Emil Henry said Monday.

Won’t quote the rest - you can google it - but the tone of the article is very much that of the government washing its hands of the GSEs. Very, very pointedly.

So is the Treasury asking the Feds to pull back? Or are they just drawing the line in advance of the onslaught?

Comment by Mort
2006-06-27 14:50:48

We at the Treasury are confident we are not simply ‘crying wolf,’” Emil Henry, assistant treasury secretary for financial institutions, said in remarks prepared for delivery to a financial services industry group…

Henry said the potential for spillover into financial markets from any crisis at one of the government-sponsored mortgage finance enterprises (GSEs) is “nothing short of breathtaking.


Comment by rudekarl
2006-06-27 15:08:41

So I guess we should just let the party roll on until the crisis at the GSEs is something more than breathtaking. Let’s just keep postponing the inevitable, so that the great-grand kids get the royal screw. You won’t hit a defenseless old man, will ya sonny?

Comment by Mort
2006-06-27 15:16:25

I have been complaining for months on that this bubble would bankrupt the mortgage lenders but the MSM won’t even admit there is a bubble. As usual they are a day late and a $trillion short. What’s that going to do to house prices when you can’t get a loan at any price?

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Comment by cabinbound
2006-06-27 15:11:32

I read this article earlier today and thought the same thing — that this particular quote could be pre-emptive CYA for something that might in fact already be unavoidable, pointed throat-clearing in the direction of the FOMC, or a coded message to Wall Street that Ben is in fact “on board” for no more rate hikes after this one.

Comment by michael
2006-06-27 17:04:44

Fed Governors are in hawkish mode and turning dovish after all the tough talk would
make Ben sound like. Well, Greenspan.

Comment by Inspired
2006-06-27 15:15:00

Oh rudekarl:
We are way past that stage!
“The walls, come tumbelin down”,” oh the wallls are tumblin down”!
john cougar Melencamp

Comment by John Law
2006-06-27 17:01:17

interest rates could topple the GSEs? good thing we aren’t running record deficits at all levels. I’m sorry, we are.

it seems like this. dollar weakens significantly and interest rates rise because we’ve flooded the world with dollars. interest rates topple the economy, the consumer and the GSEs fail. the scariest thing is this is a very very real possibility.

Comment by Larry Littlefield
2006-06-27 17:17:04

“Reagan taught us deficits don’t matter.”

Actually, Reagan thought deficits did matter, but his handlers told him if he cut taxes the deficits would disappear. He later said that all the debt added on his watch was his one regret.

Clinton said his one regret was not getting Bin Laden.

Greenspan will eventually say his one regret was the real estate bubble.

Comment by John Law
2006-06-27 17:37:02

“Reagan taught us deficits don’t matter.”

dick cheney said that a little while ago. he’s said a lot of things that aren’t true lately…

Comment by need 2 leave ca
2006-06-28 05:14:55

John - is there one thing thta Cheney has said that is true? Other than admitting he shot his buddy with the quail gun?

Comment by Sold at peak
2006-06-28 09:08:15

Boston area SFH prices already declined 4% from a year ago.

Who, precisely, do these people think they are bullshitting? They are not fooling buyers, because we are the ones who aren’t buying.

I’ve adopted a new approach. I punish each lying MAR or NAR press release by adding one month to my own “won’t-buy-until-at-least” date.

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