Home Sales, Prices Down Across Massachusetts
The Massachusetts realtors have the 2005 fourth quarter numbers out. “The good times sellers have long enjoyed in the state’s expensive housing market began to disappear last year. The Massachusetts Association of Realtors reported that price increases moderated, with the median selling price for single-family homes rising 5.9 percent. That compares with double-digit increases in recent years.”
“The association reported that the inventory of unsold homes in Massachusetts grew 20 percent last year.”
“The market’s tilt toward buyers accelerated in the year’s final quarter, when sales of single-family homes fell 8.1 percent. That’s the largest such decline in nearly three years, dating to the first quarter of 2003.”
“Every region of the state saw a drop in fourth quarter single-family home sales.”
From the associations press release. “‘The accelerated sales pace of recent years has all but ended and we’re returning to a more normal market,’ stated MAR President David Wluka. ‘Our strong seller’s market has been replaced by a more balanced one that will help stabilize home prices.”
“Another factor that has helped entice buyers into the market of late is the sharp increase in the number of homes for sale across the state. In the past year, the inventory of single-family properties on the market has risen 20 percent, from a monthly average of 38,823 listings in 2004 to 46,501 in 2005. At the current sales pace this represents 7.7 months of supply, an increase from 6.6 months of supply in 2004, and signals the first time since 1997 that there’s been a healthy balance between supply and demand of 7 ½ to 8 ½ months of inventory for sale statewide.”
“In the most recent quarter, the statewide median selling price for detached single-family homes rose 1.5 percent to $350,000 in the fourth quarter from the comparable period last year, and the statewide median selling price for condos increased 3.8 percent in the past year to $270,000 in the final quarter of 2005. ‘Prices may soften, but look for flat to modest appreciation this year rather than sharp price declines,’ said Wluka.”
Compared to the third quarter, however, it appears prices have already declined. The SF statewide median was $370,000 in the third quarter, now down to $350,000. Looking at some smaller areas, the declines appear even steeper. Greater Boston is down from $515,000 to $467,000, in the same period.
The central region was down from $303,500 to $290,000. Northeast down from $408,000 to $385,000. Southshore was down from $369,900 to $360,000 and The west region was down from $215,000 to $199, 950.
Would you say MASS prices “tumbled”?
Boston sure did. Funny how the details are all on PDF file, which most don’t like to mess with.
I put together an Excel spredsheet comparing the cost of buying vs. renting in Boston. Available at http://savefile.com/files/4019708. Two conclusions come out of the data:
1 - If you have less than a 10-year time horizon before you move again, you’re better off renting.
2 - If you plan on staying for longer, you’re better off buying.
“The association reported that the inventory of unsold homes in Massachusetts grew 20 percent last year.”
No big deal compared to PHX (+200% since when, July 06?)
Another factor that has helped entice buyers into the market of late is the sharp increase in the number of homes for sale across the state
I hope people are not that stupid!
Prices coming down, but still not crashing. $370K to $350K is barely 5%, and that and Boston could easily be explained by changes in the mix. Typical RE spin on this, but still no signs here of widespread trouble. Can everyone compare (as GetStucco did above) to some of the other regions to get a sense of MA? That’s 46,000 homes on the market in the entire state. Not a lot. I also agree that buyers are coming out with increased inventory. As people try to cash out, there are actually some decent houses on the market compared to last year.
The crash is too slow for the unobservant to detect.
Quite a few properties are still selling in MA. What has changed is that everything sells at a discount now.
“Prices coming down, but still not crashing. $370K to $350K is barely 5%”
What are you expecting? 50% in a week? 5% a month would give a very large annual drop. This isn’t a liquid market; you can’t expect anything more quickly than this.
Vanc-
You obviously are new to this thread. There were plenty of people months ago predicting a 50% drop in MA., and others who disagreed. My point is that 5% is minor or nothing. There is also no reason to expect percentage drops to be cumulative.
Do you have any other point or are you just bashing?
Were people predicting a 50% drop in 2005? I disagree in general with people predicting 50% drops but I also thought most people thought the declines would happen in 2006 and 2007. So even just a 5% decline in the last quarter of 2005 is significant.
“One who fails to notice the hand that kills gently has been a poor observer of life.” (Not to mention the housing bubble…)
Friederich Nietzsche
Ya I don’t get you either. No one predicted 50% by Jan.05. We’re talking about 50% at the end of the road. And we’re talking real numbers, not nominal.
Vancouver blogger:
you are somewhat wrong too. Illiquid markets tend to see greater volatility, not smaller. Witness small illiquid stocks. Or past real estate busts, for that matter. The housing market takes long to “change” but the incremental changes are of larger magnitude than assets trading with great liquidity.
Your right. 5%/month is actually really quick. Annualy thats what? 45%. We can only hope that it mantains such a pace.
Sorry, I reread the post. that was a quarterly figure not monthly. Which means about a 20% drop annually not 45%. Still a steep decline.
Boy, I sure am glad that MA is returning to a “more normal market.” For a moment I was worried, but now there is a “healthy balance” between supply and demand. And that was all achieved in a few short months. Since the runup in prices took years, I wonder how long it’s going to take before the healthy balance is gone and all hell breaks loose in New England.
Someone I know had put the house for sale in boston suburbs. The initial asking price was 480k….could not sell it…reduced it to 440K…and recently sold for 420k after 5 months being on market.
They are moving to Atlanta area. They just wanted to sell and get out of the boston market while it is still hot and they were not afraid to reduce the price to sell BECAUSE they had baught the house for 60k-70k 25 years ago. So they made decent profit I guess!
A wave of such sellers are about to hit the California market.
Over the next 5 to 7 years - I’m guessing an enormous wave in California. All with sizeable equity and with plenty of room to chase (or have chased) the market downward.
That represents an average annual (nominal) gain of 7.75% over 25 years. That’s certainly nothing to sneeze at, but the money would have done better in a low cost S&P index fund.
The house provided a place to live. The initial investment(downpayment) was probably around 15-20,000 with the remainder paid over 25yrs. Even with upkeep and inflation that’s a nice return.
Yeah, you’re right: it did provide them a place to live. But if average total yearly rent for a similar house amounted to no more than 2% (the approximate difference between the average S&P return and the return on house) of purchase price (compounding at 7.75%), then they *may* have come out ahead renting. Of course, you have to factor in maintanence (~1%), taxes (~1%), dividends (2%), and fees (1%). So if anything, one might add a percentage point to the “in excess” percentage: 2% -> 3%.
3% of $65,000 is $1,950. Compounded at 7.75% for 25 years yields ~$12,600 or about $1050 per month for rent. So if a comparable home rents for that amount now, you might call it a wash. If it rents for more, a gain. It probably is close…otherwise yet another sign that the market is not completely efficient.
This does remove emotional factors, which are important (as well as some other things other peeps might point out).
Anybody know where I can get a 2-bedroom index fund close to public transportation?
LOL!
Meanwhile, not everyone is feeling the schadenfreude just yet, especially those who prefer to keep their focus on the rear-view mirror while blithely driving towards the brick wall:
“Home prices jump again, up 13.6%
Record 72 U.S. areas saw double-digit increases in Q4
By Steve Kerch, MarketWatch
Last Update: 12:12 PM ET Feb 15, 2006″
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B9B15967E%2D0EB3%2D4031%2DA558%2D092CBE27FF43%7D&siteid=mktw&dist=
If you read this closely, you will notice that there is actually a reduction in prices over the 4th quarter and all of the increase occured in quarters 1-3.
In Rhode Island there is only minor price reduction, maybe 2-3%, Any decent house is still selling. I can’t find a decent house at 400K at a good school district. How I want to get out of this place!
Well think about it. The last areas to fall in value are the more desirable towns and the nicer properties. That is always the way. If somebody has a nice house they aren’t going to suddenly say, omfg, there is a housing bubble, panic, i should reduce the price and sell immediately!!!
TOPIC :
Are we falling faster then the 1989 pop ?
Here’s another great quote from this realtor (link below): “Investors have purchased heavy and as the units are released they immediately go on the market with many of the investor/owners having to sell well below the true market value” This genius thinks that market value is set by the market, but set by the seller. This reflects the mentality of all these morons…
http://realtytimes.com/rtmcrcond/District_of_Columbia~Dupont~chrisfriespaulcizek
I read Kerch’s read at CBS Marketwatch-looks fine on the surface- more bullish junk no different then what you would get from the corner realtor- then again Kerch is a paid stooge of the WSJ which now owns CBS Market watch.
Over here in Connecticut prices have plateaued- some reductions in SFH and condo’s- but if the seller lists any property even in a good area at last summer’s prices its likely to sit. With rates rising- they will sit longer.
Providence is a city I am in often- drive over to eastern Connecticut, you Can get a new colonial, on 1-2 acres, 2700 square feet, double garage, fireplace, hardwood floors, for under 350K.
“‘The accelerated sales pace of recent years has all but ended and we’re returning to a more normal market,’ stated MAR President David Wluka. ‘Our strong seller’s market has been replaced by a more balanced one that will help stabilize home prices.”
Even though prices never drop, the market is returning to normal. The way we can tell is that prices are dropping.
This is about as coherent as the Enron defense: We are innocent; never mind that we pleaded guilty.
i don’t remember the tech stock bust. did stock brokers behave in the same way?
Washington Mutual consolidating, eliminating 2,500 jobs
E-mail | Print | | Disable live quotes By Ruth Mantell
Last Update: 4:22 PM ET Feb 15, 2006
SAN FRANCISCO (MarketWatch) — Washington Mutual Inc. (WM : Washington Mutual Inc
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Last: 42.96+0.17+0.40%
4:01pm 02/15/2006
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WM42.96, +0.17, +0.4%) after Wednesday’s closing bell said it is consolidating the network of processing offices that provide administrative support to its home loan businesses to 16 from 26 offices. The consolidation will eliminate about 2,500 jobs, the company said, adding that the job reductions will be partially offset by some new hiring.
“WAMU after Wednesday’s closing bell said it is…”
Why do they always wait until after the bell to deliver the bad news? Maybe they don’t like to see daily stock charts that have this shape:
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(Sorry - no WYSIWYG for blog posts…)
there are legal reasons for doing this. it’s the advice of General Counsel most of the time… standard procedure
“The consolidation will eliminate about 2,500 jobs, the company said, adding that the job reductions will be partially offset by some new hiring.”
New hiring in foreclosure division???
Loan work-out specialists division is the Polticially Correct term.
Peter said: “Providence is a city I am in often- drive over to eastern Connecticut, you Can get a new colonial, on 1-2 acres, 2700 square feet, double garage, fireplace, hardwood floors, for under 350K. ”
I don’t know which town you are refering to, but any town with decent school (we have a toddler) there isn’t such deal. Where we live now - East Providence, really bad schools, 300K may buy you a 1700 sq ft colonial.
Here is an example of what 300K can buy in a good school town in Rhode Island, 50 years old, 1300 sq ft, 1 bath, no garage,
http://riliving.com/PropSearch/sfformdetails.asp?MLSid=633419
I did not say Providence -If you read what I said carefully, look into eastern Connecticut- which is 30-35 miles west of you. I see new homes as I said before 2500 and up square feet NEW Colonials and Capes on an acre of land or more
see http://www.realtor.com/Prop/1051467470
Hi Peter: thanks for your info! the houses sure look like a bargain. Do you happen to know where I can find the school information on easten CT online? If the schools are good I am definitely interested.
Thanks!
According to Zillow.com. FWIW, prices are down for the last six months in the Boston area, but still 5%-10% up from February 2005, and is trending upward.
The effect appears to be somewhat stronger in Western MA. A review of sold homes from last summer finds houses selling 3%-5% less than list, which were presumably oprimistic to begin with.
It may not be the most brilliant observation, but we will have to wait to see how the next 12 weeks play out. If prices stabilize some more fools may ruxh into the market and give us a “dead cat” bounce.
RI
wow, those taxes are high !
head south my man
My mother will be selling a home in RI in the spring
I’ve been trying to persuade my husband to head south, but he refuses to leave. It’s funny situation: he works in local university, collegues have been joking that many years ago, you get a job as a faculty and buy a house in East Side and wife stay at home. then 10 years ago you have to live in suburb, then 5 years ago you live in suburb and your wife also has to work. now we can’t live in suburb anymore:)
Deat Fallout
glad you checked out that link-yes housing in eastern CT is a bargain- yet so close to Boston and Providence. If you check back on that link- the High school is EOSMITH- nationally recognized Mansfield is near the University of CT- the towns in eastern CT all are basically rural- and have regional schools of great quality. Check the Connecticut Dept. Of Education as well. I see many out of state plates in eastern CT -known as the ‘quiet corner’ from New York, Maryland and California. The reasons as you saw are now obvious- reasonable housing, rureal peaceful landscape, fair taxes with decent services and high quality of life. Oh yes I am NOT A RE salesmen!
Here is another great house over 6 acres for under 350K
http://www.realtor.com/Prop/1054094569
Dear Peter:
Thanks a lot! I studied the map and found Killingly is the one nearest to Providence(where the job is) and the commute is around 1 hour. There are plenty of new constructions around 300K. I will definitely go see them. You did better than a RE salesman