Real Estate Bubble Debate

Boston housing market 2006: "Hard landing" or "return to normalcy"?

Three weeks after economist Nicholas Perna told the Boston Globe that "both early data and the anecdotes -- are pointing more toward a hard rather than a soft landing" for the [Massachusetts] housing market, Perna repeated that assessment in the Boston Herald following news that single-family home sales fell 9.2 percent in November.  Need to confirm, but isn't that the four month this year of near double-digit decreases compared to 2004?

"It sounds more and more like the housing adjustment is a harder landing in Massachusetts than elsewhere in the country,' said economist Nicholas Perna. 'I don’t think we are seeing anything like that in the country as a whole. My guess is that Massachusetts is among the most seriously affected."

Some real estate professionals dismissed the significance of falling sales, calling them a "return to normalcy."   What's your take?  Your comments are welcome below, or on our readers' "record your own podcast" line:  617-876-2117.

Quick overview of November housing statistics from the Boston Globe:
November home sales off sharply

"The median condo price slid 2.3 percent to $265,000 in November from October. That's about the same as it was in November 2004.

Sales of single-family homes fell 9.2 percent in November compared to a year ago, the second consecutive steep monthly decline.

The Massachusetts Association of Realtors, in its November report on the state's housing market, said yesterday that 3,713 single-family home sales closed, down from 4,089 in November last year.

Despite the decline, the median price ROSE (emphasis added) modestly, to $354,000 last month. That's 1.7 percent higher than in October and 2.3 percent above November 2004."

Single family housing prices may have risen slightly last month, but this graph of real estate cycles over the past 30 years in Boston, created by Douglas McCarroll, one of The Real Estate Cafe's fee-for-service buyer agent / real estate consultants, gives some context for predictions that the Boston housing market is merely returning to "normalcy."

Crystal ball & graph to predict housing prices in 2006

Wish you had a crystal ball to see where housing prices are headed in 2006?  Then watch our video and check out is this graph of past real estate cycles in Boston before making your own prediction.  Merry Christmas from The Real Estate Cafe, particularly to those bargain hunters who know the holidays can be an excellent time to buy.  As our gift to you, we've introduced a new rebate option, at half our normally hourly rate, to encourage you to try our nationally recognized fee-for-service business model.

Pop-up quiz: What will happen to housing prices in 2006?

Predictions about what will happen to housing prices in 2006 are beginning to pop-up on line, so we've created our own "pop quiz" to get your opinion, too.  Quick:  how much will housing prices will rise or fall in Greater Boston in 2006?  OK, now the pop question.  Click on the tiny image above and a full-sized graph of housing price increases and decreases by quarter over the past 30 years in Boston/Quincy will pop-up.

Do those real estate cycles change your predictions about what will happen in 2006? 

If not, take a second look.  Compare the price spikes over the past five years to the more modest increase of prices which peaked in the mid-1980s.  If prices increased twice as high in the first half of this decade will they decrease twice as far during the second half of this decade?

Your comments, particularly regarding any factors which may mitigate or accelerate the coming down cycle, are welcome.  Most importantly, please let us know if your predictions changed when the graph popped up. Your comments are welcome here, or by calling our reader line 617-876-2117 to record a sound bite for potential use in a future podcast.

Party like it's 1773... ...or should we say, like the real estate party's over?

Yankees vs. Red Sox rivalries aside, Inman New's recent blog post about a Great Gatsby-esque real estate party in the Big Apple, described as an "elbow-to-elbow soiree straight out of Hollywood... that attracted at least 1,000 of the city's brokers and agents," had readers in Boston gagging and giggling.   

Anyone who thinks the good times will continue to roll in real estate is in for a Big Surprise, which is why bloggers in Boston secretly used the 232nd anniversary of the Boston Tea Party to plan a series of "Boston Realty Parties" celebrating the end of the housing bubble here and beginning of the first buyers' market in more than a decade.

The upcoming series of events will inform and protect real estate consumers, and aspires to bring about long overdue industry reforms (like rebelling against obsolete real estate commissions that are akin to excessive taxes on tea two hundred years ago.)  Don't believe the party's over in Boston?  Check out the (1) housing price index graphs by one of The Real Estate Cafe's buyer agents / real estate consultants, (2) view our recent series of bar charts analyzing market statistics behind the  "hard landing" for the Boston housing market, or (3) scan the Boston Globe stories and video clip on Boston.com.

While the photo above was taken at the historic tea party site in Boston Harbor, the "Coming soon" sign points to the "coming slowdown," as Business Week called it, in other housing markets, while documenting the importance of December 16, 1773 in American history (click on photo to enlarge).  Why was the photo taken at night?  Check your high school history books or visit the Boston Tea Party's web site to find out. 

Our apologies for recent technical difficulties

Please check back soon for missing graphics and delayed posts.

Price reductions on single-family homes across Massachusetts: 2004 vs 2005

This graph, the fourth in a series of five documenting market trends behind the Boston's Globe's recent feature story, shows side-by-side comparisons of markdowns by price range for single family homes across Massachusetts through Thanksgiving in 2004 versus 2005 (click on image for larger view).  As the red bars indicate, price reductions increased in nearly every price range in 2005, but most notably in the mid-market or $300,000 to $600,000 price range.

The increase of markdowns in the $500,000 to $600,000 price range is particularly visible in this bar chart, and could translate into savings of tens of thousands of dollars off original asking prices, even before our unrivaled commission rebates.  You can learn more about them by reviewing The Real Estate Cafe's menu of compensation plans, or contacting us.  As always, your comments are welcome on our blog, or by calling our reader line to record a sound bite for potential use in our audio time capsule of the real estate bubble.

MLS listings vs price reductions by price range across Massachusetts in 2005

This graph shows the number of single family homes listed across Massachusetts in MLSpin compared to the number of price reductions by price range through Thanksgiving, 11/24/2005 (click on image for larger view). Scroll down or click here to compare the number of markdowns this year versus last, but be sure to note the bar chart's change in scale:  14,000 properties this year versus 12,000 last year.  If that sounds too confusing, sign-up for our RSS feed to automatically receive tomorrow's graph which will compare reductions side-by-side for each price range. 

We're eager to know what kinds of bargains you are seeing in the market, and what kinds of questions you would like to discuss on our blog or offline at one of our upcoming Boston Realty Parties (watch for more details).  In the meantime, post your comments below or call our reader line, 617-876-2117, to record a brief message for potential use in The Real Estate Cafe's podcast.

Real estate bubble flashback: Listings vs price reductions 2004

Thus far, we've only posted one of five graphs comparing price reductions on single family homes listed for sale in Massachusetts in 2004 versus 2005.  To establish a baseline for those comparisons, let's step back and look at the number of single family homes listed in MLSPin through Thanksgiving last year compared to the number of price reductions by price range  (click on image for larger view).

Tomorrow's graph will show both the increase in listings and price reductions by price range for this year, 2005.  To receive it automatically, simply sign-up for The Real Estate Cafe's RSS feed.  If you have more specific questions about market trends -- particularly price reductions across Massachusetts related to your own house hunt, please let us know how we can help you help yourself!  There are thousands of bargains this time of year, and you can increase your savings by choosing one of our rebate options, see see diagram of potential savings.

Real estate bubble leaving leftovers or Christmas presents for homebuyers?

This chart, the first of five documenting price reductions in the Boston Globe's feature story, ranks the increase in markdowns by price range for 2005 versus 2004 (click on image for larger view).

Red and green, the traditional colors of Christmas, indicate price ranges in the middle of the market where holiday homebuyers will find the most price reductions or "Christmas presents" this year. Approximately 3,000 price reductions have occurred on single family homes between $400,000 and $600,000 (shown in RED), and more than 2,100 price reductions have occurred on homes priced between $300,000 and $400,000 (shown in GREEN). All figures are through November 24, or roughly Thanksgiving, both years and are based on data from MLS Property Information Network, the multiple listings service covering nearly all of Massachusetts.

Larger price reductions -- some well over $100,000 -- have occurred in more expensive price ranges but there are fewer properties in those price ranges, and in some cases fewer price reductions compared to last year.  (That finding and others will be documented in the next four graphs.  Click on our RSS feed to receive them and other blog entries as soon as they are posted.)

Some homebuyers see prices reductions and expired listings as stale leftovers, others see them as money-saving opportunities.  What's your take?  You can post your comment here, or call our podcast line -- 617-876-2117 -- to record your own sound bite.

Sharp price reductions point to hard landing for Boston Housing Market

NEWS FLASH:  Watch for more analysis and graphs of data behind the headline story in upcoming blog posts.  Should we host a Boston Realty Party -- online or in person?  -- to celebrate the end of the real estate bubble and the beginning of the first buyers' market in more than a decade in Boston?

Sellers chop asking prices as housing market slows
Cuts of up to 20% are now common as analysts see signs of a 'hard landing'
By Kimberly Blanton, Boston Globe Staff  |  December 9, 2005

''The evidence -- both early data and the anecdotes -- are pointing more toward a hard rather than a soft landing" in the housing market, said Nicholas Perna, an economic consultant in Ridgefield, Conn. ''Prices could come down. Could it be 10 to 15 percent? There's no way of knowing, but what we're getting is more clues that you've got a decline in prices underway.

Some of research conducted by The Real Estate Cafe was featured prominently in the article, although the contribution made via an interview with one of our buyers was less obvious:

Moderately priced homes are feeling the brunt of the price squeeze, according to an analysis of MLS listing data by Cambridge broker Bill Wendel.

Statewide, 38,418 houses had priced reductions between Jan. 1 and Nov. 24, or 22 percent more than the number of reductions during the same period in 2004. But the number of price reductions on homes between $500,000 and $1 million increased by 36 percent. One price segment that ''jumps off the page as soft," said Wendel, is the $500,000 to $600,000 price range, the fourth most active segment of the single-family housing market. It had 1,258 more markdowns, up 40 percent from last year.

The Boston Globe has aggregated some of their recent stories on the changing market into this Special Section online.  Now you can see why The Real Estate Cafe wants to throw a Boston Realty Party, on December 16, the 232 anniversary of the Boston Tea Party, for homebuyers to celebrate the end of the real estate bubble and the beginning of the new buyer's market!  Let us know if you'd be interested in participating online or in person in the Boston area.