Counter Intelligence: The Real Estate Cafe Weblog

Real estate bubble: Top news story of 2005?

For the past month, two Boston Globe real estate articles, one on falling prices and the other on rising foreclosures, have topped their list of "Most Popular Stories" (click on image for larger view).  Now, guess what their cross-town rival, the Boston Herald, has listed as #1 on their "top business and economics highlights of 2005"?

1. Pop goes the bubble — The state’s housing bubble finally sprang a leak this year, with a noticeable slowdown in sales, a falling off in prices and long waits to sell homes. Partly brought about by rising interest rates, the slowdown was evident by May, when housing sales fell by 11 percent over the prior year. The market hasn’t shown much improvement since.

The rest of the Herald's list includes factors that have contributed to the end of the real estate bubble and will continue to pull down housing prices in coming months and years:  slow job growth in the state, rising gas and energy prices, and loss of major Massachusetts employers through mergers, acquisitions, and relocations. 

TEST MARKETING AN IDEA

The Real Estate Cafe has been tracking factors underlying the housing market in Boston since 2000, the peak of the dot.com boom, and we are eager to share our knowledge and get your insight, too.  Would you be interested in participating in a monthly or bi-weekly real estate round table, or since we'll probably host the conversation in a restaurant or bar, an occasional "Bubble Hour" or "Boston Realty Party" in 2006? If so, we'd like to hear from you particularly if you want to be a featured guest. 

We know that our clients tend to be part of the "do-it-yourself" movement, but this is one of the ideas we're exploring to increase peer-to-peer interaction in 2006.  Please let us know if you have ideas about how we can help you learn from each other to make more informed decisions, avoid making mistakes, and ultimately, save money.

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."

Introducing our "Will work for Bananas" buyer agency consulting fee

  Sam, Sam, the Gorilla Man 
  Originally uploaded by BohPhoto.

After peeling back the hourly rate on our buyer agency services by half, The Real Estate Cafe began auditioning mascots and were delighted to find "Sam, Sam, the Gorilla Man" on Flickr.  Hope you "go ape" over that moneysaving option, our latest in a decade long evolution of fee-for-service (or discount) real estate business models.

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 and Happy New Year 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.