Tuesday, February 28, 2006

January Market Wrap

MAR released their January sales report today. Here are the latest SFH numbers plotted to show their relationship to recent trends over the past few years.


Here are the latest price and inventory data for Condos.


So far it hasn't made the headlines that I've seen, but prices are DOWN (albeit slightly) year over year for SFHs. This breaks a string of 115 consecutive months of positive appreciation.

And inventory numbers continue to accelerate to the upside - looks like I'll need to expand the y-axis for these plots by summer.

Money quote from MAR press release:

"...sales of detached single-family homes fell to their lowest January level in 10 years..."

Spin from the MAR Talking Points:

"False assertions of a price bubble in the local market also have prompted some buyers to delay their home buying decision in anticipation of sharply lower prices come this spring."

"Inventory, as stated in months of supply also rose steadily from 8.2 months last January to 14.3 months of supply in January 2006... In Massachusetts, the market is at equilibrium for buyers and sellers when 7.5-8.5 months of housing supply exists, thus despite concerns about an inventory glut, there’s a healthy balance between supply and demand at the present time."

As noticed by a reader, the statement above has been edited by MAR. The new text is shown below, and now reflects a more "reality-based" assessment of the market:
"In Massachusetts, the market is at equilibrium for buyers and sellers when 7.5-8.5 months of housing supply exists, thus a strong buyers market emerged has emerged over the past month due to surging supply levels and more moderate demand."

"The number of condos for sale has increased 47.8 percent in the past year... Inventory, as stated in months of supply, also has risen in the past year, climbing to 13.7 months of supply
this past January from 9.5 months of supply in January 2005."

To see where these "balanced" inventory numbers will likely be sending prices, check out my recent post.

But in case anyone might be worried about the market, MAR is here to reassure you:

"Predictions of steep price declines in home values made this past fall remain largely unfounded."

How about long, slow grinding declines in home values for years to come? All the pieces are in place: exploding inventory, record low affordability, net out-migration, stagnant job growth and wages, uptrending foreclosures, payment shock from resetting mortgages. The only questions now seem to be: How fast, and how far down?

6 comments:

Rob Dawg said...

You are gonna need bigger graphs for the inventory in the next few months. Good job, thanks.

Rob Dawg said...

Remember "inventory" assumes no new properties come on durring the period. It heterodynes (feeds on itself) during slowdowns. In a stable market 1yr inventory implies that some properties can expect to take two years to sell. That's a broken market. We aren't even close to stable yet. We won't see more homes sold than placed on market for years but it won't be obvious as listings are withdrawn, etc.

DT said...

Thanks for all the positive feedback, and a special thanks to ma market watcher for catching the edited text on the MAR Talking Points. I've added the new text to the post.

bostonbubble said...

Quote: So far it hasn't made the headlines that I've seen, but prices are DOWN (albeit slightly) year over year for SFHs. This breaks a string of 115 consecutive months of positive appreciation.

Maybe the drop wasn't so slight if you consider inflation. Based on to the Bureau of Labor Statistics' data at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt , it looks to me like inflation from January 2005 to January 2006 was 3.99%. Given a nominal decline in the median price from $346,000 to $345,500, that translates to a real decline of 3.97%, if I did the math correctly.

DT said...

Agreed, when you factor in inflation the market is already in decline. Not sure that makes much of an impact on the average person (though it probably should).

But if you're on the sidelines saving money and waiting to buy, it is a nice contrast to the many, many years of falling behind while appreciation outstripped any attempt at saving.

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