Tuesday, June 27, 2006

May Market Wrap

Both the MAR and the Warren Group released Massachusetts sales and price data in the last couple days. Before plotting the MAR numbers with historical data, here's a summary of the numbers.

Warren Group data (reported here and here):
May SFH sales: 5,208 (down 5.1% YOY)
May SFH median price: $331,000 (down 4% YOY)
May Condo sales: 3,037 (down 7.8% YOY)
May Condo median price: $285,000 (up 1.8% YOY)

Massachusetts Association of Realtors data (reported here):
May SFH sales: 4,055 (down 2.9% YOY)
May SFH median price: $352,700 (down 1.2% YOY)
May Condo sales: 2,113 (down 1.2% YOY)
May Condo median price: $286,000 (up 2.5% YOY)

I'm not sure what to make of the conflicting data. The Warren Group has a more complete data set that includes FSBOs, estate sales, foreclosures, and other transactions that don't show up on the MLS. Can any reader clarify whether sales of new SFHs and Condos are reported in MLS? If not, that may account somewhat for the much lower sales volume from MAR. Also the weaker price trends in the Warren Group report might be a reflection of some discouting done by builders to clear new SFH and condo inventory.

Unfortunately I don't have the historical data series from the Warren Group, so I will continue to plot MAR data below. First up, historical median prices for SFHs:

SFH inventories continue to climb:

Condo median prices recovered in May to post a small gain:

Meanwhile, Condo inventories leveled off last month:


While inventories are up strongly from last year, the Warren Group reports that SFH sales are down 9.3% so far this year (relative to 2005), and Condo sales are off 5.5% relative to last year.

In my opinion, the fascinating number to watch next month wil be SFH median prices. If prices don't increase from May's $352,700 to greater than $360,000, we'll not only be well below 2005 levels, we'll be back to 2004 price levels.

7 comments:

walthamite said...

I'm suprised by how well condo's are doing. Although, there is a lack of consistency with the Warren group data. I wonder if the MAR data is leading to an overly positive assessment for the month. Also, I understand that Condo values cannot be sound if SFH values aren't...Perhaps the leveling off of condo inventory is predictive of the same for SFH.

Does all this mean that the MAR assessment of real estate prices is turning out correctly?? No big crash, prices mellowing out, nothing more? Seems like a happy country and a happy economy.

indigo said...

Lets not forget that this market is not close to efficient. The May closes are mostly based on March decisions -- a time when the media just started to pick up this story.

The insiders sit on the numbers for 2 months. Imagine having to trade your stock on 2-month-old prices. (Would such a system be open to exploitation and should it be legal? -- recall the new Shiller-endorsed tradable instruments.)

While a house does not make a market -- I have recently seen several houses with asking prices around 2004 sales numbers for the same house. This is bourne out by the zillow peaks which routinely zestimate near 2004 levels. If this is a trend and if these houses eventiually sell below asking I cannot see how 2003 prices will not be tested by summer's end.

walthamite said...

I was pondering what it means to have May's #'s so late. However, Zillow is also showing a very steep increase in Condo prices (along with rather flat home prices nearing 2005 levels). I'm assuming that Zillow's trends are more up to date yet who knows??

As far as SFH reaching 2004 levels. Looking at the graph, this sounds more ominous that it looks. SFH prices really shot up over the last summer. As long as the 2006 values remain near the average price for the year, it would hard not to consider market hanging in there...Anyways, it would be crazy to think that 2006 will see those big price increases over the summer. But for condo's, they really could spike again. Amazingly.

Rush said...

Dear Admin,

Thanks for the very illuminating charts, as always! It seems unavoidable, to me, that the June 2006 SFH YOY will be down >5% which MAR and the Harvard group define as a "sharp decline." I think this will put to rest arguments that we did not have a bubble and it will be solid evidence against the idea that "it is difficult to lose money in real estate." The end result is that consumers and investors will be much more careful in the near future, at least for 2-3 weeks :)

Rush

Rush said...
This comment has been removed by a blog administrator.
RealEstateCafe said...

Dear fellow bubble blogger,

Thanks for your post comparing MAR vs Warren Group calculations of YOY price changes.

As someone who makes his living as a fee-for-serice buyer agent, my clients are less concerned about median prices than they are specific properties, or "comps," they can use to substantiate offers they are making on individual properties. That's why transaction specific data, like the houses Indigo points out that are selling for 2004 prices, are arguably MORE important than overall median prices calculated by MAR or the Warren Group.

Has anyone else noticed homes selling for less than their assessed value in some of the most expensive cities and towns in Greater Boston? While they may not be pulling median sale price down yet, they've become so commonplace that we've started mapping them and invite your contributions to the Boston section of interactive map and wiki:

http://www.realestatebubblemap.com

Please note, this is an experimental work in progress and your feedback -- particularly locations of individual properties -- are welcome on our map (or one you can create and post here). As you will see, this blog is already linked to the wiki.

Rush said...

Would you please post the # of sales chart including May data?

Thanks