Tuesday, July 25, 2006

June Market Wrap

June numbers were released today by the Massachusetts Association of Realtors (pdf here). First up, prices:

Prices for both SFHs and Condos were DOWN ~1% compared to the same month last year. Sales were also off, 17% for SFHs and 14% for Condos:

Reported inventory numbers seem absurd:

Any explanations? Houses flooded by the spring rains? Sellers giving up?


walthamite said...

Inventory. My guess is that real estate agencies are cracking down on pointless listings. Perhaps several agencies are suggesting to agents to avoid fruitless efforts. I don't see what else could have led to such large drops in inventory so quickly. The numbers also show how many sellers were merely speculating. Fishing. Enticed by the 2005 prices and see if they could do even better.

notsofastlouie said...

I agree with Walthamite's list of possible causes for the drop in inventory. I would add that some condo owners may have decided to rent their unit and sell when the market is stronger in a year or two. Single family homes are harder to rent. Maybe retirees (who are more flexible with time than job transferees) decided to stay in Boston another year or two and sell into what they hope will be a tighter market.

whistleblower26 said...

I'll tell you exactly what's going on. I've been watching my uncle's house for sale sit in the town of Marshfield. For the past two months the number of properties available in the town has fluctuated from 380-395. About three weeks ago, that number dropped to exactly 300! A couple of days later, the number was back up to 387. It is currently at 391. This is the link:


I think MLS Mass took a bunch of the houses off their listing, collected their inventory data, then put them back on. There is no other explanation! How can Marshfield, right in the thick of this inventory pileup, show absolutely no decrease in available properties over the last month when the rest of the state shows roughly a 20% decrease? Coincidentally, 300 would be a 21% drop from 380, which fits right in with my theory.

I am predicting that one of three things will happen. Mass Realtors will admit they “made a mistake” sometime in the next few weeks, you will see a dramatic unexplainable increase in inventory next month, or they’ll do the same thing next month- cut listings, collect data, then re-list. This time I’ll be watching and I’ll blow the whistle on this scam.

Remember, 391 properties available in Marshfield on 7/26/06. If it drops again, I will repost.

walthamite said...

From what I read in the press, no one seems to care that the inventory numbers have dropped. Everyone is far more focused on the drop in sales (which is actually misleading, since June 2005 was off the charts high in sales). I'm impressed with how difficult it is to assess supply and demand in the market. There would seem to be two types of supply. Those who must sell and those that are only selling because the price and timing are right. Because inventory numbers don't distingiush between these two types of sellers, the data is less usefull than you might hope.

CondoHunter said...

The realtors really need to eliminate the "fishing listings" if this market is ever going to adjust itself. It wastes the time of buyers. I estimate that 1/4 of my time looking for houses was spent looking at these listings. It gives the real sellers a false value of their homes so proper pricing takes much longer to achieve. And if a fisher does make a catch it ruins the pricing of the whole neighborhood for weeks and stalls sales even longer. I think the realtors should go through the listings and any listing over 120 without a price change of at least 2.5% should be taken off the market. They would never do that, but things will only get worse until they clean out the glut of houses.

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notsofastlouie said...

July employment statistics are out and show robust job growth: about 29,000 jobs created in the last 12 months, 4,000 in July. All of this suggests that demand for housing will continue to grow. Purchasing power has obviously been affected by rising interest rates, and it may take a few years for income to catch up to current price levels. But price inelasticity in the housing market, stabilizing rates, and continued demand growth in line with supply growth all suggest minor up or down movements in prices (but no freefall in prices) for a few years. Again, if current conditions hold.

For the Bureau of Labor Statistics jobs report:


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