Wednesday, August 23, 2006

July Market Wrap

This week saw the release of July market stats for Massachusetts.

First up, data from the Warren Group (reported here):
SFH sales: 5,070(down 27% YOY)
SFH median price: $339,000 (down 6.1% YOY)
Condo sales: 2,692 (down 23.5% YOY)
Condo median price: $277,000 (down 4.2% YOY)

Next up, data from the Massachusetts Association of Realtors (reported here):
SFH sales: 3,982 (down 25.3% YOY)
SFH median price: $361,750 (down 3.5% YOY)
Condo sales: 1,883 (down 21.4% YOY)
Condo median price: $276,000 (down 4.1% YOY)

For those graphically inclined, here are the MAR price and inventory data relative to recent history. First up, SFH numbers:


(Note the inventory numbers reflect corrections for June by MAR).

Here are the condo figures:



I'll post the sales graphs soon, along with the trend in months inventory. Needless to say, the numbers for July were unquestionably weak. The "soft-landing" scenario of moderate price growth seems to have suffered a rapid demise. The question of the day now is: how far down will prices go?

9 comments:

TheLievense said...

For condos I think this is going to be HORRIFIC.

The amount of inventory is simply staggering and with how quickly sales are dropping off we're looking at like almost a year's worth of inventory, and that doesn't count all of the condo projects in the pipeline expected to open in the next year or two.

For condos I could see a return to 2002 or earlier prices.

willydog said...

actually, condos have reversed the trend my friend. Babyboomers all want condos.

It should be interesting when the inventory numbers adjust and the non-serious sellers pull out of the market. Lots of folks are trying to "catch a price". If they don't get it, they don't sell. IMHO, those people are artificially skewing the inventory numbers.

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whistleblower26 said...

Surprise surprise! MAR adjusted their inventory numbers dramatically for June in July's report as I suggested they would in the June Market Wrap! This is blatant data manipulation and they don't even MENTION that June's numbers are corrected in July's report. Their credibility is nil, so don't believe this month's numbers or anything that comes out of their mouths. Lerah is still saying there shouldn't be dramatic price declines! Ask any seller whether a $13k median price drop isn't dramatic!

whistleblower26 said...

One more comment to all the real estate pushers who say "interest rates are still at historical lows" when defending their position that it's STILL a great time to buy: IT'S THE PAYMENT, STUPID! If housing prices have skyrocketed relative to income (which they have), then the rate can be "historically low" while the payment is still a killer! I'd like to ask these people when is it NOT a great time to buy?

TheLievense said...

WillyDog,

If BabyBoomers all want condos then why is there a record amount of inventory and why are the sales falling off just as fast as SFH?

There is no reversal in trend. Look at the inventory numbers from 2002 to now.

SFH 2002 - 25,000, 2006 - 45,000 a 180% increase

Condos 2002 - 8,000, 2006 - 21,000 a 262% increase

Not only that but condos are being built at a higher rate and in the next 2 years there are a ton of projects projected to finish. The Boston Globe in November 2005 quoted the BRA as saying there are currently 14,000 condos in various stages of development in the Boston area.

I'm sorry but there aren't enough BabyBoomers to support that inventory, especially since the BabyBoomers won't be able to unload their SFH in the 'burbs to trade up.

Condos historically have always lost more value during a downturn and this time will be no different, the huge amount of inventory will drive prices further than SFH declines.

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walthamite said...

Condos have historically suffered worse during downturns (in the US as a whole) or so I've read. I'm not sure if this statement is true for the Boston metro area however. I believe that during the last downturn, lower priced real estate suffered less than higher priced real estate, at least in Boston. Strangely, the opposite was true on the west coast, where low prices homes dropped the most in price. I don't think the question is, will prices drop across the boards, its obvious that they will. Its trying to predict exactly which segment of the market will do best, and which will do worst...

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