Tuesday, October 24, 2006

Preliminary 3rd Q Analysis - Bear Market Deepens

With the September market stats now in hand we have the all raw data for the 3rd Quarter (July-August-Sept). The official numbers for Q3 won't be released by MAR for another few weeks, but I've estimated the year over year (YOY) results and come up with similar findings to those of the Warren Group (link). Notably, sales trends are weakening dramatically, and price declines are growing more pronounced. Not even a remote sign of a bottom in these data.


notsofastlouie said...
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notsofastlouie said...
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notsofastlouie said...

DT: thanks again for the incredibly useful graphs.

I quite agree that the third quarter numbers do not show signs of a bottom. But this does not controvert the Moody's report, which is claiming that future quarters would show a stabilization in prices.

The reasoning behind the Moody's analysis is that there is pent-up demand from the 33,000 net new jobs created in the last year: there are many new professional jobs, and many of these new job holders have been renting (hence vacancies have fallen to under 4%!) but on balance will increasingly want to buy in the next year. With wage increases they will have more purchasing power, too. And new supply is not keeping up.

Your state-wide graphs obscure the fact that inventories in the urban core market have declined considerably since the second quarter. The fall market has not brought on a wave of new listings. The suburbs, of course, are another story.

To my mind, the Moody's study reflects a sound reading of the fundamentals. The great unknowns remain interest rates and continued job growth. But these factors never go away.

notsofastlouie said...

A recent study out of Wharton Business School argues that houses in a few cities like San Francisco, Boston, and New York remain excellent long-term investments because of high wage growth and severe limitations on development.

The study is bullish on Boston homes, predicting amongst other things that within five years Boston will have the second highest per capita income after San Francisco. (Higher wages increase demand and hence housing prices.) Of course prices here are much lower than San Francisco or even L.A.

See article at:


See blurb on Boston at:


notsofastlouie said...

Apologies: here's the link on Boston:


Larry Linkler said...

I'm sure this is pragmatic by nature.

notsofastlouie said...

Sorry for the barrage of comments but hopefully this is useful to someone.

The Census Bureau just revised its population estimates for Boston. Apparently the city didn't lose population from 2000-2005, it gained population. See:


A rising population in the city, severe development restrictions, declining inventory (in the city), rising jobs and wages, and a reasonable mortgage payment/income ratio... if rates stay stable and job/population growth continue prices are not likely to drop in the urban core market.

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