Saturday, January 27, 2007

December Market Wrap

This week the Warren Group posted Massachusetts housing market data for December and all of 2006 (link here). For the month of December they report SFH prices down 8%, and condo prices down 2%. For the year, SFH prices declined 5.8% and condo prices declined 1.2%.

MAR reported their numbers on Thursday. Below are their numbers plotted relative to recent years. NOTE: MAR incorrectly reported (and all other sources I have found failed to correct) that December condo prices were up 2% yoy. In fact, according to the data available on the MAR website (link here), condo prices were DOWN 1.8% yoy. The prices were up 1.9% over 2004 levels, which is where they likely made their mistake.

SFH prices for December were down ~5% from 2005 levels, and down ~2% from 2004 levels. They are still up ~8% from 2003 levels. This is the 5th consecutive month that prices have been below 2004 levels.

Condo sales in December strengthened slightly relative to the recent trends. SFH sales continue to deteriorate.




Both SFH and condo inventories showed their smallest yoy gains since early 2005. Importantly, inventory is still climbing (though much more slowly) and is well above recent year levels. The spring market inventory levels will be interesting to watch. We could see the first yoy decline in inventory levels for SFHs in the coming months.


Months Inventory continues to run at high levels as inventory levels out and sales deteriorate.

I'll put together the year end numbers in a future post and try to make some early projections for 2007.

11 comments:

indigo said...

To their credit I think the local RE establishment managed this winter much better than last. Through whatever methods they got significant inventory off market and kept a sizable fraction of serious sellers. For the small number (50ish) of interesting houses I track, I saw about 15 closing over winter -- on average 10% below tax assesment and 20% below zillow.

Of course I see a noticable increase in listings since the new year. My new habit is to investigate the mortgage situation of the interesting listings. What a shock, at least half are quite squeezed and quite a few under water! Several lax liens, new helocs, a foreclosure notice and a crook obviously involved in mortgage fraud involving about $4M in assets! (including 2 houses I found interesting in the past.)

Another owner upgraded (zero down) about a year ago and has not been able to sell his old house. He has gone from owing 250k on a 700k asset to owing 1650k on perhaps 1650k's worth of assets with around 2k's worth of monthly payments increasing to over 11k/month. I wonder if it was worth it? This guy does not appear to be in senior management and his latest heloc does not suggest he has anything stashed away.

The big surprise is the towns: Newton, Cambridge and Wellesley!

Ken said...

I'm curious about your last sentence, indigo. What is the big surprise about those 3 towns and where can I find the data that you are referring to in this way?

indigo said...

The RE propaganda I was exposed to, perpetuated the myth that in the pervious correction, the commuter towns like Framingham, Wayland etc were much harder hit and that towns like Newton and Wellesley suffered minimal depreciation.

Also, most of the media coverage on recent buyers burned by exotic loans are on the lower end price range.

But my personal observations have suggested that Newton turned south very early (late '05) -- perhaps due to its market size, and for the transactions I track Newton has dropped much more than 20%. (One house is not a market, but see eg. MLS 70327379, tax assesed at around $1M sold Feb 06 in lowish 800's.)

I cannot explain why my very limited and selective sampling suggests Newton and Wellesley started to move down before Belmont, say, or for that matter parts of Florida, California and Arizona. I probably find Belmont more interesting than Wellesley but Wellesley certainly has much better deals right now, with Newton in the middle on both counts.

All this is anecdotal. Through many online RE agents you can get access to MLS and track properties you find interesting. When I averaged the last 15 or so closing for the last 3 months, I get the trends mentioned before. Through online county registries you can get the mortgage info -- see cambridgedeeds.com. Zillow.com used to give reasonable assesments but my impression is that in a downward market it uses too many old comps, which is why the recent closing are so much lower.

This all depends on my definition of an interesting property. I probably will not track some dump listed at 20% over tax assesed. I look at properties that either strike me as nice or better values than the others. Of course I canot afford any of them!

If you are a seller or an agent I will concede that pricing a home has become exceedingly difficult. In a rising market you can put down any number and the buyers efficiently determine the price for you through a bidding war. Now you have to come up with one of the best deals in town -- you have to have your pulse on the market and listen to where the last few transactions point to.

notsofastlouie said...

Median home prices for Cambridge, Wellesley, and Newton have not been falling. In fact they have been rising according to the Warren Group (see Warren Group Townstats on their web site):

Cambridge:

2007 $758,000
2006 $717,000
2005 $615,000

Wellesley

2007 $950,000
2006 $950,000
2005 $876,000

Newton

2007 $730,000
2006 $736,000
2005 $692,000

Certain properties may trade at less than the tax assessment or the zillow.com price. But the median price has been rising in these markets.

(By the way, tax assessments and zillow.com are notoriously inaccurate predictors of market price in the Boston area, largely because of the extreme variation in property condition and amenity in the same neighborhood.)

TheLievense said...

Thanks again for your very useful charts. It will be VERY interesting to see what the spring market holds as tradition has been that people pull slow moving properties off during the winter and relist in the spring. I'm wondering if we'll see an inventory spike with fewer buyers than this year which will then add to the pressure of the market.

Indigo, do you know what the other online deed sites are besides cambridge? I've often been looking for that exact mortage information to know if someone is simply trying to make a killing or are they maxed to the hilt? Specifically I'd be interested in knowing how to find that information for Bright, Needham & Dedham. Thanks!

indigo said...

Sorry for the delay in responding. The mortgage docs are made available by county. The url cambridgedeeds.com is simply an easy one to remember. It has South Middlesex County docs but from it you can link to other counties in Mass.

The great advantage of the web is you need not listen to anyone's spin. We live in an age when many `commentators' have an agenda to shape others' opinions and actions.

Instead nothing gets more real than you yourself tracking 1. closing prices of excecuted transactions and 2. the debt exposure of houses for sale, of the properties you are interested in.

notsofastlouie said...

The Warren Group's Townstats data was published today.

The Urban Core Market numbers for January are all way up year over year - higher condo sales and prices in all markets from last January. That's several months in a row. Perhaps just the good weather? Or pent-up demand from the slow sales last summer.

For those who have access to MLS, inventory in all urban core markets is down year over year.

DT: I know you don't agree with my interpretation of the urban condo market, but perhaps it would be useful to graph this market as well as the state-wide market.

My guess is that most of your regular readers live in the urban core market and would be interested in seeing if a notable discrepancy between the urban and state-wide housing market persists.

DT said...

nsfl-
You claim that condo sales and prices were up yoy in January for ALL of the urban core markets (your definition). Would you like to retract/revise that statement, or do I have to publish the facts that contradict your statement (hint: check out Dorchester)? While you correctly identified a trend, whether it is meaningful is another question. But the real estate business is sloppy enough with the facts, something this blog was created to address, and I will not tolerate comments that make false statements clearly contraindicated by published data.

notsofastlouie said...

DT:

I ASKED you if you would publish the data and track this trend. You act like my mistake was intentional.

I meant the urban core market as a whole. Since you won't publish the data, which on the whole does show the urban condo market surprisingly up, here is your red herring: Dorchester condo sale prices declined from $286,250 to $275,000 over 12 months to January 07, but on condo sales that INCREASED from 50 to 91 for the same period.

When sales increase 80% the comparison of median price is less meaningful.

I just rechecked quickly - Boston, Cambridge, Somerville, and Brookline sales and prices were all up.

I again wonder if you won't present the facts for the areas most of us live in, not just for the whole state, which includes vacation markets like Cape Cod, Cape Ann, the Berkshires, etc, and very different metro areas like Springfield, Fitchburg/Leominster, and Worcester.

DT, you've over-reacted: a polite correction would have served. Perhaps you should be equally intolerant of ad hominem attacks.

DT said...

nsfl-
I'm sure you'll agree that precision in language is important. Unfortunately, you have not been very precise in your recent comments.

Earlier in this thread you claimed that prices were not falling in three towns, then reported data that clearly showed that in one of the towns prices had fallen.

In a subsequent post you stated "higher condo sales and prices in all markets from last January." I then pointed out that your statement was, as written, misleading and technically wrong.

There are enough propagandists for the real estate industry. When the facts support your argument, there is no need to overinterpret.

As far as me presenting various data - I have a finite amount of time to run this little blog. It is, by title, about the "Massachusetts Housing Market" - not the Boston, or urban core condo market. I do provide links to sites that focus on Boston. But most of the city or neighborhood data I can find is hard to interpret because of small sample size (see the next post).

You seem to have access to more data sources than do I. If you create a blog with these data (a trivial task), I'll be glad to link to it.

hck said...

The RE propaganda I was exposed to, perpetuated the myth that in the pervious correction, the commuter towns like Framingham, Wayland etc were much harder hit and that towns like Newton and Wellesley suffered minimal depreciation. evet yoruma katılmamak eldedeğilki...
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