When you go to a party a few years from now, and you tell people that you plan on buying a house and you get responses like:
â€œI wouldnâ€™t do that.â€
â€œIâ€™ll never buy a house again.â€
THEN â€“ youâ€™ll know that weâ€™ve hit bottom and itâ€™s time to buy. Before then, youâ€™re just catching the falling knife.
Donâ€™t get cut.
Who's calling Roxbury the South End (I assume you mean "the next South End")? What do you mean "The North End is up"? Median price? Average? Year over year? Sales volume? According to whom? Just throwing stuff at the wall, and hoping it sticks?
Every week, the Globe runs a new article about condo developments not only not "being filled up", but being auctioned off wholesale. Recently, several downtown, one in the South End and one in Brookline, all areas you cite as "hot".
Prices in Boston have dropped 5% in the last year, according to the very best data available (the S&P Case/Shiller house price index), and will drop another 10% this year at least, based on exchange traded futures in the same index, in which people's money's where their mouth is.
Is your money where your mouth is? Are you buying up a bunch of condos in the seaport, to flip them in a year? I'm guessing you know how foolish that would be, and that you wouldn't buy today. Neither should anyone who won't be staying put for 10 years, at least.
Prices for Boston Homes have been the same for at least 11 years. I have Excel graphs to show that proves this. Try reading this one. The url is http://blog.wesellboston.net/boston-condos/boston-condo-sale . The title is Boston Condo Sales, January to August for 11 Years and in the article there are graphs that show the average price for a Boston Condos is the same as 11 years ago.
When brokers talk about a rebound in Boston Real Estate they are talking about number of transactions, not prices. Prices have not given an inch for at least the last decade.
Hope this helps, Jeff Persons ABR http://wesellboston.net/
According to the Case Shiller index.... yes, it waas one of the earlier cities that it measures to see a decrease in housing prices.
Also, don't forget, -asking prices- don't mean much.
Just wait until all those foreclosures hit in August...
"3. The last buyers (and regions) into the bubble will be the first ones out."
Boston was the first part of the country to see the downturn. On the flip side, I notice more buyer activity (although not strong) today than I have noticed since late 2006.
Sure the bubbles burtsing in Vegas, Californis, Phoenix, but the east coast is seeing more of a deflation than an outright burst, with certain areas seemingly doing just fine. I don't know if I would really consider us to currently be in the innings of the bust (bust being defined as decreasing Real Estate Prices).... more around the seventh inning stretch.
The housing bubble was created all around by the get rich quick/day trading mentality that switched from the stock market to the housing/lending market in 2002. Now that losses are being recognized, and the kneejerk reaction is already in effect, I will say again, I can't imagine things getting worst than they are now. Famous last words? Only time will truly tell.
And I wouldn't know NAR rhetoric, I'm not a member. Being my own broker, it's a choice I'm "allowed" to make (I'm so fortunate).
1. Rich people are not feeling the crunch like the rest of us (big surprise).
2. However you count the start of the bubble, it's bursting;
3. The last buyers (and regions) into the bubble will be the first ones out.
4. The areas that became most unaffordable remain unaffordable as of May 2008.
My point, given all that, is that we're in the early innings of the bust, not the end of it. Those unaffordable areas will be more affordable soon, and there will be outright bargains in places like Dorchester even sooner.
Not trying to put words in your mouth. Just responding to the "median down, but average up" point you seemed to be implying, which sounds an bit like the "great time to buy or sell a house!" marketing rhetoric from the NAR.
Banks (and speculators) got really sloppy and greedy in the loose money mudbath; now they're getting shellacked. Irresponsible legislation notwithstanding, that shellacking may help us all avoid a repeat of this debacle.
In other words, it's good that standards are getting tightened up; a lack of standards is what brought us the negative-amortization, payment option, hybrid ARMs and the like, that are blowing up in everyone's faces these days.
You're kind of putting words in my mouth by telling me about my arguement that I never made.... Like switching to average prices... I just provided both... open information and all...
Also to say the bubble was from 1995 to 2005 is kind of stretching the truth too. Housing prices didn't catch up with their previous peak in the lat '80's until 1997(according to the CS), history shows that business cycles usually continue to rise from peak to peak, if you look at the CS for real bubble cities, the bubble didn't really start until '02.
"The super rich are not the ones hurting in this town, state, country, world. So flat or rising sales volumes in the multimillion dollar segment, when averaged in with sales of fewer than ususal houses at the low end, for lower prices, results in a higher average price."
Is pretty much exactly the original point I was trying to make (downtown versus harder hit areas), well said...
And yes, I think we're currently witnessing the kneejerk reaction from the banks underwriting standards... I can't imagine those can get any worse than they are now...
During the bubble, when the Boston area median price was going up every quarter (far, far faster than incomes, I might add), it was a measure of the market that house salespeople deemed satisfactory. Now that it's going down, those with an interest in house sales are questioning its validity. Seems like a classic case of "lies, damn lies and statistics".
To answer the question posed above, I'm suggesting we use data from long-standing, objective (non-industry generated) sources. Data that show what happened from 1995-2005: a *massive*, unsustainable bubble in house prices, not nearly matched by incomes or rents.
The Boston Case-Shiller index, which has been dropping for 2-3 years, and which recently went negative, does not suggest a price recovery soon. It looks a lot like we have another solid year, maybe two, maybe more ahead of us of declining house prices in Boston.
As for suddenly switching from using median price to using mean price, while I think it's basically an attempt to distract otherwise cautious buyers from what's actually going on in the market, I will offer one explanation: houses at the high end are less susceptible to the credit crunch.
The super rich are not the ones hurting in this town, state, country, world. So flat or rising sales volumes in the multimillion dollar segment, when averaged in with sales of fewer than ususal houses at the low end, for lower prices, results in a higher average price.
While prices are softer in some areas than in others, dropping prices in one area ultimately affect prices in neighboring areas, and universally tighter credit from banks, which is what we have, will affect the number and the qualification of buyers in any town.
Glad for the open debate.
Sure the case shiller is great and all, but is a system that only looks at single family houses that have been twice sold before, really the best home price indicator for areas where there's mostly new construction condos?
I can tell you that looking at MLS data for all of Boston, it shows a declining median price, but an increasing average price. So what's your take on that?
Demographics (retiring/Florida-bound baby boomers), loan aging on both subprime and Alt-A, and a recession, whether run-of-the-mill or long and deep, will keep downward pressure on prices, whatever else may happen to prop them up temporarily.
Election-year grandstanding and last-ditch spin by industry cheerleaders ("Brookline/Back Bay/Wellesley is different!") will continue to muddy the waters through 2008, but don't be fooled. That's if oil stays under $150. If it breaks out to the upside, it'll be free mcmansions and SUVs for everyone, not that we want em.
The dollar's the wild card. If inflation takes off (more than it has), we'll all wish we'd financed $500K for 6% at the peak in 2005. But then all bets are off anyhow.
This view is not out of keeping with those of Nobel economist Joseph Stiglitz. (See also Paul Volcker, Robert Shiller, Dean Baker, Paul Krugman, Nouriel Roubini, etc, etc).
The bouncing along the bottom was more like '88 - '95, and the run up in prices from '84 - '87 saw almost DOUBLE the rates of appreciation that we saw from '99 - '03, if all things stayed constant compared to 80's and 90's, logically speaking the bouncing along the bottom should take half the time before prices catch up ... roughly 4 years.
The market peaked in late '05.