Monthly Archives: March 2006

Inflation-adjusted price declines since Sept 2005 in MA

Yoy_bostonbubble_0206_1

BostonBubble.com has done an extraordinary analysis of single
family home sales in Massachusetts that ought to be mandatory reading
for any homebuyer making an offer this Spring.  Thanks for their
permission to reprint the graph above and pull quotes below from their full post, "Boston Bubble Report: What’s Really Going on in MA- Feb 2006":

"It turns out that Massachusetts real estate has seen year over year
price declines every single month between September 2005 and February
2006 inclusive. While the Massachusetts Association of Realtors
officially states that February 2006 was the first time in several
years that there have been year over year declines, that is only true
in nominal terms. Seasonally adjusted values have been declining for
half a year now in real terms."

The MIT graduate behind BostonBubble.com is one of the bloggers who
participates in our monthly Bubble Hour to review housing statistics as
soon as they are released by the Massachusetts Association of
Realtors.  Please let us know if you would like to participate in those
Bubble Hours, online or in-person by emailing RECafe@mac.com.
In the meantime, your comments are welcome below or on the BostonBubble
forum
where you’ll find another remarkable graph and more insights into why
"real prices are down 11.44% from their peak. This is in contrast with
the 9.48% that the MAR is reporting."

Posted in Bubble Hour, Market trends, Real Estate Bubble, Timing the market

Soaring inventory signals of “Wisdom of Crowds?”

From "The Wisdom of Crowds”:

“During a true bubble,
price and value lose all connection. Prices rise because people expect
them to keep rising. At least they do until the moment when they don’t.
Then comes the stampede for the exits.”

Posted in Uncategorized

Real estate in MA may be stabilizing?

http://www.boston.com/business/articles/2006/03/24/real_estate_market_in_state_may_be_stabilizing/

Posted in Uncategorized

Pay no attention to that 9.5% decline in median prices

Askingprices_globe1_3The Massachusetts Association of Realtors (MAR) released their official February housing statistics yesterday; and once again, a number of leading bubble bloggers in Boston hosted an online chat to make sense of the Realtor-speak.

Help me with this puzzler from MAR’s housing report:

"Predictions of steep price declines in home values made this past fall remain largely unfounded. While the current median price is 9.5 percent below the record high monthly median of $375,000 set in July and August 2005, today’s prices largely reflect healthier inventory levels, which has eased upward pressure on prices, rather than plunging property values."

Median prices dropping nearly 10% in six months?  Sounds like a pretty steep decline to me, how about you?  As always, comments are welcome below, or on own blog readers line 617-876-2117 for possible use in a future podcast.

Posted in Bubble Hour, Market trends, Price trends, Real Estate Bubble, Timing the market

UK’s Telegraph: No mercy now, no bail-out later

Tough talk from overseas: No mercy now, no bail-out later:

Whatever his inner doubts, Mr Bernanke seems bent on pushing full steam ahead with interest rate rises, and damn the torpedoes.

In
a speech to the Economic Club of New York this week, he said he would
not let a faltering housing market deter him from the necessary action
to wring inflation out of the system.

"There may
be in the future some stress in some areas, but broadly speaking I
think that consumer finances are enough to keep the economy at or close
to its potential output growth rates," he said. "The increase in
mortgage debt may not be a particularly serious problem."

Fellow governor Donald Kohn hammered
home the Fed’s hawkish strategy in blunter language during a speech in
Frankfurt. "If real estate prices begin to erode, homeowners should not
expect to see all of the gains of recent years preserved by monetary
policy actions," he said.

In other words, no mercy
now, and no bail-out later, regardless of warnings by financier George
Soros that Fed tightening could combine with sliding house prices to
cause recession in 2007.

Early signs of stress are already showing
at the edges, from Iceland, to Egypt, Turkey and Hungary. However, the
American housing boom is now the mother of all bubbles – in sheer
volume, if not in degrees of speculative madness.

Mr Bernanke’s steely line is all the braver given the
disquieting data coming from the East and West Coasts. January home
sales were down 14pc year-on-year in Massachusetts, and down 24pc in
California. Prices usually follow.

The levels of
US household debt are vertiginous, rising 8.6pc in 2000 from already
dizzy heights, then again 8.6pc in 2001, 9.7pc in 2002, 11.4pc in 2003,
11.1pc in 2004 and 11.7pc in 2005.

The Fed itself
has warned that millions of punters are "in over their heads" with
100pc mortgages and zero up-front interest costs. The personal savings
rate has turned negative for the first time since the early 1930s.

As
fitting testimony to the bubble, estate agents, surveyors, and the army
of workers linked to property made up 55pc of the 2m jobs created by
the US economy from 2000 to 2005, according to Moody’s.

The rolls of the National Association of Realtors have grown from 767,000 to 1.2m in five years.

The
Americans are now drawing down 6pc of GDP from the equity in their
houses each year, much of it to pay bills or splash out on a spanking
new V-6 Chevrolet Equinox.

Goldman Sachs estimates
that 68pc of this home equity withdrawal is spent outright on
consumption. It warned that the drag on growth could reach 1.5pc of GDP
by next year if property stalls.

It is portrait of a nation that is living further beyond its means than any advanced society has ever dared before.

By
Britain’s world-beating standards, the 13pc rise in US house prices
last year (35pc in Arizona, 27pc in Florida) seems paltry stuff. But
the two markets are chalk and cheese. America has abundant land, easy
planning laws, and now a record five-month inventory of unsold homes in
sprouting suburbs across the country.

It is hard
to believe that Mr Greenspan would have stood by impassively as this –
the biggest of all his serial bubbles – began to pop.

Posted in Uncategorized

Boston “Bubble Hour” to discuss February housing statistics

The Massachusetts Association of Realtors (MAR) will announce their official February housing statistics tomorrow, Thursday March 23, 2006; and once again, a number of leading bubble bloggers in Boston invite you chat about them as soon as they are released and press coverage unfolds.

Would you believe the first "Bubble Hour"
generated 36 pages of content including over a dozen graphs submitted by a number of bloggers and savvy consumers?   If you missed that chat, the transcript and graphs of January 2006 housing statistics are accessible online but comments or questions should be posted below. 

Better yet, why not participate in our second Bubble Hour(WILL REOPEN CHAT BETWEEN 9PM AND 10PM THIS EVENING.)  Please let us know if you’d prefer to chat online or meet offline by emailing RECafe@mac.com.  Either way, you can enrich the discussion by posting your question below, or submitting them privately beforehand.  Graphs are our specialty so let us know if there is any data you’d like to see presently visually.  As before, chat participants with different perspectives — both
geographically and with respect to their opinion about the housing
bubble — are earnestly sought.  Homebuyers, sellers, professionals, and press are all welcome.

We’d be particularly delighted if someone from MAR joined us to answer questions directly, too.  After (1) single family home sales fell to their lowest volume in ten years during January and (2) year-over-year prices fell for the first time in 115 months, my guess is that MAR will say that housing rebounded in February 2006.  More evidence of a "soft landing," industry spin, or a mild winter?  We want to hear your opinion.

Posted in Bubble Hour, Market trends, Price trends, Real Estate Bubble

Housing prices not set to fall

http://www.boston.com/realestate/news/articles/2006/03/21/minehan_housing_prices_not_set_to_fall/

Posted in Uncategorized

BYOB this St. Patrick’s Day to avoid bloated real estate commissions

Following feature stories about falling real estate commissions in CNNMoney and AOL, hope St. Patrick’s Day 2006 is remembered as the year home buyers and sellers began to BYOB — Bring Your Own Brokers — and compensate them separately.  Ten mega-trends suggest that the obsolete, two-sided real estate commission may be "uncoupled" or "decoupled" in 2006, fifteen years after the Consumer Federation of America first called for that reform.  The blog post and 90 second video below explain why. 

Why pay a flat-fee listing entry service approximately $500 to list your home in the MLS, and then undermine your potential savings by offering a "traditional" full commissions to buyer agents?  If anyone is interested in experimenting with the moneysaving BYOB plan, please email us and we’ll bring the booze.  Watch for more details about our newest menu item:  wine tastings at "for sale by owner" open houses.  As always, your comments are welcome below, or recorded on our reader line for a future podcast:  617-876-2117.

Posted in Change Agents, Commission Reform, FSBO: Best Practices, RECALL: Real Estate Consumer Alliance, Unbundling the Commission

The Art of Leading Change

Posted in Change Agents

Beware the Ides of March

Beware the Ides of March:
http://astrology.about.com/od/oddstrange/a/idesmarch.htm

Posted in Uncategorized
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