Bubblicious

http://mrzine.monthlyreview.org/sandronsky190206.html

Bubblicious: Looking at the U.S. Real Estate Market

by Seth Sandronsky

Many eyes are on the U.S. real estate market.  “During the past five years, home prices have risen at an annual rate of 9.2 percent,” according to the 2006 Economic Report of the President released on February 13. Was this growth normal?  We need the historical context of home price increases to answer this question.

The media coverage of the report sidestepped the historical context altogether.  For the relevant historical data on recent home prices, we turn to economist Dean Baker, co-director of the Center for Economic and Policy Research in Washington, DC.

“Through the post-war period 1950 to 1995, house prices grew at approximately the same rate as the prices of other goods and services,” Baker wrote last July.

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Industry’s seller bias understates risk to homebuyers

Herald_082306_1Kudos to the Boston Herald for asking "Has the Mass. housing bubble burst?" on their front page this morning.

If homebuyers focus on median sales prices, they might reach the same conclusion the Massachusetts Massachusetts Association of Realtors (MAR) did three months ago when they told the public that a "New study finds no evidence of a “housing bubble” in metro Boston."

Afterall, according to MAR’s report on existing home sales during July 2006, median single-family home prices decreased just 3.5 percent from the previous year, despite declining sales during 17 of the past 18 months.  To their credit, MAR also disclosed:  (1) that is the largest annual price decline since March 1993; (2) median sales prices have declined for six consecutive months, and (3) that is the longest slump since housing prices fell 13 straight months from March 1992 to March 1993.

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.

Bubble babble

Sign of the times or self-fulfilling prophecy?
Trendster
John Naisbitt (Megatrends, et al) used to count media mentions to track
trends. On June 10, the New York Times ran a graphic counting the
number of "major world newspaper" bubble features that had been
published in the days of May: 0 in 2001; 18 in 2002; 20 in 2003 (a
relative plateau); 35 in 2004; and more than double that to 77 in 2005
(and Fed Chief Alan Greenspan only weighed in with his "froth" concerns
on May 20). Will the babble break the brawny housing bubble? Or is it
just chit-chat chatter?
–Christina B. Farnsworth
                   
                   

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