Fed

"By neglecting the critical role that housing plays in U.S.
recessions, our Federal Reserve has let our recessions be more frequent
and more severe then they need to be," said Leamer. "In particular, the
subprime mortgage crisis is a direct consequence of short-term interest
rates held too low for too long by the Fed."

Leamer examines statistics back to World War II to highlight how
weaknesses in housing and consumer durables make significant
contributions to economic recessions.

More from his paper: "The historical record strongly suggests that
in 2003 and 2004 we poured the foundation for a recession in 2007 or
2008 led by a collapse in housing we are currently experiencing. Only
twice have we had this kind of housing collapse without a recession, in
1951 and in 1967, and both times the Department of Defense came to the
rescue, because of the Korean War and the Vietnam War. We don’t want
that kind of rescue this time, do we?"

Related Articles

Real time “comps”

Link to recent press post Inman re "real time real estate."

Instead of developing a "CMA" type of report that describes sold data, I’ve
been using the "pending date" instead of the sold date.

 
Reason?  The market is changing so much on a daily or monthly basis,
that considering "comps" may not be as accurate if the sold date is used, as
much as using the "pending date."  If you develop a list of 6 houses that
sold in August to compare those sales with an offer you’re making today, then
what if the market has been in a decline since March?  How much of a value
difference may there be from properties that went pending in the spring,
compared to a property on the market now?
 
Some, if not all of those 6 "comps" could have sold last spring.  As
we know, listing agents and appraisers will often use the "comps" that best fit
the subject being appraised rather than an objective assessment of the sales
data.
 
So, next time you structure some type of analysis, why not use "pending
dates" instead of "sold dates" to make any comparison to a subject property
you’re trying to negotiate for on behalf of your buyer clients?
 
I suggested this to one of the "honest" appraises we typically use
here…he said he’s only using month old "comps" because there is an ongoing
decline in values here.

Asking prices drop by nearly 15% in 16 suburban Boston towns

Price_reducedHomeowners in Greater Boston and elsewhere continue to expect "big real estate gains" despite a stunning revelation this week: "asking prices in 16 MetroWest towns have dropped by nearly 15 percent" since August, according to MLS statistics.  "All good things come to an end," economist and housing guru Karl Case told real estate reporter, Sue Brickman of the Weston Town Crier.  Commenting on "a spreading inventory problem" and "a sea change on the demand side which we have been expecting for a long time," Case predicted that "prices are going to fall back to a justifiable level, because people are running out of gas (interest)."  Noting that current price reductions will not show up in industry statistics for some time, Case was guarded — but cautious — in his assessment of the market:

"We’ll see some softness for a while, but I don’t see a collapse. But I say that not with a hell of a lot of conviction." 

US Housing markets entering sustained decline?

Using market trends detailed in an article in the Boston Globe today entitled, US Housing market seen declining in 2006, economist Michael
Bazdarich concluded:

"…we believe housing is due for a sustained decline…  The remaining questions are
how hard the fall will be and when it will begin." 

Take a look at The Real Estate Cafe’s graph of 32,000 expired listings in Massachusetts below, then let us know if you think the decline has already begun and how far prices will fall.  If you are housing hunting now in Greater Boston, what kind of price reductions are you seeing and do you agree that the "holiday season is an ideal time to buy?"

Wall Street “spooked” by falling housing index

Brainstorming about user generated content / video contest:
Haunted by the Housing Market

The Real Estate Cafe has maintained an excel spreadsheet comparing
housing market conditions from 2000 to 2007.  The original version was
prepared for Halloween 2002, and resulted in a slideshow called,
"Haunted by the Housing Market."

As Halloween approaches this year, and NPR reported yesterday that Wall Street was "spooked
by a sharp drop in housing prices," we are thinking about sharing the
spreadsheet and inviting others to update the "Haunted by the Housing
Market" slideshow.

Better yet, what would it take to create a contest with different categories for user-generated content, like "Funniest Housing Bubble Video," "Best slideshow attached to an offer" (samples available),
etc.?  We’re open to putting our content on the web so others can
"mash-up" images, statistics, quotes (both audio and text), etc.

Any good models and potential sponsors out there?

Cross-post:  "Haunted by the Housing Market" originally mentioned as comment in this blog post:
Wait 2.0:  Negative cycle creating marginal or mega-savings for patient homebuyers?

Use the following quotes to launch "Haunted by the Housing Market."

NPR:  The closely watched S&P Case-Schiller housing index earlier this week spooked Wall Street when it showed a sharp drop in home prices — down more than 3 percent in the second quarter alone. 

Karl Case, a housing economist who helped develop the 20-year-old index, says it’s the largest price decline since the inception of the index.

Economists expect total declines of about 10 percent throughout many parts of the country — and up to 25 percent in some of the formerly hottest markets.

Will expired listings surpass 2003?

Originally posted to Harvard Law School blog: 1/28/04:

My goal is to develop a forum for real estate consumers, particularly home buyers, to post comments about what is really happening in their local housing markets. Despite the Boston Globe’s headline yesterday, stating that 2003 set a record for existing home sales in Massachusetts, 2003 also so the highest number of expired listings since 1998.

During the last 90 days of 2003, approximately 12,000 listings expired or were canceled. This represents approximately 40% of the homes on the market in Sept 2003, and totals approximately $5 billion in listings.

What does this mean for ordinary consumers? The housing market is not as "hot" as the press is reporting, and expectations that prices will continue to rise at approximately 10% per year in 2004 could result in thousands of buyers overpaying for properties.

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