Will “Last Hurrah” cause homebuyers to be “Haunted by the Housing Market?”

 

In 2002, there were early indications of a housing bubble so the Real Estate Cafe prepared the slide show above —Haunted by the Housing Market — to document why we believed housing had reached a tipping point.  Seems some heavy hitters are seeing signs again of a “significant change in direction in August” causing the chief economist for the National Association of Realtors, to say:
“…fear of rising rates hurried people into making a decision (in June),”
Today, readers of Boston.com’s real estate blog are exchanging arguments about whether recent homebuyers will regret the prices they paid during the past two quarters.   Out of frustration, one asked, “Is there ever been a good time to buy?”  Here are some flashbacks from the past decade to help individual homebuyers answer that question.  To exchange perspectives with other potential buyers, we’re hosting our next “Bubble Hour,” Tuesday, October 8, 2013 and invite you to participate online or in person.  Contact us directly for more details on that event, or to help update our slideshow before Halloween 2013!

FLASHBACK:  Excerpts from selected Real Estate Cafe blog posts

August 19th, 2006

Reading some assessments of the current Massachusetts housing market, one wonders if industry spokespersons are taking their cues from Rod Serling classic, “The Twilight Zone.”  Arguing “that prices are not declining sharply in response to falling sales,” one recently told the Boston Globe that “I’m seeing some concessions from sellers, but not a whole lot.”  Last August when the same spokesperson was asked by WBZ-AM radio talk show host Paul Sullivan if buyers were in danger of buying at the height of the market, he said no.

February 14th, 2007

Savings of $100,000 or more on individual home purchases were relatively common across the top 25 most expensive housing markets in Greater Boston in 2006, and according to one MIT professor, savings are likely to continue in 2007.  Professor William C. Wheaton predicts housing prices could decline another 20 percent in Greater Boston and other markets over the next two to three years.  Does that mean that homebuyers in the most expensive communities will see even more price reductions in each of these categories in 2007?

October 28th, 2008

Between September 26 and October 26, 2008, 372 single family homes across Massachusetts were listed in the MLS at or above $2.85 million. One in four of those homes, or 94 listings, have reduced their original asking price by $1,000 or more per day; and one in seven, or 52 listings, have reduced their original asking price by $2,000 or more per day.

What does that mean to you? If you have been patiently waiting for prices to fall, there has been a real financial benefit. In fact, 47 home buyers have effectively saved $100 per hour by waiting!

Related Articles

MIT Professor: Housing prices could decline another 20%

Savings of $100,000 or more on individual home purchases were relatively common across the top 25 most expensive housing markets in Greater Boston in 2006, and according to one MIT professor, savings are likely to continue in 2007.  Professor William C. Wheaton predicts housing prices could decline another 20 percent in Greater Boston and other markets over the next two to three years.  Does that mean that homebuyers in the most expensive communities will see even more price reductions in each of these categories in 2007?

PARTIAL MAP of homes selling for more than $100,000 below their original asking price: (see technical note below)

As sales prices fall, well-informed sellers are could set more realistic prices so the gaps between the original asking price and final sales prices may not be as wide as those recorded in 2006.  We’ll continue to map the location of six figure savings, and invite you to do the same on The Real Estate Cafe’s award-winning interactive bubble map.  We’re so convinced that our clients will save money, we’re willing to base part of our compensation on it.  Contact us at 617-661-4046 or RECafe [at] Mac [dot] com for information on our experimental NEW fees and rebates options.

CAUTION: You are entering “The Bubble Spin Zone”

Nospinzone750x1000_1
"You’re traveling to another dimension, a dimension not only of sight and sound… but of mind. A journey into a wondrous land, whose boundaries are only that of the imagination… you’re entering… the Bubble Spin Zone."

Reading some assessments of the current Massachusetts housing market, one wonders if industry spokespersons are taking their cues from Rod Serling classic, "The Twilight Zone."  Arguing "that prices are not declining sharply in response to falling sales," one recently told the Boston Globe that "I’m seeing some concessions from sellers, but not a whole lot."  Last August when the same spokesperson was asked by WBZ-AM radio talk show host Paul Sullivan if buyers were in danger of buying at the height of the market, he said no.

So, to help inform homebuyers and protect them from overpaying in overvalued housing markets, The Real Estate Cafe has developed an interactive map to involve homebuyers (and fellow buyer agents) in the process of documenting falling housing prices, in Massachusetts and beyond.  Beyond price concessions, we are particularly interested in mapping sales below assessed value.  Would you believe that some buyer agents first began chatting privately about homes selling below appraised value this time last year?

Misleading medians understate savings opportunities for homebuyers

Surprising_bubblestats1
Posted in response to blog post entitled "Boston Housing Prices" on Boston.com’s new real estate blog, Boston Real Estate Now:

As some of your readers know, focusing on median sales prices can understate the magnitude of saving opportunities in the housing market.  Like the image above, a closer look at sales behind the housing bubble reveals some surprising findings!  If, for example, you focus on sales of single family homes in the 28 most expensive suburban communities in Greater Boston last month (Sept. 2007), these findings emerge from the MLS:

1.  Sales were down nearly one third from last year:  216 sales in 9/07 versus 300 sales in 9/06;

2.  The percent of homes selling below their assessed value, once unthinkable in Greater Boston, rose slightly from 37% in 9/06 to 40% in 9/07;

3.  Those who argue that prices are holding up in Greater Boston can point to these stats: 

3.1  Twelve listings sold for over  their original asking price or 1 in 20 listings;

3.2  Another 13 listings sold for their original asking price or 1 in 20 again;

4.  In contrast, those who argue that median statistics are misleading would point to these stats:

4.1  One in four listings, or 53 of 216 single family homes in the most expensive suburban communities, sold for at least $99,000 less than the original asking price — a trend we mapped last year;

5.  Looking just at the 86 homes which sold below their assessed value, 1 in 3 sold for at least $99,000 off;

6.  Switching from dollars saved to percent saved last month:

6.  One in three listings sold for at least 10% less than their original asking price; and worse

7.  One in ten sold for at least 17% below than their original asking price!

So, if you are a buyer, don’t be too quick to base your assessment of market value, and hence your offer, on median sales prices or market indexes which are showing modest declines.  Historically, one in five homes which go under agreement between Thanksgiving and New Years, sell for at least 10% below the original asking price.  As the statistics above reveal, price reductions are likely to be deeper and more wide spread this year.  We’ll map them on our award-winning real estate bubble map. It’s an open, interactive map so Real Estate Cafe clients can earn rebate bonuses by adding properties, too.

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.

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