Paper Economy - A US Real Estate Bubble Blog: Crashachusetts Existing Home Sales: April 2007

Saturday, May 26, 2007

Crashachusetts Existing Home Sales: April 2007

This week, the Massachusetts Association of Realtors (MAR) released their Existing Home Sales Report for April 2007 showing further weakness to the regions residential housing market.

Along with the release, MAR President Doug Azarian continued to maintain an optimistic outlook on the trend.

“The housing market continued to trend in a positive direction for the month of April … While the number of detached single-family homes sold was down, the 1.7 percent decrease year-to-year was the lowest we’ve seen in the month of April for the past three years. … With inventory levels decreasing and interest rates still low, demand should continue to keep prices stable through the end of the spring home buying season,”

Probably the most notable data-point of the report is the continued increase of the average “days on the market” resulting in an increasing monthly supply.

Although the total residential inventory is lower now than in April of 2006, the sales pace is continuing to slow.

It’s important to remember that we are again seeing year-over-year sales declines “on the back” of last years historic sales drop-off indicating truly fundamental weakness.

This is inevitably resulting in climbing inventories that for some towns, such as Concord, are exceeding last years levels while many other towns continue to simply trend upward.

Use the PaperMoney Inventory Tracker to follow your town’s daily inventory as well as visualize the inventory changes that have occurred over the last year.

As in months past, be on the lookout for the inflation adjusted charts produced by BostonBubble.com for an even more accurate "real" view of the current market trend.

April’s Key Statistics:

Single family sales declined 3.5% from March and declined 1.7% as compared to April 2006
Single family median price increased 0.3% from March and declined 2.3% as compared to April 2006
Condo sales declined 0.7% from March and increased 0.7% as compared to April 2006
Condo Median Price declined 1.6% from February and increased 2.6% as compared to April 2006
The number of months supply of residential properties stands at 10.0 months.
The average “days on market” for single family homes stands at 150 days.
The average “days on market” for condos stands at 143 days.

Labels: Bernanke, bubble, economy recession, Federal Reserve, Greenspan, home sales, housing bubble, housing bubble realtor real estate, mortgage, recession economy, sub-prime, sub-prime lenders, subprime

2 Comments:

I love this webpage! I'm am totally with everyone on the current housing situation and am willing to lead the revolt.

I sent an email to Lawrence Yun, the National Association of Realtors Senior Economist, who is one of the people the NAR uses to mislead the public. I used many points from this thread to state my case:

Dear Dr. Yun,

Thank you for taking the time to read my letter. I would like to present the potential homebuyers view of how WE see the market. I can appreciate your optimism regarding the impending future of home sales by anticipating a rebound in sales by the last quarter of 2007. As a potential home buyer, I also share an optimism that the prices will correct themselves to pre-boom levels. I’m not alone in this belief.

I have been watching the market closely since the housing boom. The NAR seems to justify the housing slump by blaming the tightening of lending standards, the weather, bad press, etc, without considering the possibility that the housing market is severely overpriced.

I recently spoke with a Realtor who tried to justify why houses were still selling higher than Just Market Value (the price that a house should sell in a competitive market). She told me I should compare the selling prices of houses in the areas I'm looking that have sold within the past 6 months to get an idea of what to expect to pay for a house in that neighborhood.

I tried comparing a few local areas of interest in the Riverview/Brandon area and there are only a few that are starting to compare at Just Market Value, which is too high to begin with, in my opinion.

You’ve also alluded to encouraging factors, such as wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months. Similar to trying to “comp” a house within the last 6 months, the 24 month job statistic doesn’t hold water, especially after unemployment benefits rose by 311,000 last week. 24 months ago, there was still a housing boom, yet you used favorable numbers to justify your stance.

As consumers, we notice the little things. The headline for Thursday was “New Home Sales Soar”. Of course, the Commerce Department didn't mention how the sales have dropped 10.9% from a year ago and how the numbers from a year ago were bad to begin with.

It would be interesting to see a demographic regarding the level of education of potential home buyers. My wife and I both have Master’s degrees and are willing to do the infinite research required to determine the right time to buy a house. Now is not that time. Despite our education, we earn less than $100k per year combined and cannot afford to spend over a quarter million on a house. As you know, it’s much cheaper to rent until the existing home sales fall to acceptable levels.

You recently mentioned, "The existing market is generally much more stable, while new homes are a little more pricey," Now that new homes are dropping their prices, existing homes will have to follow suit. I would much rather buy an existing home versus a new home, but the new home prices are beginning to make it very tempting to consider, especially with many new homes having upgrades and warranties.

NEWSFLASH!!! Until the seller’s “greatly inflated perception of what their home is worth” becomes more realistic, the housing slump will continue for a long time and time is on the buyer’s side. You may justify the decline in the housing market any way you’d like to Dr. Yun, but the bottom line in today’s market is price.

I recently read an article that stated, "The under-pricing game is now over. You are free to bid far lower than the asking price. You might be pleasantly surprised to find out how desperate the sellers are."

In contrast, we were told by our realtor that we should not underbid because it may insult the seller. I'm insulted by the sellers that are still trying to get June 2005 prices on a house when it's supposedly a buyer's market!!!

The rules have changed. One cannot compare prices in an area within the last 6 months, because the most recent month is the most telling statement of what a house is worth in that particular area. And each month, that number continues to drop.

There's no sign in the near future that this will end anytime soon. Economist Gary Shilling forecasts a drop of 40 to 50 percent in home prices in overpriced areas such as CA and FL. While that may not be good news for the realty business, it's wonderful news for us. This downward spiral is predicted to last at least 5 to 10 years, similar to previous housing slumps.

I don’t expect a drop of “40 to 50 percent” but I do anticipate around 30 percent. If you “took 150 steps forward”, how many steps back would a 30% decrease be? (EDITED NOTE: this was a reference to Yun's article "Making a Correction" on the NAR webpage in which Yun stated there was a "150 percent price increase during the boom. Let’s see, that is 150 steps forward and 12 steps backwards (in reference to the small decline in existing home prices)." Yun is minimalizing the price decrease and justifying the post-boom prices. Here's the link: NAR: Research: Real Estate Insights: Chief Economist's Commentary )

My wife and I are in no hurry to buy an over-priced house, especially when prices are continuing to fall while the market is over-flooded with unsold houses. There will be plenty of opportunity to buy a house at a fair price for many years to come.

The NAR must surely realize the grave possibility of a recession, led by slumping home sales. That’s why you HAVE to be an optimist. The NAR doesn’t want to be the reason why the country went into a recession. The hole has been dug by greed, and is getting deeper. They say there’s a sucker in every game. If you don’t know who the sucker is, then it’s you.

It’s not me in the housing game, despite every Realtor trying to tell me, “Now’s the time to buy!!!” This will be their last chance, for a long time, for them to make the hefty commission on an over-priced home. They also have sales quotas and goals to achieve. Of course, in their mind, now is the time to buy. Have you ever heard a Realtor say, “Now ISN”T the time to buy”?

I sincerely respect your optimism, as I am sure you can empathize with my optimism as well. Perhaps each person’s expectations will meet somewhere in the middle, although neither one of us is hoping for that to happen.

I’d appreciate your thoughts or comments on this letter.

Sincerely,

XXXX XXXXXXX
Potential Homeowner

If Dr. Yun responds to my email, I'll post that as well.

By nychiefsfan, at 8:22 AM
The new homes drop in price by over 10 percent and they get 120,000 sales more than expected. The existing homes drop in price by 0.8 percent and they get 140,000 sales less than expected. Gee do you think that some shoppers switched stores thanks to the discounting?

By Anonymous, at 9:13 PM