Yesterday, the Massachusetts Association of Realtors
(MAR) released their Existing Home Sales Report for September 2007
showing a slight bump in the road for president Doug Azarian’s purported two month long winning streak of increasing home sales.
In fact, MAR reports that in September, single family home sales plummeted 13.7%
as compared to September 2006 with a median price decline of 0.3%.
Along with MARs release, Azarian blames the media coverage of the mortgage-credit crisis for keeping buyers on the sidelines while he simultaneously attempts to goad potential buyers by invoking the “for credit-worthy buyers now is a really good time to buy” jargon.
“it is definitely possible that all the reports about foreclosures, lack of financing, and the like have taken their toll and the result is that buyers are waiting on the sidelines. However, despite the disappointing news, interest rates are still low and for credit-worthy buyers now is a really good time to buy.”
Although I just love the addition of “for credit-worthy buyers” to that tired old line, I can’t say the same for the quality of MARs numbers.
As usual, The Warren Group’s latest figures
were significantly different than that of MARs showing single family home sales down 18.7%
and a median price decline of 4.4%
as compared to September of 2006.
Whereas last month I speculated
that we were at a crossroads of perception and information, I believe with September’s results we have firmly crossed over to the new reality of virtually non-existent (or ridiculously costly and inaccessible… take your pick) Jumbo and No-Doc loans.
We are now clearly seeing the results of the credit-mortgage crisis on home sales resulting in a new leg down that is not likely to recover anytime soon.
I now feel firmly that the next few monthly results of the S&P/Case-Shiller index for Boston
will show renewed price declines indicating that as the mortgage-credit crisis unwinds, out area is not immune.
To better illustrate the drop-off in home prices and the potential length and depth of the current housing decline, I have compared BOTH the year-over-year and peak percentage changes to the S&P/Case-Shiller home price index for Boston (BOXR) from the 80s-90s housing bust to today’s bust (ultra-hat tip to the great Massachusetts Housing Blog
for the concept).
The “year-over-year” chart compares the percentage change, on a year-over-year basis, to the BOXR from the last positive value through the decline to the first positive value at the end of the decline.
In this way, this chart captures only the months that showed monthly “annual declines” and as we can see, if history is to be a guide, we could be about one third of the way through the annual price declines with the majority of falling prices yet to come.
The “peak” chart compares the percentage change, comparing monthly BOXR values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.
In this way, this chart captures ALL months of the downturn from the peak to trough to peak again.
As you can see the last downturn lasted 105 months (almost 9 years) peak to peak including 34 months of annual price declines during the heart of the downturn.
Notice that peak declines have been more significant to date and, keeping in mind that our current run-up was many times more magnificent than the 80s-90s run-up, it is not inconceivable that current decline will run deeper and last longer.
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.September’s Key Statistics (according to MAR)
- Single family sales declined 13.7% as compared to September 2006
- Single family median price decreased 0.3% as compared to September 2006
- Condo sales declined 13.0% as compared to September 2006
- Condo median price increased 1.9% as compared to September 2006
- The number of months supply of single family homes stands at 12.1 months.
- The number of months supply of condos stands at 12.1 months.
- The average “days on market” for single family homes stands at 129 days.
- The average “days on market” for condos stands at 135 days.
Labels: Doug Azarian, economy recession, Federal Reserve, housing bubble, interest rates, jumbo loan, massachusetts