Yesterday, the Massachusetts Association of Realtors (MAR) released their Existing Home Sales Report for July again showing a continued deterioration of the regions residential housing market.As was noted last month, with July comes the start of the seasonal deceleration in single family home sales that will generally continue through the Fall before concluding the following February.
With this drop-off will come additional pricing pressure as sellers compete for the scanty remains of the 2008 selling season.
With the report the Massachusetts Realtor leader Susan Renfrew attempts to backpedal from the ridiculous and overly optimistic sentiment spun last month.
“While there has been some positive change in the fact that sales declines narrowed in July compared to other months this year, the economy continues to keep some buyers out of the market,”
MAR reports that in July, single family home sales slumped 10.0% as compared to July 2007 with a 7.0% decline in inventory translating to 8.8 months of supply and a median selling price decline of 10.7% while condo sales dropped 6.7% with a 13.0% decline in inventory translating to 8.0 months of supply and a median selling price decline of 2.9%.
The S&P/Case-Shiller Home Price Index for Boston, which is the most accurate indicator of the true price movement for single family homes, showed continued weakness with Boston declining 5.24% as compared to July 2007 leaving prices now 11.03% below the peak set in September 2005.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 normalized price movement 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.
The “normalized” chart compares the normalized Boston price index from the peak of the 80s-90s bust to the peak of today’s bust.Notice that during the 80s-90s bust prices took roughly 46 months (3.8 years) to bottom out.
The “peak” chart compares the percentage change, comparing monthly Boston index 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.
The final chart shows that the Boston housing market has been, in a sense, declining steadily since early 2001 when annual home price appreciation peaked and the intensity of the housing expansion began to wane (click on following chart for larger version).
It appears that that the main thrust of the housing expansion occurred “in-line” with the wider economic expansion that was fueled primarily by the dot-com bubble and that since the dot-com bust, the housing market has never been quite the same.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 home price movement.
July’s key MAR statistics:
- Single family sales declined 10.0% as compared to July 2007
- Single family median price decreased 10.7% as compared to July 2007
- Condo sales declined 6.7% as compared to July 2007
- Condo median price decline of 2.9% as compared to July 2007
- The number of months supply of single family homes stands at 8.8 months.
- The number of months supply of condos stands at 8.0 months.
- The average “days on market” for single family homes stands at 129 days.
- The average “days on market” for condos stands at 139 days.
