Friday, March 13, 2009

The Arlington Artifice: January 2009

Subtitle: The Re-Medfordization of Arlington

This recurring monthly post tracks the latest results of the housing market seen in Arlington Massachusetts.

I choose Arlington as a result of the Boston Globe’s (relatively) recently published and absurdly anecdotal and ludicrous farce about the town’s “hot” housing market.

The ridiculous tone and outright mishandling of the housing data by the Boston Globe “reporter” would almost be comical if it weren’t for the fact that the Globe’s editor, Martin Baron, ALSO blundered seriously when he responded to my email about the discrepancies.

Baron attempted to justify the articles contents and in so doing, he disclosed his disgracefully poor abilities with even the most basic economic data.

I suppose this shouldn’t come as a surprise given that Baron also appears to be presiding over the final days of his sorry paper.

Why would an editor of a nationally recognized newspaper think that a single town would continue to function as an isolated bubble amongst a backdrop of the most significant nationwide housing recession since the Great Depression?

Longtime Boston area residents will note that Arlington hasn’t always had the brand recognition and loyalty it currently enjoys.

In fact, if the clock was turned back a mere 20 years, there is a good chance that many current residents would scarcely recognize the place… or more accurately… they would recognize the place as present day Medford.

You see… Arlington experienced tremendous growth during the 90s internet boom as young families sought its desirable location and outstanding (presumed…) school system.

Now though, it looks as though Arlington is, more or less, a perfect representation of a town struggling with our secular bear market economy.

Its housing market has essentially been eroding since the peak of the internet economy and not even the unusual conditions of the housing bubble could bring back the outstanding growth experienced during that era.

Further, merely peruse the latest events in the Arlington Advocate and you can see the town is now feeling the social effects of the economic downshift about as powerfully, but inversely, as it experienced the 90s-era booming economic uplift.

Increasing crime appears to now have become so notable that the town’s Police officers recently celebrated their acts of heroism revealing to the public just a small sample of the mayhem that they now deal with on a daily basis including armed gunmen, bank robberies and break-ins.

This should not be surprising.

For years Medford and Arlington were like two peas in a pod but given a sufficient supply of marginally affluent dual-income couples all with the want of the best things their credit could afford and their heads just filled with fictional stories of better school systems and the like, the two towns parted ways with sharp economic divisions being draw between their boarders (much to the chagrin of the sorry West-Medforites... but that's another story altogether!).

Now though, a relative re-balancing of sorts is taking place and although Medford will likely continue its slide into economic malaise with widespread foreclosure activity and all its associated fallout, Arlington is playing catch-up and fast.

With the economy headed into likely the worst recessionary years of the post-WWII period, it will be interesting to watch how this firmly middle class suburban town copes.

In January, there was a slight bump up in single family home sales with six more homes trading hands compared to January 2008 while the median selling price remained flat at $475,250.

It’s important to remember that the median selling price is derived from taking the middle sale of the collection of all home sales in a certain period.

In this way, more sales will generally result in a more accurate (compared to other home value measures) median reading.

Therefore, until there are a sufficient number of sales for the year, the median will tend to jump wildly around.

The following chart (click for much larger version) shows a history of Arlington’s January median sales price since 1988 along with the annual outcome.

The next chart (click for much larger version) shows that annual home sales in Arlington have fluctuated in a range between 233 and 381 over the last 21 years with the peak selling year being 1998.

The final chart shows how the year-to-date median sales price and combined sale count for Arlington, Bedford, Belmont, Cambridge and Lexington have changed since 1988.

All towns registered modesty lower to exceptionally low sales and all showed declining median selling prices compared to last year.