S&P/Case-Shiller: January 2009

Today’s release of the S&P/Case-Shiller home price indices for January 2009 again confirms a worsening of deterioration seen in the nation’s housing markets with ALL of the 20 metro areas tracked reporting significant year-over-year declines and ALL metro areas showing large and even shocking declines from their respective peaks.

Further, there continues to be a notable re-acceleration of the price slide with the 10-city index dropping 2.52% and the 20-city index dropping 2.76% just since last month.

In all likelihood, we are now firmly sliding down an even more momentous slope of home price declines as the continued economic crisis and dramatically accelerating unemployment work to both crush consumer sentiment and force panicked mortgage lenders to continue to tighten their lending standards.

As the housing decline enters the year of the “Prime-Bomb” a larger and much more damaging population of homeowners will face historic levels of financial stress the outcome of which is, at the moment, very hard to calculate.

The 10-city composite index declined a record 19.40% as compared to January 2008 far surpassing the all prior year-over-year decline records firmly placing the current decline in uncharted territory in terms of relative intensity.

Topping the list of regional peak decliners were Phoenix at -48.50%, Las Vegas at -46.49%, Miami at -43.38%, San Francisco at -43.06%, San Diego at -40.78%, Los Angeles at -39.21%, Detroit at -38.95%, Tampa at -37.33%, Washington DC at -31.51%, Minneapolis at -29.77%, Chicago at -22.42%, Seattle at -19.72% and Boston at -17.39%.

Additionally, both of the broad composite indices showed significant declines slumping -30.16% for the 10-city national index and 29.11% for the 20-city national index on a peak comparison basis.

To better visualize the results use the PaperEconomy S&P/Case-Shiller/Futures Charting Tool as well as the PaperEconomy Home Value Calculator and be sure to read the Tutorial in order to best understand how best to utilize the tool.

The following chart (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as compared to each metros respective price peak set between 2005 and 2007.

The following chart (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as on a year-over-year basis.

Additionally, in order to add some historical context to the perspective, I updated my “then and now” CSI charts that compare our current circumstances to the data seen during 90s housing decline.

To create the following annual charts I simply aligned the CSI data from the last month of positive year-over-year gains for both the current decline and the 90s housing bust and plotted the data with side-by-side columns (click for larger version).

What’s most interesting about this particular comparison is that it highlights both how young the current housing decline is and clearly shows that the latest bust has surpassed the prior bust in terms of intensity.

Looking at the actual index values normalized and compared from the respective peaks, you can see that we are still likely less than half of the way through the portion of the decline in which will be seen fairly significant annual declines (click the following chart for larger version).

The “peak” chart compares the percentage change, comparing monthly CSI 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 97 months (over 8 years) peak to peak including roughly 43 months of annual price declines during the heart of the downturn.

Notice that peak declines have been FAR 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.

Crashachusetts Existing Home Sales and Prices: February 2009

Today, the Massachusetts Association of Realtors (MAR) released their Existing Home Sales Report for February showing that single family home sales declined significantly dropping 11.42% on a year-over-year basis while condo sales dropped 16.4% over the same period firmly indicating that the new leg down for the housing market is continuing.

Further, the single family median home value declined a whopping 18.5% on a year-over-year basis to $252,500 while condo median prices dropped 15.4% to $213,250.

Clearly, the impact of the recent stock market crash (that keeps on crashing) and ongoing economic crisis is bearing down on both consumer sentiment and, more fundamentally, credit availability resulting in a significant pullback in spending on homes and other costly purchases.

It’s perfectly clear now that home sellers that choose to wait out the “down market” did so in vain as the 2008 selling season marked likely the last opportunity to sell any residential property at anywhere near the prices set in the peak boom years.

With confidence depressed and eroding and sale volumes this low, Boston area home prices have nowhere left to go but down.

Of course, the new Massachusetts Association of Realtor president Gary Rogers strikes a more hopeful tone while embracing government handouts for his industry:

“We continue to be hopeful that sales will increase in the coming months as buyers take advantage of the combination of low prices, low interest rates and the $8,000 federal first-time homebuyer tax credit that expires on December 1, 2009,”

It’s important to keep the following points in mind when considering the impact of the homebuyer tax credit legislation:

• The credit is for “first time” home buyers only… if you have had ownership interest in any home (including condos) anytime in the last three years you are NOT eligible.
• The credit has income restrictions of $75,000 for individuals and $150,000 for married couples filing jointly.
• The credit can only be used for principle residence.
• The credit cannot be applied to the downpayment.

So this is really a very limited program which will very likely NOT result in any noticeable increase in demand in our area.

MAR reports that in February, single family home sales declined 11.42% as compared to February 2008 with a 16% decline in inventory translating to 15.4 months of supply and a median selling price decline of 18.5% while condo sales dropped 16.4% with an 24% decline in inventory translating to 16.0 months of supply and a median selling price decline of 15.4%.



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.

February’s key MAR statistics:

• Single family sales declined 11.42% as compared to February 2008
• Single family median selling price decreased 18.5% as compared to February 2008
• Condo sales declined 16.4% as compared to February 2008
• Condo median price declined 15.4% as compared to February 2008
• The number of months supply of single family homes stands at 15.4 months.
• The number of months supply of condos stands at 16.0 months.
• The average “days on market” for single family homes stands at 153 days.
• The average “days on market” for condos stands at 187 days.

Beantown Bust: Boston CSI and RPX November 2008

The S&P/Case-Shiller (CSI) Home Price index together with the Radar Logic (RPX) for Boston represent the most accurate indicators of the true price movement for both single family homes and the entire residential real estate market as a whole (singles, multi and condos).

For November, both the CSI and RPX showed continued weakness with the CSI declining 7.38% on a year-over-year basis while the RPX dropped 16.58% over the same period.

Further, both reports indicate that area home prices have suffered significant peak declines with the Boston CSI showing a decline of 15.03% since the peak set in September 2005 while the Boston RPX shows a 29.59% price decline since its peak of June 2005.

Recently S&P introduced a new line of data series that specifically track condominium prices in five select markets including Boston which showed that in November Boston condo prices declined 5.07% on a year-over-year basis (see chart below).

It’s important to note that all measures are derived from sales data transacted in November (actually an average of prior three months ending in November) which generally includes many properties that went under agreement in September, well in advance of the historic stock market collapse and wider macroeconomic declines that have since sent consumer sentiment to all time lows.

In all likelihood the dramatic declines to consumer confidence and increases in unemployment will work to place significant downward pressure on property prices for the foreseeable future.

As you can see from the chart below (click for larger), although the RPX captures a greater degree of seasonality, both series are very strongly correlated.

The November results confirm that the typical seasonal pattern is firmly in place as all indices head lower on a downward trend that generally bottoms in mid-winter.


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, annual and peak percentage changes to the Boston CSI home price index 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 “annual” chart compares the percentage change, on a year-over-year basis, to the Boston CSI 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”.

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.

Existing Home Sales Report: December 2008

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for December continues to indicate a new leg down in home sales despite the significant slide to median selling prices fueling a slight sales snap back from November as well as speculative distressed property buying in the west region.

Most importantly, the report continues to show stunning declines to the median selling price for both single family homes and condos across virtually every region.

The NAR leadership continues their shameless spin while simultaneously turning to the new Obama administration for a handout as Lawrence Yun notes:

“We’ve added 25 million people to our population over the past decade and housing affordability conditions are the best we’ve seen since 1973, but household formation is much lower than expected, … Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable home buyer tax credit. The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery.”

The following (click for larger versions) are charts showing sales for single family homes, plotted monthly, for 2006, 2007 and 2008 as well as national existing home inventory and month supply.







Below is a chart consolidating all the year-over-year changes reported by NAR in their most recent report.

Pending Home Sales: July 2008

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for July showing that the peak sales month for the year was, as usual, set in June and that starting with July’s 6.4% year-over-year decline, sales will likely trend down for the remainder of the year.

As the decline in demand for residential housing slumps through its third year, it’s important to consider the significance of the extent of the decline.

It is very likely that we are now seeing the spiraling feedback effect of sharply declining prices and both the palpable sense and actual effects of recession and higher energy prices all working to depress buyer confidence thereby causing continued declines in housing demand.

As usual, NAR Senior Economist Laurence Yun continues his self-interested spin foolishly insinuating that sales will be flat for the long term and blaming Fannie and Freddie for the lack of buyer enthusiasm.

“Pending home sales are oscillating month-to-month, with the long-term trend essentially flat, … Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings.”

So much for the “momentum carrying into 2009” … Sorry Laurence… home sales will now decline through to December… but you knew that all along.

The following chart shows the national pending homes sales index since 2005 compared monthly. Notice that each year, the months value is decreasing consistently (click for larger version).

The following chart shows the national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Note that in the above charts, I had to use the Not Seasonally Adjusted (NSA) data series as NAR changed the methodology for their Seasonally Adjusted (SA) series a while back and never republished the numbers.

Look at July’s seasonally adjusted pending home sales results and draw your own conclusion:

• Nationally the index was down 6.4% as compared to July 2007.
• The Northeast region was down 13.2% as compared to July 2007.
• The Midwest region was down 2.4% as compared to July 2007.
• The South region was down 13.4% as compared to July 2007.
• The West region was up 8.6% as compared to July 2007.

Realtor’s New Reality: Existing Home Sales Q1 2008

Yesterday, the National Association of Realtors (NAR) released their existing home sales report for the first quarter of 2008 showing, in truly stark terms, the tremendously broad nature of the housing downturn.

Single family home sales, on a year-over-year basis, are now falling in every state except for Indiana, Alaska and New Jersey (see chart below and click for larger version and note that NH doesn’t report sales data).

Worse yet, Q1 2008 home sales on an annualized basis compared to peak home sales set between 2005 and 2007 showed significant declining home sales in virtually every state (see chart below and click for larger version) except for Alaska and Indiana.

As for median selling prices, the NAR’s data (see chart below) also shows truly tremendous and widespread weakness among the statistical regions they track with virtually EVERY (147 of the 157 NAR tracks … some of the remaining 10 declined but didn’t report enough data for prior years to be included in a peak comparison) metro region showing significant declines from their respective peaks set between 2005 and 2007 and MOST (99 of the 147) metro regions showing declines as compared to Q1 2007.


Given that the majority of price declines have just begun to show in 2007, look for this price chart to continue to deteriorate in coming quarters.

Also, keep in mind that the NAR data only includes sales for MLS listed properties and given this limitation, the S&P/Case-Shiller index for each respective major metro should be considered a far more accurate price reference.

Amazingly, even given the obvious completeness of the housing downturn shown by their own data, the NAR officials are terming the results “Unusual” with their president, Richard Gaylord, blatantly continues the Realtor tradition of shameless self interested spin.

“It’s more important than ever to examine what’s happening with home prices at the city and neighborhood level, … The old real estate mantra of ‘location, location, location’ is perhaps more relevant today than ever before. Consumers should check with REALTORS® for local expertise on what’s going on in their own area because conditions can vary considerably from one neighborhood to the next.”

Crashachusetts Existing Home Sales and Prices: February 2008

Today, the Massachusetts Association of Realtors (MAR) released their Existing Home Sales Report for February 2008 and simultaneously Standard & Poor’s released their Case-Shiller Home Price Index for January 2008 both showing, perfectly clearly, the truly dire circumstances that have now befallen the Bay State’s housing market.

Whether it was a slow depression brought about by over two solid years of steadily declining home sales and prices, the credit crunch, a looming recession, a palpable increase in inflation of necessities like food and fuel or just simply a change in attitudes toward the notion of a house as a vehicle for wealth, the regions housing markets have now hit a dangerous tipping point (particularly for fancy south end condos... see BostonBubble.com for more).

It appears that we have entered the “price freefall” phase of the housing decline where mounting inventory, declining sales, and negative sentiment all combine to result in plunging home prices which, quite possibly, may continue to decline substantially even through the spring and summer months which are typically strong periods in any selling season.

The Massachusetts Realtor leader Susan Renfrew, apparently left a bit speechless by poor results, could only muster a weak one-liner before degenerating into a robotic regurgitation of the NAR party line.

“February single-family home and condominium sales came in about where we expected them to, which was generally in line with January’s activity … The good buying opportunities that exist today, along with the recent increases in the FHA, Fannie Mae and Freddie Mac loan limits could help improve sales over the next quarter.”

MAR reports that in February, single family home sales plummeted 22.9% as compared to February 2007 with unchanged inventory translating to a truly massive 16.2 months of supply and a median selling price decline of 4.6% while condo sales plunged 34.6% with a 4.0% decrease in inventory translating to a startling 17.5 months of supply and a median selling price decrease of 6.7%.


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 accelerating prices declines (prices are falling faster) with Boston declining 3.39% as compared to January 2007 leaving prices now 10.89% 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 (ultra-hat tip to the great Massachusetts Housing Blog for the concept).


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.

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.

February’s Key MAR Statistics:

• Single family sales declined 22.9% as compared to February 2007
• Single family median price decreased 4.6% as compared to February 2007
• Condo sales declined 34.6% as compared to February 2007
• Condo median price increased 6.7% as compared to February 2007
• The number of months supply of single family homes stands at 16.2 months.
• The number of months supply of condos stands at 17.5 months.
• The average “days on market” for single family homes stands at 166 days.
• The average “days on market” for condos stands at 165 days.

NARcasting The Future: March 2008

Today, the National Association of Realtors (NAR) provided their latest estimate of annual existing home sales for 2008 leaving their prior estimates unchanged at a 4.9 million unit annual pace for the first half of the year and a 5.8 million unit annual pace for the second half of the year resulting in total year sales of 5.38 million units.

I’m fairly certain that in the coming months NAR will choose to discontinue publishing first half and second half sales pace estimates and simply go back to stating their total year sales estimate but for now I will chart all predictions.

Note that in this month’s chart I simply broke out each prediction and connected them to the 2007 year end result so as to best capture the flow of predictions.

As usual, the latest forecast comes with another dose of truly ridiculous spin.

In an effort to put their absurd bias into perspective I compiled all their existing home sales forecasts for 2007 and now 2008 into a chart along with a list of prominent quotes supplied with each forecast.


12/11/2006 Prediction: 6.40 million units.
Lereah "Most of the correction in home prices is behind us."

1/10/2007 Prediction: 6.42 million units.
Lereah "The good news is that the steady improvement in sales will support price appreciation moving forward."

2/7/2007 Prediction: 6.44 million units.
Lereah "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008."

3/13/2007 Prediction: 6.42 million units.
Lereah "Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next."

4/11/2007 Prediction: 6.34 million units.
Lereah "Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections."

4/30/2007
Lereah Leaves NAR for Move.com

5/9/2007 Prediction: 6.29 million units.
Yun "Housing activity this year will be somewhat lower than in earlier forecasts."

6/6/2007 Prediction: 6.18 million units.
Yun "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year."

7/11/2007 Prediction: 6.11 million units.
Yun "Home prices are expected to recover in 2008 with existing-home sales picking up late this year."

8/8/2007 Prediction: 6.04 million units.
Yun “With the population growing, the demand for homes isn’t going away – it’s just being delayed.”

9/11/2007 Prediction: 5.92 million units.
Yun “Patient buyers in most areas who do their homework will recognize that housing remains a good long-term investment.”

10/10/2007 Prediction: 5.78 million units.
Yun "The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."

11/13/2007 Prediction: 5.5 million units.
Yun "In some ways, the extended real estate boom from 2001 to 2005 created unrealistic expectations that housing is a short-term high-yield investment… 2007 will be the fifth best year for housing on record"

12/10/2007 Prediction: 5.67 million units in 2007, 5.7 million units in 2008.
Yun "The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007."

01/08/2008 Prediction: 5.66 million units in 2007, 5.7 million units in 2008.
Yun "A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008."

02/07/2008 Prediction: 4.9 million units in H1, 5.8 million units in H2, 5.38 million units full year.
Yun "Where builders have cut construction sharply, and in most areas with improving affordability conditions, we’ll generally see moderately higher home prices."

03/06/2008 Prediction: 4.9 million units in H1, 5.8 million units in H2, 5.38 million units full year.
Yun "Significant price declines in some local markets have sharply and quickly improved local affordability conditions, and are inducing buyers to return to the marketplace"

The Almost Daily 2¢ - Nouvelle Riche

It would be an understatement to say that since I learned of the existence of the “Nouvelle at Natick”, a luxury condo project “fused” to the revamped Natick Mall in Natick Massachusetts, I have been a bit perplexed.

In truth though, I have also been also captivated by the many details and news surrounding the project and I have followed along closely.

As you may already know from past posts concerning the project, to me the Nouvelle represents a sort of crescendo of optimism and exuberance of both the notion of American “consumer” and of the modern concepts of “homeowner” and "luxury".

How better could the euphoric sensibilities of the pre-collapse heyday be represented than through a luxury condo project, with units ranging from $439,900 to $1,599,900, that is actually attached to a newly refurbished mall some 20 miles from the nearest city center.

Add to that the fact that the town of Natick has never seen a median condo price higher than $242,000 or that over the last year only 18% of all condo sales for the town sold at or above the LOWEST priced Nouvelle unit with NO sales ever reaching the HIGHEST priced unit, or the many quietly reported details suggesting that the builder, General Growth Properties (NYSE:GGP) has been experiencing very poor, almost nonexistent, sales from the project and the picture becomes even clearer.

But before I get too downbeat and bearish let’s all remember that thankfully not everyone interprets information the same way and that there is certainly room differing opinions on both the fundamental value and personal value we place on the things we purchase.

Remember, these are “luxury” units implying that the buyers are, in a sense, both in the position to expect and desire a bit extra from their living space.

They can afford the extra expense, the space fits their need of location and lifestyle, and risk of re-pricing may simply not be a concern.

To that end, I recently contacted Michael DuGally, one of the current Nouvelle buyers quoted in the many articles (Boston Globe, NY Times, etc.) on the project and here is an excerpt from our exchange.

Keep in mind, Michael was generous enough to answer my questions even in light of the fact that this blog and blogger present some of the most pessimistic and bearish outlook on residential real estate to be found on the web and, as you can see from his responses, he is perfectly aware of the downturn in housing, its causes and its effects on the wider economy.

SoldAtTheTop: Can you describe what you perceive the total experience will be living at the Nouvelle at Natick?

Michael: Convenience. First class building, great amenities, underground parking, our primary view is the small wetlands so feels like being remote even on top of a mall. Access to both work and airport for travel is even time for us. We have our favorite Yoga studio 5 minutes away that we used to have to drive to from Everett.

SoldAtTheTop: Has the builder communicated any information to you regarding any difficulties with the project or the possibility of them leasing rather than selling units?

Michael: No, not yet.

SoldAtTheTop: If leasing the units rather than selling was to occur in the future, would that change things for you?

Michael: We would have to deal with that when the time comes. I don't think it really matters because we we're not snobs about who our neighbors are, and a college party crowd would not lease there anyway.

SoldAtTheTop: Has the builder reduced prices (or increased incentives) on any of the units and if so, are you entitled to any compensation?

Michael: Not yet from what I understand. Not sure if we would be entitled to anything.

SoldAtTheTop: Are you close with any of the other unit buyers and if so, have any others expressed any reservations about their purchases especially in light of the recent downturn to residential real estate?

Michael: Real Estate has been in a downturn for 18 months. All that is happening now is the reality of bigger impact is starting to set in. As you well know, the bubble bursting is GOOD for the economy.

Americans have become ridiculously obsessed with easy debt and deserve a reality check. You can't blame McDonald's for obesity. People make choices. It is a shame that state and federal governments are bailing out people who live beyond their means.

I don't blame the lenders. There are a miniscule handful of real victims. We have been getting easy credit card promotions in the mail for over 20 years now. Do we blame the banks because people use them and end up in bankruptcy? No.

The best thing that could happen to the larger economy is for home prices to adjust to somewhat resemble wages and for the condo "flippers" to be driven out of the market.

Nouvelle had an insane amount of people (hundreds) a couple years ago on a list who paid $1000 for the right to buy them when they went on the market.

Those were fast money flippers. Not people like us making a lifestyle living decision. I don't think you will see a single condo flipper buying at Natick. It is not an easy money investment.

SoldAtTheTop: You mentioned that this will be your primary residence... will you be selling your current property prior to moving to Nouvelle and if so, are you having or do you think that you will have any difficulty?

Michael: We have the nicest unit in our current property, and did so many unique things to it that we have actually a list of interested buyers and a couple offers already to consider.

We bought pre-construction and very early on that project, and won't lose money. We won't make the killing we thought, but that is the way real estate is.

SoldAtTheTop: What's your take on the current state and future outlook for housing and the economy?

Michael: I think we are heading for a deeper recession, but it should be a softer more gradual blow over the next 8-10 months and will be overall very good for the broader economy in 09 and 10.

The fed will continue to cut rates, but lenders will not be dropping rates as a result. Global economic growth and weakness of the dollar will help in many ways from things going totally south.

New construction and new permits will come to a standstill by this spring, which will help move the record inventory in the market.

Once that is gone, builders I think will be more prudent. This is very akin to the dot.com bubble.

We could argue we are in another bubble with Google at a multiple that would take 1000 years to justify, but largely there is rationale in valuations of tech companies versus blind faith during the bubble days. Same thing will happen with housing.

SoldAtTheTop: Is there any misinformation that has been reported about the project that you would like to correct?

Michael: The Globe (Boston Globe) did a great cover story on Natick, but it focused too much on "Living at the Mall." JC Penney, Cheesecake Factory are not what Nouvelle represents.

It’s simply a blend of city “high rise” style convenience with an urban hook. Sure, for the price we paid we could find a nice place in Boston.

We could not find a 2200 sq. ft penthouse with all the other amenities.

In comparable quality buildings with similar interior standards we would have paid 50-100% more. Not just in price, but in taxes, condo fees, etc. Nouvelle is practical for us both, cutting our reverse commute in half. That is 1 less hour a day of the mass pike. And, we will still be just 20-25 minutes from the city.

NARcasting The Future: December 2007

Today, the National Association of Realtors (NAR) provided their final approximation of annual existing home sales for 2007 on an “up” beat revising their prior estimate up to 5.67 million housing units sold along with providing both their initial estimate for 2008 as well as, of course, another dose of truly ridiculous spin.

In an effort to put their absurd bias into perspective I compiled all their existing home sales forecasts for 2007 and now 2008 into a chart along with a list of prominent quotes supplied with each forecast.

12/11/2006 Prediction: 6.40 million units.
Lereah "Most of the correction in home prices is behind us."

1/10/2007 Prediction: 6.42 million units.
Lereah "The good news is that the steady improvement in sales will support price appreciation moving forward."

2/7/2007 Prediction: 6.44 million units.
Lereah "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008."

3/13/2007 Prediction: 6.42 million units.
Lereah "Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next."

4/11/2007 Prediction: 6.34 million units.
Lereah "Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections."

4/30/2007
Lereah Leaves NAR for Move.com

5/9/2007 Prediction: 6.29 million units.
Yun "Housing activity this year will be somewhat lower than in earlier forecasts."

6/6/2007 Prediction: 6.18 million units.
Yun "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year."

7/11/2007 Prediction: 6.11 million units.
Yun "Home prices are expected to recover in 2008 with existing-home sales picking up late this year."

8/8/2007 Prediction: 6.04 million units.
Yun “With the population growing, the demand for homes isn’t going away – it’s just being delayed.”

9/11/2007 Prediction: 5.92 million units.
Yun “Patient buyers in most areas who do their homework will recognize that housing remains a good long-term investment.”

10/10/2007 Prediction: 5.78 million units.
Yun "The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."

11/13/2007 Prediction: 5.5 million units.
Yun "In some ways, the extended real estate boom from 2001 to 2005 created unrealistic expectations that housing is a short-term high-yield investment… 2007 will be the fifth best year for housing on record"

12/10/2007 Prediction: 5.67 million units.
Yun "The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007."

Reading Rates: MBA Application Survey – November 21 2007

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as application volume for both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage decreased slightly since last week to 6.18% while the purchase volume decreased 2.0% and the refinance volume decreased 5.0% compared to last weeks results.

It’s important to note that the data is reported (and charted) weekly and that the rate data represents average interest rates, and the index data represents mortgage loan application volume for home purchases, home refinances and a composite of all loans.

The following chart shows how the principle and interest cost and estimated annual income required to cover the PITI (using the 29% “rule of thumb”) on a $400,000 loan has changed since January 2007.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages over the last number of weeks (click for larger version).

The following charts show the Purchase Index, Refinance Index and Market Composite Index since January 2007 (click for larger versions).