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.

The Daily 2¢ - Nouvelle Bulle

At the risk of sounding too blunt and negative I have to revisit the condo development at the Natick Mall in Natick Massachusetts as this condo development is apparently gaining more national attention and has now been covered in a recent New York Times article.

For those of you who hadn’t read my prior post on the project, the “Nouvelle at Natick” is a luxury condo building built right up against, and in fact actually attached to, the old Natick Mall… now revamped and renamed the “Natick Collection”.

In my last post I opined at great length about the truly odd circumstances of the “luxury” condo complex with its 215 units ranging in asking price from $439,900 for a one bedroom to $1,599,900 for a 2190 square foot “penthouse” and speculated that its mere existence may physically embody the sheer lunacy that came about from the Great Housing Bubble.

Now, it appears that I may not be alone in thinking that paying huge bucks for the privilege of living in a mall is unappealing.

According to the article, to date only 15% of the 215 units have actually gone under contract.

Furthermore, many of the current buyers signed those contracts as far back as the spring of 2005 so I would think that this is a clear indication that these units are not going anywhere, anytime soon.

Keep in mind that Boston’s luxury condo projects have been taking a serious beating these days with developments like the Harborview, built right on the Charlestown Navy Yard, going into foreclosure because they failed to sell any units … that’s the WHOLE BUILDING in foreclosure not individual units.

You have to wonder, if a builder can’t sell a luxury condo right on the water within Boston proper, how in the world are they going to move units that are attached to a suburban mall some 20 miles out of town.

How could the developer, General Growth Properties (NYSE:GGP) have gotten it so wrong?

What’s worse is that GGP paid huge sums of money and agreed to substantial affordable housing effort just to be allowed to do the project in the first place.

It’s been reported that not only did GGP pay the neighboring town of Framingham $1 million for renovations of highway and transportation facilities but they agreed to supply the wider community with 48 affordable housing units.

Now, before you get the idea that these affordable units are located somewhere within the “luxury” complex, think again.

Nothing could be farther from the truth.

It appears that GGP has purchased random condo, multi-family and single family housing units from around Natick with plans to sell them to qualified low income buyers at greatly reduced cost.

These sales will take place during December and January and will be carried out through the use of a common lottery system where winners get the opportunity to buy the low cost units.

Doesn’t this all sound a bit crazy?

Anyhow I’ll keep posting as future developments occur but for now, here is a promotional video clip about the “Nouvelle”… it should be worth a good watch!