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.