When will real estate prices begin rising again?

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    Re: When will real estate prices begin rising again?

    I feel a lot better now.

    Biden says U.S. housing sector may be stabilizing

    U.S. Vice-PresidentJoe Biden said on Tuesday the country's housing sector is showing some signs of life after a ravaging four-year recession.

    "We're seeing solid hints of stabilization in many markets, including housing," Biden told a group of investors and students at Pace University's Lubin School of Business.

    His remarks come just as an industry group reported a surprisingly sharp, 6.7 percent rise in "pending" home sales for April.

    Neal Wolin, the newly appointed Deputy Treasury Secretary, also expressed some optimism.

    "We are seeing initial signs of stability, with confidence improving and credit starting to ease," said Wolin.

     
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  4. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    Hi all -

    Many of the press' recent comments on the decrease in the rate of decline in house prices are quoting a report by IHS Global Insight. If you're interested, you can request a copy of their report, "Nation's Housing Price Decline Moderates; Market Nears Bottom " here:

    http://www.ihsglobalinsight.com/Highlight/HighlightDetail2350.htm

    Interestingly, they estimate the Boston Metropolitan Statistical Area as being 15% UNDER valued when factors such as income levels and historical income/price levels are taken into account.  This can be hard to interpret since the Boston MSA inlcudes such a broad mix of areas, some of which have dragged down the overall MSA such as Dorchester, and may be distorting the valuation analysis in this study. 

    Personally, I think that while the most fragile areas (e.g., Dorchester, etc.) have been crushed and may be at or below bottom, others have yet to see their share of the decline.  For example, while prices have only modestly declined in Wellesley, the volume this spring has fallen to 50% of the prior year, evidence that prices in that town have not reached a market-clearing level.  Time will tell.

    Good luck all!

    Finance Mike
     
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    Re: When will real estate prices begin rising again?

    Hi all -

    Sobering thoughts from Mr. Schiller:

    http://www.nytimes.com/2009/06/07/business/economy/07view.html?_r=1&ref=business

    The quote:

    "After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997. "

    If this market runs a similar course, the risk appears to be in buying before the "bottom", not missing the bottom due to sudden rebound in prices.

    Good luck all!

    Finance Mike 
     
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    Re: When will real estate prices begin rising again?

    Hi all -

    Some positive forecasts - although these are national, some of the same trends are visible in Boston.  There is an interesting quote:

    "Said another way, there is some suggestion in these data that the housing bubble, not unlike other bubbles in recent past (e.g. the dot-com bubble and the bubble in oil prices), was in large part driven by a perception of housing value based more on implied financial returns than fundamental housing stock appreciation. All else being equal, the removal of this phenomenon is the first step in returning to more historic valuation drivers."

    Said another way, people should look at housing first and foremost as a place to live.  Any financial or savings component is incidental.  Cheap credit and a mania for "investment" gains drove the bubble, and the sooner buyers and sellers realize they will probably at best break even on their home (when you consider principal payments and inflation), the sooner the housing market will return to normal. 

    http://www.radarlogic.com/research/special/June2009RPXSpecialReport.pdf

    RadarLogic via The Boston Real Estate Blog

    Good luck all!

    Finance Mike
     
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    Re: When will real estate prices begin rising again?

    Hi all -

    Ever wonder what the effect of forclosure/forced sales are on house prices?  This Harvard study attempts to answer just that.  They estimate a foreclosure within 0.05 miles of a house lowers its price by 1%.  No word on whether that's cumulative.  As a bonus, the study is MA-specific...

    http://www.jchs.harvard.edu/publications/markets/w09-4_pathak.pdf

    Good luck all!

    Finance Mike
     
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    Re: When will real estate prices begin rising again?

    Hi all -

    It looks like people are finally understanding that a home is a place to live, not an investment.  Hopefully they will remember this and not get caught up in the mania again. 

    http://www.marketwatch.com/story/many-say-homeownership-no-longer-a-path-to-wealth?siteid=nwtreal&sguid=KzMON7nEL06dVpc4TEE3dg

    "Nearly half of American adults who participated in a recent survey said they no longer believe that homeownership is a realistic way to build wealth"

    I could have told them that a long time ago...

    Good luck all, buy smart!!

    Finance Mike
     
  15. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    Hi all -

    For those interested, Case Schiller is out.

    http://www.marketwatch.com/story/us-home-prices-down-181-in-past-year

    While much of the nation is up month over month, the seasonally adjusted Boston MSA is down 0.3%.  The seasonally adjusted index has now gone into 2002 territory.  Note the unadjusted did go up 0.4%. 

    http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html
     
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    Re: When will real estate prices begin rising again?

    June's NAR numbers are out.  Sales up, prices down.

    http://www.marketwatch.com/story/june-existing-home-sales-rise-again-2009-07-23?siteid=nwtam

    and from NAR:

    http://www.realtor.org/press_room/news_releases/2009/07/sales_up

    Gotta love this quote:

    "Yun said that Realtors across the country believe that new rules for home appraisals are having the unintended consequence of squelching many home sales."

    More likely now that the bubble has burst and comps are down, sellers are dismayed their properties are appraising for less than they want.

    Good luck all!

    Finance Mike
     
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    Re: When will real estate prices begin rising again?

    In Response to When will real estate prices begin rising again?:
    Hopefully, RE prices won't rise again for a long time. If they fall far enough, first-time homebuyers might be able to buy something. Right now, many of us are watching from the sidelines, down-payment in hand, waiting for something affordable that isn't a dump or in the ghetto. Why are people panicking now that housing prices are falling? The sky-high housing prices of the last few years weren't sustainable. Prices doubled in 5 years, but incomes stayed the same.
    Posted by Giordana


    I totally agree.  We shouldn't be panicking for the market, ALL aspects of it, corrects itself from being dramatically over-inflated for so long.
     
  19. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    Hi all -

    FYI, Case Schiller is out, and Boston is up, slightly, month over month.  This is consistent with prior May results, where there is usually an uptick for the month, frequently followed by a decline in the later summer months when volumes go down.  Month over month gains were mild, at about 2% (non-seasonally adjusted).

    http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html

    Good luck all!

    Finance Mike
     
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    Re: When will real estate prices begin rising again?

    INteresting article from the WSJ about how higher priced properties (>$750k) are not participating in the recent home sales activity...

    Subscription required.

    http://online.wsj.com/article/SB124924069909799645.html

    The quote:

    "Housing is fast dividing into two markets: Sales of low- and moderately priced homes are picking up and values have stopped falling in some parts of the nation. But on the upper end, sales remain mired in a deep slump and price declines are expected to accelerate."

    Good luck all!

    Finance Mike
     
  21. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    Hi all -

    Some June results, generally seem somewhat positive:

    http://www.marketwatch.com/story/us-july-existing-home-sales-up-4th-straight-month-2009-08-21-103000?siteid=nwtam

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aaCRVTkj_Idk

    Note that months' sales in inventory remain pretty constant since May, indicating there's still excess supply.  I haven't seen any New England or Boston specific info yet.  CS should be out some time next week.

    Good luck all!

    Finance Mike
     
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    Re: When will real estate prices begin rising again?

    Hi all -

    Case Schiller is out, and has some good(ish) news, since the Boston MSA is up a bit month over month.  Note that for the seasonally adjusted, tiered index, the high tier (over $378k) is only up slightly, from 145.36 to 145.73 (basically flat), so most of othe appreciation is in lower priced properties.  Volumes, however, are still low.

    http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/2,3,4,0,0,0,0,0,0,0,4,0,0,0,0,0.html

    Good luck all!

    Finance Mike
     
  23. You have chosen to ignore posts from CBRB2. Show CBRB2's posts

    Re: When will real estate prices begin rising again?

    When will real estate prices begin rising again?

    Well, if the Case-Shiller Home Price Index is to be respected, and the data wonks know it is...then prices began rising sometime over the last quarter.

    http://money.cnn.com/2009/08/25/real_estate/June_CaseShiller/index.htm?postversion=2009082511

    Boston +2.6%. Dang! Looks like the usuals have missed the boat (but there is always Detroit).
     
  24. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    Hi CBRB -

    Welcome back!  Well, 2.6% month over month for June is roughly in line with what you see if you look at the data over the last couple years - spring seems to have a pretty consistent increase in average prices.  If you look carefully, however, this is frequently followed by a fall in average prices once you get into August and beyond once the spring selling season is done.  I doubt this year will be any different.

    Another interesting thing is if you look at the tiered index on a seasonally adjusted basis, for properties above $378k (CS' "high" tier), the increase was 0.2%.  Personally, I'm just fine with missing a 0.2% rise given the risk of additional declines.  If that's "missing the boat" then I'm not too concerned.

    What's more concerning to me is that volumes are still low, which indicates sellers are still having trouble finding buyers to pay the price the sellers want.  I expect this will continue.  Most economists are forecasting an extended period of level prices before there's any significant increase, whcih suggests there's no reason to runs into anything.  "missing the boat" is probably not the risk these days - the possibility of another decline in the economy is a higher probability risk.

    Good luck all!

    Finance Mike 
     
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    Real estate are rising again!

    New-Home Sales in U.S. Jumped 9.6% in July.

    The gain, together with rising sales of existing homes and steadying prices, indicates the housing slump may be ending as Federal Reserve efforts to thaw credit and the Obama administration's first-time home buyer incentives lift demand. 

    The jump in sales was led by a 32 percent surge in the Northeast. Purchases increased 16 percent in the South and 1 percent in the West. They dropped 7.6 percent in the Midwest.


     
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