It's official: Prices fell in 2007

Please make sure to do your analysis on as specific of an area as possible when speaking about Massachusetts next week. There are many good news markets that have seen 5-10% increases in sales volume and 40% drops in inventory. I am sure you drive through some of them every day. I would predict an analysis of inventory and volume (supply and demand) inside Route 128 would be a stunning contrast to the numbers we see nationally.

There is no doubt that all sellers must proceed cautiously. There are some areas of our state which are getting hit very hard right now. There are also communities with strong numbers and they deserve to be written about too.

Seven more years of falling prices. Housing has always been 3x income and 100x rent.

Greg,

Why don't you list the "many good news markets" along with stats?

The Wall Street Journal today reported that the housing "slump" has started to hit "stronger cities" such as New York. The articles focuses upon rising inventories. Interestingly, the only listed cities with falling inventories are Denver and Boston. Boston's inventory change of -8.3% leads the list and sets the city apart from other cities such as San Francisco. The housing slump has not hit all areas equally. I suspect that this reflects relative lack of uncontrolled large scale multiunit tract home building around Boston that blighted the landscape outside many other cities (such as northern Virginia) . Unfortunately, lack of affordable housing remains a problem aroung Boston, and as long as inventory remains low, I would be surprised to see dramatic declines in home prices of mid priced homes, much beyond the current levels. I am convinced that this is a good time for first time buyers to consider their first purchases, though, they may want to wait just a month or two longer as Mortgage rates will undoubtedly fall (for the Fed to lower interest rates even further). (* I am not a real estate agent or in any way affiliated with any real estate business).

I've seen this angle tried elsewhere. Cherry-picking miniscule sub-sub-sub-"markets" is the latest NAR/MAR spin : "Mass housing is doing great!...if you eliminate all foreclosures." "02138 is hot hot hot!...on the odd-numbered side of Mass Ave." Unfortunately, we can now see what NAR's analyses are worth simply by reviewing last year's endlessly revised, perpetually shrinking, and wildly incorrect projections for 2007 sales.

On a more fundamental note, though, this spin isn't just wrong, it's entirely irrelevant. It doesn't matter what sold in Brookline last week or who showed up to check out dentil moldings in Arlington. That's staring at the wrong end of the cow. Now the most important local real estate news isn't happening here, but in Washington, Wall Street, and in France and Beijing. Banks see no end to their write-downs, bond insurers are going bankrupt, and the central banks quite seriously fear that the world financial system is about to collapse. And the entire mess is locked in an unbreakable death spiral with a falling housing market all over the globe.

This is just a tad more relevant now than fabulous finishes, desirable schools, or an easy walk to some crappy bakery in Wellesley.

I agree with Greg. Check out newton housing inventories....the lowest I've seen in many, many years. I'm trying to buy a house in Newton and can't find a place; there is just very limited stock. I've already been on the loosing side of a multi-offer house in January. In two other open houses I attended this month, the property was under agreement in 2 days. Very frustrating. I do think there is "two Massachusetts" -- those towns inside 128 and those outside 128.

Open letter to Deval Patrick and any other politicians who might be reading:

Please please PLEASE let the market continue to do it's work.

No need to wait till next week for housing numbers that you can get today. According to housing data taken from MLS-PIN there are a number of towns in the Boston area that experienced a strong, healthy 2007 with increased sales volume , sales price and a lower inventory. For example...
Brookline saw an 11% increase in average sales price with a 17% increase in sales volume. There is approximately 46% less inventory available now than there was a year ago.
Needham witnessed a 2% increase in average sales price with a 26% increase in sales volume. Current inventory is approximately 40% less than last year.
This data is for single family homes specifically.
The following data reflects, specifically, the condo market in the following two towns.
Jamaica Plain's condo market saw a 7% increase in average sales price and a 6% increase in sales volume. Inventory is approximately 10% less than last year.
Brigthon's average sales price is up 13% over last year.
In addition, Brookline and Newton's condo sales were up 5% and 3% respectively. The approximate inventory for both towns are 36% and 37% below the previous year's levels.
A great time for sellers and buyers! Sellers and buyers are negotiating and getting to the closing table!!
No need to wait for February and March. The time to list your property with an agent is now.

Arthur,

Average price is meaningless and you know it. Far more telling, in the fourth quarter almost all sales in Brookline were for below assessed value , something unheard of until recently. Lower inventory is a by product of home owners unable to sell because they are now upside down on their loans due to accelerating price declines. Get real....

The self promotion in these comments is sickening. IT IS STILL NOT A GOOD TIME TO BUY !!!

My wife an I have made well above median income for a number of years. We had accumulated a respectable down payment in the fall of 05. When we started going to open houses we were truly dismayed at what we were truly able to afford (afford meaning 28-31% of groos income devoted to PITI). That's when I started educating myself about the housing market.

I came to the conclusion that housing prices needed to fall to come back to historical averages. It wasn't just a little off it was number of factors off !

This downturn has a way to go. Just look at every other housing boom & bust in the past 100 years. It takes an exteremely long time for house prices to get back down to where they historically should be based on inflation. This time is no different.

If you've saved for a downpayment and don't care about it being completely wiped out in the event that housing keeps dropping now is certainly the time to buy. In a number of years your house will no doubt be worth more than you paid for it (nominally anyway). But I'm going to make sure that I get the most out of my dollars that I have saved over a number of years.

Lastly, the least reputable people to listen to are those that have a financial interest in you buying a house. Realtors and the like are the same people who said that "Real estate always goes up". Do your own homework and come to a decision that way. And if I ever see that a house is listed by William Raveis Real Estate I'll make sure to avoid those.

Inventory is also low because speculators have pulled their units off the market (some are renting them instead of selling).

In 1987, my new wife and I bought a home in MA. I still remember the words of my REALTOR as he took our hard earned down payment from us: "Real Estate is just like money in the bank!". Well 3 years later we had to move and we lost everything unloading that albatross when the bottom of the market fell out. We had to move in with friends for a year to recover financially. 20+ years later, we are happily in our own home in a great town, but the NAR was only an obstacle to us.

Ask yourself this: if these REALTORS are enjoying all these "good news" markets, then why are they so obsessed with making sure the news reports reflect them? The obvious answer: you don't buy, they don't get paid. And that's all they care about: your money in their pockets.

I'll give the advice I wish my REALTOR told me:

- A home is a place to live and NOT an investment.
- Make sure you see yourself happy in the place you buy for at least 10 years.
- Buy when YOU are ready, using whatever criteria YOU decide.
- Don't try to "time the market". If it's your time to buy a home, go right ahead and do it, but as long as you follow the previous advice.

And the last, most important one: Don't trust anything a REALTOR says, no matter how nice they seem to you. They see you as $$ and nothing else.