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The audacity of hope

Posted by Binyamin Appelbaum April 11, 2008 03:27 PM

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I keep tripping over reasons for cautious optimism about the health of the Boston real estate market, or at least reasons to believe that our fate is diverging from the fate of the Sun Belt, where real estate prices seem destined to fall sharply.

The latest comes from today's Wall Street Journal, which reviews recent data on the number of homes for sale in various markets. I've grabbed a screen shot of their interactive chart, comparing Boston with three other cities. Los Angeles and Miami show the line of a crash: Up, up and away as homes sit on the market waiting for buyers who are waiting for loans and they all will be waiting for a long time. The third city, Washington, offers an interesting contrast with Boston: Inventory is starting to pile up there, while our inventory levels are holding fairly steady.

Some of you will point out, correctly, that flat inventory can also reflect a market so bad that sellers aren't taking the trouble to list properties. I'm sure this is part of the explanation. Sales volumes certainly have fallen sharply. But in the truly bad markets, a growing number of people are so desperate they have to list their homes. And that much, at least, seems not to be happening around here.

A second item: A new analysis from PMI Mortgage Insurance Co. finds the risk of continued price declines in Boston is merely "moderate," the middle level in its five-tier rating system (which bears a striking resemblance to this federal creation). The insurance company calculates a 20.4 percent chance that housing prices in the Boston area will decline over the next two years. The analysis is based on past price appreciation, unemployment levels, a measure of affordability, and the aforementioned data about inventories.

Finally, there's a new report from Movoto, a real estate information Web site, showing that 'distressed properties' are holding steady at about 6 percent of all homes for sale in Massachusetts, comparing the end of March with the end of February. By 'distressed,' Movoto means resales of previously foreclosed properties and homes offered in 'short sales' in a bid to avoid foreclosure.

"Foreclosures are being sold at roughly the same rates as new foreclosures come on the market," the report says.

To paraphrase Winston Churchill, maybe we have reached the end of the beginning.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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