Market shows signs of spring

So what you are saying is: A) there are more properties on the market than last month, and B) the sellers are unrealistic and asking for more than they are going to get. If thats a healthy Spring market, then you are right on!

Frank S. you took the words right out of my mouth.

This is the classic "return to normal" phase of any boom/bust cycle. Next come "fear", "capitulation", "despair" and "return to the norm". Be looking to buy during the despair phase. You'll know we've hit that point when everyone you know is telling you how much the value of their home has dropped and anyone who buys is a moron.

Healthy would be if we had a good sized increase in Sales Volume..... We don't have that... Prices Come Down then myself and my Fiance will buy... Simple as that for now we will rent. There are a lot of houses that I would buy today but not at todays prices maybe, I would buy at 2001 or 2002 prices but not yet.

Why do prices have to come down? If you like a house priced at $490k, make an offer of $460k. If you like a house priced at $399k, make an offer for $350k.

My wife and I were interested in a property that was advertised at $465k. It ended up selling for $415k.

Don't wait for prices to drop, they might not drop. If you don't make an offer, you never know if the property is available!

By the time we bottom out, you'll probably be able to buy at 1998 prices, if not lower. Markets tend to overcorrect on the downside.

Prices might drop a little further, but I don't see any fantastic bargains on the horizon unless you role the dice on an "as is" forclosed home.

You can keep throwing money away on rent, but an average rent of $1,200 for a year means you just flushed close to $15k down the drain. This might be a deal if the home you want drops 30 in that year, but that's hoping for a lot.

My home has probably dropped $30 k in the last year, but it doesn't matter since I'm not selling. Prices will come back eventually, they always do.

I'm looking for the word "healthy" anywhere in the article...still can't find it. Maybe you folks were all reading another article somewhere?

I love all the bitter comments from buyers who STILL can't afford a home in this state - move to Florida......

The buyers out and are buying, there has been a lot of pent up demand. The buyers and sellers are more reasonable.

Buyers are fed up with losing good properties and are making decent offers and the sellers now realize they will not get higher prices of the past few years and are accepting decent offers.

IT IS A BUSY MARKET. Realtor Pat

When the averaged price home, is affordable to the average household income, we will then see a 'healthy' market for all...buyers and sellers.

Ha Ha Ha - Here is a buyer sitting on the sidelines with 6 figures in available cash and a six figure income. I'm renting and my money is doing much better invested than it would be in a house. Forced savings and equity building is nice (and I have had it before) but by renting I don't have to deal all the expensive stuff home owners deal with like oh a new roof, paving, condo assessments, etc... I do like owning my home and it's nice to say, hey I'd like to knock that wall out and just do it. However, I also like not dealing with any of that and I'm willing to pay someone else to deal with all of those risks. A roof over my head and no risk, that doesn't sound like throwing money away at all does it?

Our situation supports Realtor Pat's statement. Our home was not on the market, but is under agreement due to a realtor's outreach on behalf of his clients who did not find what they were looking for in the homes on the market.

It is all about the town or location, good town,good location very little depreciation, get out around 495 and further out, real value declines of up to 20%, also condos really seeing some major price declines

People should not wait much longer to buy. Things will not go to 1998 prices. They probably will fall a little more and then GO UP. When they go up, they will go up quickly and people who could have bought now, will lose out.

Linda,

What is the rationale behind your comment that prices "probably will fall a little more and then GO UP. When they go up, they will go up quickly..."? What are the underlying economic factors that have led you to this conclusion?

I've been bearish on real estate a long time (sold in late 05 and rented), but I think it's not a bad time to buy right now if you look for a good deal. I've been looking and desirable properties in prime locations are selling fast and they are usually getting full asking price. I don't know where some of you are renting, but I pay over 2k for a 1bd and by putting 20% down I can easily buy a place for the same monthly payment as renting. Incomes aren't doing too bad either, it seems like it's very common for people to make 6 figures these days, and there are many people with 6 figures in the bank. I think some of you are being a little too optimistic thinking you'll be able to time the market and buy a house for cash at just the right time unless you are looking in less desirable areas.

As long as rents keep pace with inflation, and real estate prices keep dropping, and house prices are so unbelievably unaffordable as compared to salaries, rent on! Don't flush your money down the maintenance, property tax, interest payment, pmi, house insurance, leveraged risk toilet.

Does this mean that if more non-troubled homes are entering the market, this signals that sellers that pulled out or had waited are more comfortable they can sell? And, the increase in the listing price, is this because the price is supposed on a true value and not a short sale or that the seller is hedging against low-ball offers?

Food for thought: We received a low offer on our house. We countered in good faith. 36 hours later, we got a second offer for full price. We notified the first buyers and requested a final and best offer. They came back with what we would have signed on immediately if we hadn't had the full priced offer. It was a reasonable price (5% off the list and comparable to other sales). Note to buyers, if you want the house, be reasonable. Not everyone is desperate – know your seller. You can't low ball in all situations.

Fear mongers and negative talk is always plentiful. People can wait and hope for better prices that may or may not come but what they are not thinking about is that there is a good chance mortgage rates, which are relatively low now, will likely be higher in the future. Smart folk know where I'm going with this, higher mortgage rates will mean that you can afford even less house than you can now.

Wait and risk not getting a home or buy what you can afford now, it's your choice people. I hear that not yet reported sales, at least in parts of Metrowest, are up. Could it be, nah..

Yeah right ! "We should not wait any longer to buy." Sales in the last quarter have been dismal. Activity and pending agreements do not equate a SALE. I am not going to throw away my six figure down payment, only to have a lender tell me that the house I want is not worth what the seller is asking, and that I have to make up the difference with a larger percentage of the down, only to lose that when the house depreciates further!

homes from "good families"? odd phrasing.

Wow. Awful lot of realtors and/or frustrated sellers posting comments. Yup, another month and another round of "we've reached the bottom, better buy now".

Sorry folks, prices have alot further to fall and would do so just due to bloated inventories and weak demand. Too bad we are also contending with a recession, runaway inflation, the credit crunch, the collapsing dollar and a coming spike in long term interest rates. So, not only have lenders tightened standards, but mortgage rates are poised to go up. And when rates go up, prices will just collapse further.

David, you're comments are straight out of the National Association of Realtors handbook.

Contrary to NAR's recent absurd ads that say on average home values double every 10 years, home prices over the last 100 years have averaged less than 1% over inflation. That's a FACT!

In real terms, home prices are already down near 2001 levels. And that's all that matters, what something is worth in real terms. Nominal worth means nothing as should painfully obvious during a time when the dollar has lost so much purchasing power.

At least its moving...I am seeing much more "sold" signs. I use to think "good for them" when the market was at a standstill here in NH. Now I am seeing more of them. I pass a home in North Reading MA on my way to work, a sign went up about a month ago...now says "sold".

Our home was on the market for 5 weeks up in Southern NH. We close the end of May. It does happen. Our house is a regular person's house not even close to $400,000 its nice though. It depends on who's buying.

Owning is definitely better than renting. We have done both. There is a peace of mind that it's yours. Mortgage Interest for taxes. Plus in this economy there is nothing to stop the owner from selling his property and unless you have a long lease you are out...or they can up your rent.

I see the market has picked up. Condos where I live are selling.There used to be 15 units for sale in March and now only 2 remain. Interest rates are still historicaily low.Prices will only fall by about 2-5% more. Interest rates may increase in July or August.So NOW is the time to buy.A .50% increase on a 200k morgage =about $80 more amonth.So it makes sence to make the move now.

What on Earth will drive prices up quickly (or even keep them stable), Linda and the rest of the realtors on this board? Lower interest rates? No, we've been through that before. Increasing incomes? Doesn't sound like those are on the way with the number of layoffs and high degree of uncertainty among executives across all industries. A greater percentage of income available to spend on housing? No one who has bought groceries or gas lately would make that claim. Reduced supply? Not according to the report that prompted these posts....

Isn't the March->April->May increase in volume and asking price just the normal, annual trend? I actually think it's probably more concerning that the volume and asking price aren't up higher.

Since when do we make value judgments upon the Sellers of real estate in these analyses? I am struck by the use of the term "good families." Mr Appelbaum is not journalist but moralist. Homes go into forclosure for a number of reasons. Let's focus on the economics of the catastrophe, not entire families which would include children. The market is beginning to turn on Cape Cod, with a few properties (including bank owned) selling for greater than the asking price. If you were waiting for the bottom, the confluence of low rates and low prices has probably arrived.

I have good news for all you doom and gloomers - the market is on its way back! In my neighborhood alone two house went under agreement in the past two weeks. The first was gone in 6 days and the other went the first day on market.

The houses here have dropped by about 30 - 40k in the last 2 years and they have maintained now at about 400k for the past year. And the news is, that sellers are holding back and they should because we all paid good money for our houses and put work into them and we are not anxious to give in to the vultures who have been circling.

Stick to the foreclosure market but don't expect people with nice houses in nice neighborhoods to be reducing their properties anymore. I just can't wait until the sellers' market is here, because I have never heard of so many whiney freaking buyers who want everything for nothing and complain about the interest rates. For those buyers who wait, I hope that you all miss out on the "boom" again!

Linda, nice fear mongering. Can you sprinkle in a little facts in your predictions or even rationale?

How many times do we have to go through the actual logical argument before people get it? It is really kind of easy to deconstruct the bubble pricing in hindsight, give piles of cash to people, up to 6-8X their income and add in boom time speculation and investment $$$ fleeing the tech crash and you get the prices we now have.

Take away the speculation, investing $$$ and tighten the credit to say around 4X incomes for those who even qualify. Add in a huge inventory of unsold homes. OK now, do we believe that prices will "fall a little more and then GO UP"?

Let's see, roughly $2,500 in PITI to own a median priced home in Mass. which is dropping in value. Of course, you don't own the home, you are just renting from a bank (the "PI" part) and the local government (the "T" part).

OR......

Rent for $1200 and put the other $1200 into investments. Even at a pathetic return of 15% a year (which is a no brainer if you know what to invest in) you will have over $55k in three years. In 3 years, when home prices might have actually bottomed out, down another 20 -30%, that $55k will be one heck of a down payment, meaning you will "own" more of your home and rent less of your home from a bank.

The rise in asking prices just shows that sellers are still delusional. What matters is the selling price.

Mike, if you're paying $2k a month for a 1 bedroom, then you should just buy a condo. The fact is, when you can rent for half the cost to own, buying doesn't make financial sense, especially when prices are falling. I pay $800 for a 1 bedroom, so I have no incentive to buy until this market completely bottoms. And if prices don't come down as much as I expect, then I'll just move. I have no interest in making myself house poor. Of course, I am also completely confident than home prices will plunge much further.

Not another,

Rising interest rates just mean falling prices. It's basic math. If I can afford a $300,000 home at a 6% mortgage rate, than I can only afford a $240,000 home at an 8% mortgage rate.

The whole reason we had a bubble in the first place was because of low interest rates, lax lending and easy money. If mortgage rates had stayed high, the bubble could have never formed. The same high interest rates that would have never caused the bubble to form in the first place are the same high interest rates which will cause property prices to collapse.

Ah yes, Shoshanna, it is your right as a homeowner to get what you think your home is worth. Forget that economic fundamentals say that your home is worth much less. You deserve to get what you THINK it's worth.

Unfortunately, your home is only worth what someone is willing to pay for it. And the real estate Ponzi scheme fell apart long ago.

Based upon these posts, looks like many are still in the "denial" and "return to normal" phase of the bubble cycle. Yup, this is your standard "Bull Trap". Amazing how human psychology can be reduced to a simple boom/bust graph.

Dan, don't bother. As usual the perma-bulls provide no basis for their comments. No numbers, no facts, not even logic to back up their claims of rising prices and a return to a normal market.

Wow. When I saw there were 34 comments here, I figured it was going to be one mindless rant after another.

Much to my surprise and pleasure, there's actually conversations and thoughtful analysis of data and opinion!

What a relief.

As far as I can see, the Boston Proper spring market is slow but steady ... as always, too few properties in the $350,000 - $500,000 but plenty to choose from in the upper, $700,000+ market. There is plenty of demand, but I don't see anyway we're going to have any lower prices in the lower end. (Quotations on lower.)

Of course prices are going to rise. Credit is flowing freely, food prices are dropping, energy prices are dropping, wages are outpacing inflation, the dollar is rising......oh wait, none of those things are happening. But prices will go up anyway, because I say they will :)

Wow, amazing how much ignorance is still out there.

I haven't said this for a while, but it's MATH people. If you don't want to trust mine, or don't want to do your own, google what Fannie Mae, the Treasury, Goldman Sachs etc. etc. are all saying.

There is universal agreement between the govt and the banks that prices will drop 10% more, and that prices will keep dropping till summer 2009.

The idea that you have to get in now to avoid missing out is laughably stupid. Even from bottom, prices won't shoot up - we'll be back to 1% annual real growth, just like the last 100 years of real estate prices.

looks to me like to many people had a hot Friday night of posting on this blog. Why are not more buyers droping their prices??? Are they insane or just crazy or is it the fear of not getting the best price you can for your property?

Buyers don't "have to" get in now, they have a choice obviously. They can gamble that prices will go down further, they can buy now and be sure of a low mortgage rate. It's not a black and white situation, things are fluid and no one can accurately predict the future. If you want a home buy one if not don't.

The homeowners on this board are very bitter. Must be alot of people who have seen their equity evaporate and/or are underwater on their mortgages. I guess saying that the market is healthy and prices are on the way up makes them feel better anyway.

I suggest you take this as a learning experience so you don't get burned during the next Bubble.

Charles, it's also common sense. Something which many people seriously lack.

Impressive, a full scale Realturd assault of misinformation hoping to land one of the few remaining knife catchers. One problem, nothing they are saying is true and they offer no facts to back their ridiculous statements.

"Much to my surprise and pleasure, there's actually conversations and thoughtful analysis of data and opinion!"

Data? not one actual verifiable piece of proof was offered in 41 posts . Conjecture at best, flat out lies the more likely...

Pat:

"The buyers out and are buying, there has been a lot of pent up demand. The buyers and sellers are more reasonable"

Any numbers to back up your disingenuous statement?

Jim:

"It is all about the town or location, good town,good location very little depreciation"

Anything to back it up?

Shoshanna:

"I have good news for all you doom and gloomers - the market is on its way back! In my neighborhood alone two house went under agreement in the past two weeks. The first was gone in 6 days and the other went the first day on market"

What neighborhood?

Cape Cod:

"The market is beginning to turn on Cape Cod, with a few properties (including bank owned) selling for greater than the asking price. If you were waiting for the
bottom, the confluence of low rates and low prices has probably arrived."

Addresses please...

Another Linda:

"At least its moving...I am seeing much more "sold" signs. I use to think "good for them" when the market was at a standstill here in NH. Now I am seeing more of them"

Prove it with some data....

Scott:

"I see the market has picked up. Condos where I live are selling.There used to be 15 units for sale in March and now only 2 remain"

Where?

"In another sign of seller confidence, asking prices also are on the rise. Altos says average asking prices in the Boston area ticked up 1.2 percent comparing the end of April to the end of March."

Big leap in logic to suggest that increasing average asking price is a sign of "seller confidence". It's more likely a simple matter of a greater number of higher priced listings raising the overall average. Can you refer us to the study which ties average asking price to seller confidence?

I'm not seeing any bloated inventories -- we've been looking for nice mid-range house for 4 months, and now we've seen everything on the market in the towns we're looking in. Where are all the good houses?

Its pretty funny listening to all of you experts out there with regard as to whats next for the real estate market. Heres my story. I bought in 1997 for 179000. I sold that house on '02 for 324000 and immediately bought another house for 408000 with 300000 down payment. Principal taxes and interest are 1400/mo for14 more years and Ill own it outright. I drive a hyundai accent, cut coupons and bring lunch to work each day. What kills me is the government is now going to use my tax dollars to bail out all the losers who pulled out every bit of equity in their house while the going was good. Thats CRAP!! Those people deserve to lose their houses. Live responsibly people. You reap what you sow. So keep driving those H2's people. Ill be there laughing at you at the pump and at your home auction.

Chris, A good friend of my once said..."We live very simply - but with all the essentials of life well understood and well provided for - hot baths, cold champagne, new peas, and old brandy." I have no problem with your post until the last sentence. Please clarify.....do you really mean that?

For all the desperate realtors, I know you have mortgages to pay too. And no income for half year does hurt. But your scare or cheer-leading tactics don't work any more. Try something new.

For all the desperate sellers, here is your path for daydreaming.
Date Price
Nov 23, 2007 $849,900
Jan 03, 2008 $750,000
Mar 12, 2008 $699,000
Mar 14, 2008 $699,900
Mar 27, 2008 $649,900
Apr 28, 2008 Pre-foreclosure

Right now there are 3 condo auctions in the greater Boston area - South End, Concord, and Peabody.

So I do see signs of spring......for auction homes.

Why don't you ask actual owners who are selling their homes what they think about any "slowdown" in the Greater Boston real estate market. 9 times out of ten, they are walking away with a profit. You can spin it anyway you want, but you can't argue empirical data, my friends.

The only loss most owners have, if any, is on paper. Even there, most owners have been in their current properties for over five years, so they are sitting on what, 30-50-60 percent increases in prices? Yeah, they must be losing sleep over a theoretical drop of 10-15%.

They're sleeping on a pillow made of equity profits, while you troll the internet.

There is way more to buying a home than just money. My husband and I are buying a foreclosed home for a really good deal. Because we bought the home for less than the bank valued it, we already have equity.

But more than that, we will finally be in our own home that we can do with as we like. No more dealing with the lady in the apartment down the hall who stinks up the building with her perfume. Or the downstairs neighbor who thinks it's OK to blast music that shakes our floor. We can now do our own laundry on our own schedule without quarters. And if our air conditioning or something else breaks, we don't have to wait 3 weeks for the apartment's awful maintenance staff to come fix it.

Could we still rent and save more money? Sure. But we'd be sacrificing quality of life.

Could you qualify what a "good family" is?

John K - I recommend that instead of insulting possible future clients by name-calling (see "trolls" above), you adopt a more professional demeanor when posting on online message boards.

I'm sleeping on a pillow made from more equity profits, having cashed out and sold all my real estate portfolio in 2005, John.

And I expect good profits again when I buy in and start developing again in 2009 or so...

Granted I have a bit of a different perspective on the above. It's a way to make money for me, not a place to live.

I do find the quality of life in my rental quite high. I'd still prefer to live in my own place, without a doubt, but my preference for a continued happy bank account is higher.

Clearly there is a lot of emotion in the arguments we hear from sellers, realtors and buyers. The buyers know there has been a sea change in the basic fundamentals that drive supply and demand, and most are unwilling to leverage themselves as during the bubble peak.
The market will slowly adjust to the new fundamentals. Binyamin, I respect your journalistic credentials, but I do have to say that it is speculative articles like this blog entry that slow the adjustment of the market by hanging false hopes for sellers on very dubious analysis. The Boston Globe is a very well respected paper and should take into account the threshold of evidence needed before plastering a headline that says "Signs of Spring" in the RE market. Given the preponderance of evidence, it seems much more likely and responsible for the Globe to give sellers real world advice on the likelyhood of the market taking back more than 5-10% of the 150% bubble rise. Then sellers can make rational choices based on reality, not speculation.

Look out below!!!!!!!

Kind a like when Dorthy's house is falling to earth (Seller) in the Wizard of Oz and you feel like the witch of the east (buyer).

Follow the yellow brick road anyone????

The Greater las Vegas Assoc of Realtors reported a greater than 30% increase in home sales for April compared to April 2007. The median single family home price dropped by about 23% compared to a year ago. More than half were owned by banks or other lenders. If a harder hit market like las Vegas is starting to turn around, one might expect stabilization in other hard hits areas and also in the Boston real estate market. It seems that if the price is low enough (at least on foreclosed properties), buyers will purchase and that time appears to be now.

GB May,
Interesting data point and it actually backs up what a lot of people are saying here on this thread. In Las Vegas, home prices dropped a large amount and home sales picked up.
What we are not seeing in Massachusetts is home prices from sellers dropping much. We have seen sale prices drop about 5-8%, after a huge runup in prices. I would also note that in Vegas the housing stock is in much better shape and much newer than most of Boston area housing. An "old house" in most other states is one from the 80's and early 90s. 50's houses are not the norm as they are here, they are antiques.

@GB

It's called a dead cat bounce.

is this fact or fiction or sellers have Spring fever? I see the some houses on sales since last Spring. Some even went further to jack up the price.

"It seems that if the price is low enough (at least on foreclosed properties), buyers will purchase and that time appears to be now." Good point...

When the prices are low enough you will have an ample supply of buyers... all the 20 somethings that are paying $1200/mo in rent will definitely pay $1500/mo in Mortgage and another $300/mo in real estate taxes... the problem is that a $1500 mortgage is a $250,000 house.... Houses need to get down to a Quarter of a Million for first time homebuyers to be able to reasonably afford a home. News flash for all you Baby Boomers and Some Gen Xers, us in Gen Y have no downpayment, maybe $20,000-30,000 for a DP, and that might be generous. We are trying to put away 10% in our 401(k) plans and do Roth Ira's and pay off college loans at the same time.

So you cant use the old metrics of 3 or 4 times salary for a house... you need to factor in Retirement savings Rediculous levels of Student Loan Debt and everything else people have to deal with.

None of my friends want to be House Poor either. What happens if interest rates go up to 7 or 8%.... = Prices go Down further...

A lot of the "math" here is pretty funny. People are over-exaggerating in both directions. There are some properties that are clearly overpriced, but at the same time there are plenty of good deals out there. If you compare comparable 1-3 bedroom condos in the city to rentals the prices are in many cases favorable to buy rather than rent. To live in a good location in the city and have a nice, renovated place will cost you the same as buying. I'm saying this because my original intent was to rent. After plenty of searching and rental increases I've decided it's better to buy and am finding places for the same monthly outlay as rent which is fantastic. Buying has always cost a premium over renting anyway because eventually you'll be better off, not to mention can do whatever you want to the place and not have to worry about your landlord.

I've been renting for a few years and have been looking at property listings and open houses for about 7 months now. I keep track of homes I was interested in even after they sold. The bottom line is this, every property that I've seen listed or visited in open houses had other people looking at it and they have all sold. There really aren't that many *desirable* properties available here as you will learn from visiting open houses so there is plenty of demand.

Matt,

Bingo. Your numbers reflect my take, and my situation, exactly.
$275,000? Sure. $300-325? Maybe. $350-400, where an awful lot of the starter homes I see are? Not a chance am I going to do that. A condo? Where- not near Boston, where I live now. I'm not paying the price of a SFH for a box of an apartment so I can not worry about what color I painted the walls.

Those homes are not/should never have become priced that way for what they are (considering their typical age/# of rooms/lot size/condition/neighborhood). I am not going to lock myself into more $ than I can afford and become a statistic like many in my generation, so until what I can afford yields what it used to before people started naming their own price and getting it, I'm playing it safe.

If it's not rational, or not fair from a seller's point of view, oh well. I hope you can sell to someone who doesn't have to worry about whether his job will decide to move out of state next year, or who has vast resources to tap from within a privileged family. We are the people the administration says should be able to buy a home, and we can't. I'm not asking for government assistance; the market will correct itself eventually, or I'll make more money and feel better about wasting so much of it when I finally do buy.

J Christian,
I agree with you 100%. We are in the same Situation. I will def buy at 275k for a house that I like. Low 300's it better be a place that I want to be at for 10 years + and anything higher we would be house poor. My Fiance and I pull in around 110 and are 27 and 26. We can swing 275 comfortably but it would still be a jump from our rent situation of $1200/mo. Anything higher than lets say 325k and it doesnt make sense we will just keep renting and let the market fall more and us save more for a DP. Remember that we are saving 25% in 401k plans and Roth Ira's something our parents didnt do and now they want to cash out to pay for their retirement... Well I am not gonna play that game.