Still hovering in the cellar

Of the single-family homes that were sold in June, there was a 1.2% gain in prices in Boston, and a 1.5% gain in Denver. That is the third consecutive month of positive returns in both markets,

Nope. From Ms Blanton's article, the prices are falling more, not less:

July house prices in the Boston area suffered the largest decline since the current housing market downturn began two years ago, while statewide prices had the biggest drop since 1987.

The median price in the Boston metropolitan area fell 8.2 percent last month compared with a year ago, to $484,750, according the Greater Boston Association of Realtors, which released its report yesterday on the housing market roughly inside of Route 128.

For Massachusetts, the median price for single-family houses plunged 12.3 percent in July, to $320,000, Warren Group, a Boston real estate publishing firm, also said yesterday.

As has been pointed out ad infinitum, month over month sales only reflect seasonality. Which is why the various real estate groups stop mentioning these statistics in the winter.

I think its obvious I think local prices are due for a sizeable drop. The mere fact things take longer to happen here (we are wealthier, fewer new homes, less investor speculation) does not mean things won't happen here.

Granted Boston will never be as bad as Miami/Phoenix/Central Valley, just as we weren't as up on the way up.

But supply, demand, and people's ability to pay without access to easy credit still matter. The money to buy a house has to come from somewhere. The syndication market is over. Banks are in tough shape. Freddie and Fannie are arguably in worse shape. That leaves only income as a source of money - last I hear slaries weren't exactly skyrocketing.

So back to prices people can actually afford, which is 3-4x income. That means, you make 100k between the 2 of you, you buy a 350k house. And 60k of that is hard money downpayment.

But wait, you say, there aren't a lot of people with 60k sitting in their bank account. And whoever heard of a 350k livable house in Eastern Mass? And 100k family income is actually pretty high, even in Massachusetts.

Yep, sounds like a problem to me too. Either incomes will have to go up, or credit become easier, or house prices down.

I know which way I'd bet.

As an aside, how many times has the bottom been called on this housing market? 6? I love how the lambs flock to the slaughter on each call .

I think it's common knowledge that sales and prices typically drop after the spring season. However this market hardly seems typical. Here's a theory: with such drops in sales you have to assume there are buyers out there looking for signals that prices are bottoming. If price declines slow to a crawl, or even flatten in some areas, those sidelined buyers will start to get ancy. Some will think that this is it for price drops in Boston, best to buy now. Whether they'll be right is another question -- who knows how far prices could drop before this is over? -- but the point is that some will see a bottom and buy. That's good for sellers, banks, market normalcy -- basically everyone but other buyers waiting for a deeper bottom.

Hey, I've been much busier lately and had multiple offers on one of my listings last week. We'll continue to see how this shakes out.

Yes, prices and sales will begin to fall steadily. These month to month increases are seasonal swings. You will now see month-to-month declines for the case-shiller July numbers. The year over year difference is the only number that is useful out of any of these data sets. The month to month should almost be ignored completely. If you saw a decrease in price from May to June that would buck the historical trend. The industry is looking for something to spark up sales. The true spark they should be looking for is affordability and availability. There are plenty of buyers out there sitting on the sidelines. Yeah there are properties for sale that are in the affordable range but the quality of the home is just not there. There are few quality homes available in the affordable range for many people. The sweet spot from my observation is 350k which you need an income of about 100k to afford. The household median income in the Boston area that I have seen varies from 70k to 90k depending on the source. Any quality property that falls within that 350k range gets snatched up pretty quickly. But within that 300k to 400k range there is a lot of places that need a good amount of work and then the few gems that are actually worth buying. The good ones typically go within a month of falling into that range.

How about a little context? The same thing happened in the spring of 2006 and 2007. Once the spring selling seasons ended, prices resumed their descent. By not including this information, you are not telling the whole story.

multiple offers are interesting if places are priced at fair market level. If places are priced below fair market level, multiple offers don't reall mean much.

Its tough to find someone who says the market is on its way up, even the NAR, which can see a sunny day in a hurricane.

There is an old trader anecdote that on the face people go "Yeah. DUH." * It is surprising how many people do not actually heed it: "It is better to buy after a bottom than before. "

Corollary's are "The trend is your friend" and "Don't try to catch a falling knife." Personally, I hate the former and heed the latter like its a edict from God's mouth.

* There are also those that don't understand it what it means. Stay away from those people.

how can you catch a falling knife when Bill Miller is hogging them all?

Once again, wise words. And I'm with you on the trend is your friend, as you've no doubt guessed. Though I can't see even a momentum guy buying real estate now.

The current price downtrend is the best possible thing that could happen to this real estate market. We live in a banker created paradigm that has enabled us to believe that it is normal and ok to put 5% down on a house and pay interest on that other 95%. The banks are doing everything in their power to keep it that way, because it is their bread & butter. However, imagine how much better your life will be when prices are down to the point when you can buy a house that costs 3 times your yearly income, rather than renting via an interest payment to the bank. Lets get more financial freedom to the people, and let the banks take a hit for once. All you need to do is stop borrowing so much.

This so incredibly true- with the 5-7yr average ownership tenure, one never really begins to knock off the principle. It is pure profit for the the bank on your back.