One more look at the numbers
For those interested in data, here’s another look at the real estate numbers from August, according to the Warren Group, a real estate data firm that tracks sales of all properties using records at the state’s registries of deeds.
In the first eight months of 2008, all but one of the 14 counties in Massachusetts have posted double-digit declines in sales of single-family residences. Sales in Barnstable County, which encompasses Cape Cod, declined only 2.5 percent when compared with the same period in 2007. It likely has fared better, relatively speaking, because it’s an attractive market for second-home owners.
During the same time, only one county saw an increase in condo sales. Franklin County in Western Mass. posted a nearly 3 percent increase. The rest saw double-digit sales declines. For the state overall, condo sales from January through August declined just over 25 percent when compared with the same eight months in 2007.
Meanwhile, in the same period the median sales price for the state slid about 9 percent. The median price is $318,000 -- meaning half the sales were for properties valued under $318k and the other half were valued at more than that.
To get a better sense of community results, I looked at single-family sales in Suffolk County listed in the Sept. 22 Banker & Tradesman. Of the communities with sales listed in that issue, two have posted an increase in sales transactions for the year-to-date: Chelsea and East Boston. In Chelsea, sales were up about 73 percent, from 11 in 2007 to 19 this year. In East Boston, sales rose about 37 percent, from 19 to 26. The rest of the communities listed had posted fewer sales so far this year, but many were not too far off their 2007 numbers.
Yes, real estate sales are still happening, but they are undeniably slowing down. And no I’m not saying you can judge every community based on countywide numbers. Massachusetts’ market isn’t crashing like California and Florida, but the market is nonetheless adjusting, and buyers and sellers alike should make note.
Finally, if you’re interested, here’s the list of single-family sales results, by county, in order of how they have performed for the year-to-date:
1) Nantucket: -45.83%
2) Franklin: -21.88%
3) Hampden: -20.14%
4) Bristol: -19.83%
5) Norfolk: -18.56%
6) Hampshire: -18.5%
7) Worcester: -18.05%
8) Middlesex: -17.93%
9) Suffolk: -17.93%
10) Plymouth: -16.44
11) Essex: -12.5%
12) Berkshire: -11.94%
13) Dukes: -12.5%
14) Barnstable: -2.0
STATE: -16.7%
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Maybe I'm dense, but these deep sales declines just aren't shocking. Credit is harder to come by, and buyers are understandably wary. They're afraid they will lose a lot of value if they buy today.
If the bailout happens and credit starts flowing again I think that will increase sales (or at least lessen the decrease), and even a slowdown in price decreases will help sales.
This is not to paint a rosy picture, but I do think the bailout will happen. And I think it's certainly possible that prices decreases will slow in Boston compared with first half of 2008. Not that they won't continue to drop, just that it won't be quite so steep.
Do you have the median asking and final sales prices for the mentioned counties? Sales are declining but are the prices following suit? The statistics are less meaningful for some of the counties with only a small number of sales. Except for a few outliers, the numbers are remarkable uniform.
A take home message given the worsening economic climate over the past month is that everyone, from the east to the west, is affected and the bottom has unfortunately not yet been reached.
I wonder if in the case of Barnstable the number is lower because it slowed down earlier as I recall - they had a big drop from 2006 to 2007 no? Can't remember fully.
You also have a bit of a sales floor in Barnstable, Nantucket, and Dukes, as so many year arounders have been priced out of the market for so long, that they will jump into anything once it gets affordable. And some of the properties at the top of the market (over represented in those counties) really are discoupled - people I know looking in the 4-20 million range have a lower marginal value of money and so are more affected by rarity than markets. More true of the upper end of the range of course.
The State wants to raise Mass Pike and bridge tolls. I think a good point to make is that the more expensive it is to use the Pike and roads in Mass, the less motorists will use them - hense backfiring this form of revenue. In MA, no one can afford to drive to work - who wants to buy here?
GB,
Here's the data that I have on median sale prices for the counties. Again, it is courtesy of the Warren Group. The lists below include median prices for single-family residences and then change when compared with the same period last year.
Jan.-Aug. 2008
Barnstable: $335,000 -- down 12.30%
Berkshire: $195,000 -- down 7.14%
Bristol: $265,000 -- down 11.67%
Dukes: $650,000 -- down 7.14%
Essex: $350,000 -- down 7.87%
Franklin: $185,000 -- down 5.37%
Hampden: $181,000 -- down 5.10%
Hampshire: $250,000 -- down 7.37%
Middlesex: $405,125 -- down 5.78%
Nantucket: $1,637,500 -- down 2.09%
Norfolk: $394,000 -- down 7.29%
Plymouth: $311,000 -- down 11.14%
Suffolk: $325,000 -- down 10.96%
Worcester: $240,000 -- down 12.25%
STATE: $318,000 -- down 9.14%
August 2008
Barnstable: $325,000 -- down 18.75%
Berkshire: $185,000 -- down 11.69%
Bristol: $255,000 -- down 13.56%
Dukes: $656,250 -- down 30.92%
Essex: $354,000 -- down 5.09%
Franklin: $207,500-- UP 1.22%
Hampden: $178,750 -- down 12.16%
Hampshire: $257,500 -- down 6.33%
Middlesex: $420,500 -- down 6.56%
Nantucket: $1,475,000 -- down 30.42%
Norfolk: $395,000 -- down 12.22%
Plymouth: $325,000 -- down 9.72%
Suffolk: $326,000 -- down 6.66%
Worcester: $234,000 -- down 14.91%
STATE: $323,000 -- down 9.01%
Everybody can go to the warren group website and look at the town by town data for free. You can look all the yearss medians and total sales for each town. I have been looking at it and noticing a pattern. You can do it yourself and see if you see I have been seeing. The 2008 median prices so far this year for the towns I have looked at are about the same as the prices for 2003 medians. I am not saying I am seeing this for all towns but I have more most in the sample I have looked at. 2002 was the start of the loosening of credit. So, does that mean prices will revert back to 2002 prices. I have also noticed a large increase (approx. 30%) between the medians from 1999 to 2000 for some towns. I am not sure if that is real but the region was prosperous during the 90's and that increase could reflect the desireability of the region. I do think that house prices could revert back to the nominal 2002 prices and that might be your bottom. So I think we might have another year to go before hitting bottom. But who really knows!
The bailout won't improve homeowner credit options so much as keep them at current levels instead of getting DRASTICALLY worse.
Current levels are nothing to get too excited about to my mind.
G I've also noticed this. In fact, we purchased our house in June for less than what the buyer paid in 2002: about 3% less. However, I'm not sure that I would say we have only a year left. The bubble may have started in earnest in 2002, but I think it could go back to 1998 prices in certain pockets of eastern ma and here's why. In 1996 the economy in MA was significantly on the rise due to the tech bubble with relatively low interest rates and that is when I think home prices really started to take off. I also think that banks were starting down the path of loose lending during this period with interest only loans, double mortgages with no money down, and pushing of adjustable mortgages. You have to remember that the strong housing market was the genius of the Clinton administration. Bush really only exacerbated it with his poor (lack of) fiscal policy. While the tech bubble burst, the loose lending only helped prices continue to rise significantly. What I think the problem is right now is that housing during 2002 to 2006 was predicated on credit where at least during 1996 – 2001 it was at also supported by jobs and real commerce. Today's perfect storm is: no credit, no jobs, declining trade and manufacturing. In terms of a housing recovery, I'd watch for barometers such as: falling gold prices, unemployment at 5%, GDP at 3%, stabilized dollar and a strong euro, and China and India are not stagnating due to economic impacts from the US and Europe, at least 18 months with a new president. But realistically, I think we are only now starting to see the affects of the US economy on the global market. If we don't have anyone to sell to, how are we going to bring in money and pay for our houses?
To pile on Mish's pessimism or realism, you are going to see a significant change to Boston area economy vis a vis BOA Wealth Management (soon to be ML), Evergreen (soon to be citi), and the other job losses that are certain to be coming. I believe it will make 2000 - 2003 or 4 look mild in comparison.
Unrelated, I want to get something off my chest.
if you read that CRA caused this mess, immediately discount the person as reflecting opinion, not fact. The fact is 50% of sub-prime was by mortgage lenders and another 30% was by subs of bank holding corps; that means 80% of sub-prime lending was done by institutions that are not beholden to the CRA guidelines. Next, approximately 30 -40% of CRA loans (depending on how you want to count it) are made to small businesses - NOT homeowners - with medium to high incomes. Also, not all CRA is sub-prime. Lastly, since 1977, $14 trillion in CRA loans were made. The securitized mortgage market is in excess of $11 trillion as of last month - notice I made the distinction of securitization and early outlined that CRA loans are 70% mortgage at best.
Oh, and the CRA are principles based guidelines - not a requirement by law or regulation.
Now my opinion: I think the CRA should be disintegrated as it has been corrupted by the same infectious greed afflicting the entire housing market. People took advantage of the guidelines for excessive personal gain and the ultimate loser is the people the CRA was trying to help.
minor correction wsjevons - Citi just bought the bank, not evercore and the securities business.
That said, I completely agree with you, there will be many fewer finance jobs in Boston in a years time.
Charles - and I pride myself on accuracy. (Evercore is an investment bank btw. ;-)
WSJevons - I find you quite accurate - hence I thought you'd appreciate the pedantry.
This blogger might want to review your comment before posting it.
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