Sales pick up in September

One month does not make a trend. Let's see what October and November look like since the credit crunch only kicked into overdrive in mid September. And of course there are the nasty facts that 40% of sales were distressed and prices were down 9%. Although, when the chief economist for the NAR starts to sounds a little bit bearish, makes one think that we might be starting to see signs of a bottom.....nah, there's still much more pain to come.

When Lawrence Yun starts saying things like "The downturn in the housing market which began in 2005 seems to be showing signs of accelerating and we can see no signs of a bottom" or your friends say things like "The value of my home has dropped 30%. Anyone who buys in this market is a moron." then you will know we are at or near the bottom.

I don't think most in real estate are taking it as good news, nor the markets. Sales are up because prices are crashing down, and foreclosures are getting pushed out the door to get them off balance sheets.

Now arguably this is good news for the country as a whole - realistic real estate prices will increase sales, etc. etc. Good for real estate agents too - fundamentally number of transactions is a better driver of incomes than high prices.

But its not great news if you currently own real estate. ANd the high level of inventory indicates prices will have to come down more to put the market into balancec

I'm going to stick with what I have been saying all along. Prices will continue to decline (locally and nationally) for at least another 2-3 years followed by several years of price stagnation.

Up until recently Yun and his NAR cronies have tried year after year to hype up the RE market by saying there would be a turnaround within X amount of months. You know things are really bad when the NAR finally stopped predicting a turnaround. To make matters worse it looks like the economy (locally and nationally) may be in worse shape than what many realized. The declines have occurred in every town but more so in "depressed" areas. Based on recent events in the local and national economy, housing values will start to depreciate at a higher rate everywhere.

The important question may not be how much longer the housing market will take a hit. We may need to start asking to what magnitude prices will decline.

Honestly Stacy this sort of post is beginning to make me lose all respect for you. We're in the middle of a huge recession. While certain areas will go down less than others the overall trend is undeniabely down, everywhere. No area will be spared. Mortgage rates are showing as much volatility as the overall market. Lenders are cracking down on the terms of who they'll lend to and with what they require. Many businesses in the area are on the verge of layoffs. If people don't think broad based cuts of staff are coming in the greater Boston area they are fooling themselves. I would expect several financial firms and other businesses to announce cuts in the next few weeks. These have been in the works for weeks and the recent downturn has contributed to the cuts being even larger. I would hope that by writing this blog it would be a mix of reporting of facts and opinions. Clearly the trend going forward is down. Significantly.

Prices here in the Bethel Maine area are tumbling and no takers. According to a real estate friend, prices are down 35% from the peak back in 06 and they will continue to fall. Nobody wants these big homes for vacation homes. They can't swing the insurance or the taxes. We are in a time where getting back to reality and basics will be a way of life. The party is over! Now we have to pay for the damages.

My analysis on this is that there are a large pool of buyers out there that are sitting on the sidelines. They would like to get this house search over before Winter. Sellers have been irrationally unwilling to come down to market pricing, so there has been a stalemate. Now we are seeing more distress sales as the economy weakens. When the job layoffs get into gear in Q4, you will see even more distress sales and prices fall further. The amount buyers will pay will get even more conservative as they also fear job layoffs, so dont want to get in over their heads. As has been speculated a number of times, prices will probably go down to 4X avg incomes in most towns, which will be a huge drop.

I'm in total agreement with the commentors above... the next 5 months will most likely show a renewed even dramatic new leg down to the price and sales declines as the real economy slides into a hideous recession.

Our area had experienced a somewhat muted version of the housing decline up to September but since the stock market sell-off kicked in and laid waste to consumer and business confidence, we are in a new paradigm.

Unemployment is going to rise dramatically as a generation of dead-wood professional service workers are chucked overboard in businesses desperate attempt to adapt to a far more difficult operating environment.

30% of households with these unneeded workers are going to face tremendous financial stress and good portion of them will simply go under.

The old normal is now completely gone for good.. there is no sense in wishful thinking ... This is a tinderbox situation.

We haven't yet begun to feel the impact of the Wall Street meltdown on Main Street (at least Main Street Massachusetts) - and right now we're only a few months into the credit crunch. It's impossible to make an assessment at this point until the stimulus plan makes its way through the system to see whether any credit is, in fact, freed up by the terrified banking industry (so far it hasn't), and also to see the impact that the ongoing job losses have on housing demand.

If I were to attempt to assess the health of the real estate market going forward, these ongoing sales figures aren't the final say on what I'd be looking at. They may just represent bargain hunting by investors with cash as much as anything else. Ask me where things are in another year or two and then we'll see. Right now even the foremost experts have absolutely no clue what comes next - it could be as bad or worse than the chicken littles are saying, or we may be reaching bottom soon. Nobody knows at this point since we are literally in the eye of the proverbial financial hurricane.

While I would fully expect prices to tumble in a place as distant and remote as Bethel Maine, I can assure readers that here in downtown Boston, the boom continues unabated. While admittedly the total number of properties sold has moderated somewhat, the median and average prices, the price per square foot, any other metric you choose, things have gone in one direction: UP. Bidding wars, swarmed open houses and multiple offers are still happening here. But is it any wonder? We have a very diverse local economy that has proved itself immune to the wider downturn. With the weak dollar we're seeing foreign buyers taking up any slack that might appear in the market. Plus, sharp buyers are keenly aware that when the stock markets descend, a very safe place for their dollars is the old standby: real estate. And wealthy owners of blue chip stocks know to invest in only the bluest of blue chip areas: the city center downtown market. Read the latest Otis & Ahern report: 2008 is shaping up to be a RECORD year.

So to any agents out there in undesireable areas like Bethel Maine, all I can say is come to downtown Boston. We're still partyin' like it's 2005!

what weaker dollar????? In my part of downtown boston we have regular access to things like currency reports.

I really think sunshine is a real realtor, but statements like this make me ponder whether we are getting trolled.

Charles - Call me a troll if you wish, but I speak the truth.

In fact, did you just see the latest Case/Shiller Report? Terrible terrible news. Their 20 city index crumbled a whopping 16.6% year over year for the month of August. Prices fell in the 20 cities tracked by the index....EXCEPT in (drum roll please!) BOSTON!

Prices in Boston, according to the report, INCREASED!! That's right, increased. Admittedly it was a modest increase, but the point is that Boston has proven itself to be immune from the downturn striking other cities. I'd go further and suggest that since the Shiller reports considers "Boston" to be the Boston Metropolitan Statistical Area, which includes less desireable areas such as Quincy, Chelsea, etc., that the price increase for real Boston (i.e. the city center market) has gone up even further.

So call me a troll but the evidence has proven me correct. The Boston market is immune from the crisis happening elsewhere. Our prices continue to increase, our economy is diverse and well-compensated, and we can look forward to the boom times continuing here in our happy corner of the country.

How Bizarre, Sunshine.

On my computer, the US dollar is at a recent high, and the Case Shiller index shows Boston down 4.7% year over year. Thats minus. Not increased.

Are you just randomly making stuff up?

S & L,
Unfortunately for your assessment you are talking about a tiny fraction of the overall housing market in downtown Boston. I can assure you that as someone who lives in Boston, and who has several friends in the category you mention, there are no bidding wars going on and even the "blue chip" folks are taking a massive hit with their investments. I would admit that there will always be buyers regardless of the market conditions but your assessment is more of the same old hype that the realtor groups were trying to spread in the last several years.