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Boston Bubble Brief: The Real Story for MA - Apr 2007

 
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admin
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PostPosted: Fri May 25, 2007 2:37 pm GMT    Post subject: Boston Bubble Brief: The Real Story for MA - Apr 2007 Reply with quote

This is a brief report on what the data for the housing market in Massachusetts looks like in real terms. Market data is typically reported in nominal terms which can be misleading because it combines changes in housing values with changes in the value of the dollar. Correcting for inflation removes changes in the dollar as a factor and gives a more accurate picture of how housing values have changed. This report is based on the published data of the Massachusetts Association of Realtors.

The Massachusetts Association of Realtors released their data for April 2007 on Tuesday, May 22nd, three days ahead of schedule. While the raw prices were provided in nominal terms, for this report they have been adjusted for inflation using the CPI Northeast Urban numbers available at http://www.bls.gov/cpi/ Adjusting for inflation produced the data represented by the graphs below:

Full Price History




Change in Median Price From One Year Earlier, February 2004 - April 2007

Seasonal variations are removed by comparing prices from the same month in the prior year.




Some observations:

  • The real decline from April 2006 to April 2007 was 4.40%
  • Prices are now 13.29% below the peak set in June 2005.
  • The year over year decline in April returned to the normal range, suggesting that the less severe decline than usual from last month was fleeting.
  • April's year over year decline was over two standard deviations below 0 and the moving average was nearly three standard deviations below 0, indicating that continuing declines are the norm.

Yet again, The Warren Group reported greater declines than The Massachusetts Association of Realtors. The Warren Group reported nominal declines on equivalent transactions of 4.7%, with the median price falling from $335,000 in April 2006 to $319,314 in April 2007. This translates to a real decline of 6.77%. The Warren Group's data is more comprehensive than the Massachusetts Association of Realtors' data as it includes all sales rather than just Realtor affiliated MLS sales.

The S&P/Case-Shiller Index for Boston is likely superior to the data from both The Massachusetts Association of Realtors and The Warren Group as it corrects for many flaws that are inherent when only using the median price. The S&P/Case-Shiller Index also has the advantage that futures contracts can be traded against it, thereby offering an unbiased insight into where housing prices are expected to be in the future. The MAR data was used for this report mainly out of inertia and might be replaced with the S&P/Case-Shiller Index in future reports.

As usual, please do try this at home. Double checking of the math used to construct the above charts and analysis is strongly encouraged in order to help ferret out any errors. The data was derived from the following sources:

The text of this post and the associated graphs are Copyright 2007 by bostonbubble.com with all rights reserved, except as stated here. You may reproduce each graph individually or the text of the entire post as a whole (including graphs) under the Creative Commons Attribution-NoDerivs 2.5 License. You may additionally scale the graphs to fit your work. Alternatively, if you remove the bostonbubble.com signature from the bottom left hand corner of the two images within this post, those modified images (and only those modified images) can then be distributed under the Creative Commons Attribution 2.5 License. In all cases, attribution should be made via a hyperlink to http://www.bostonbubble.com/forums/viewtopic.php?t=234 or http://www.bostonbubble.com/ Quoting excerpts of the text is also allowed provided that the quotes would normally fall under fair use. To request other terms for reproduction, please post your request in the original thread at http://www.bostonbubble.com/forums/viewtopic.php?t=234

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admin
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PostPosted: Fri May 25, 2007 3:28 pm GMT    Post subject: Reply with quote

One thing that I forgot to mention in the original post above was this quote from Tuesday from the Massachusetts Association of Realtors:

Quote:

"The housing market continued to trend in a positive direction for the month of April," Doug Azarian, president of the Massachusetts Association of Realtors, said in a statement.


The price change was most certainly not positive, and the continuing trend is down, as evidenced by the above graphs. The MAR's spin is misleading at best and obviously does not apply to prices.

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PostPosted: Fri May 25, 2007 7:04 pm GMT    Post subject: Reply with quote

I believe the positive trend that MAR was referring to is a slowing in the rate of the declines in prices, not that prices are rising. They are trying to say that they think we are near the bottom (which I doubt).
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PostPosted: Fri May 25, 2007 7:10 pm GMT    Post subject: Reply with quote

jbw wrote:
I believe the positive trend that MAR was referring to is a slowing in the rate of the declines in prices, not that prices are rising. They are trying to say that they think we are near the bottom (which I doubt).


The price declines aren't slowing, though.

I think they were referring to the YOY inventory numbers declining. The problem is, in 2005 when prices were soaring and inventory was ballooning, why didn't they say that the market conditions were negative?

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john p



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PostPosted: Fri May 25, 2007 8:23 pm GMT    Post subject: Reply with quote

I know, the way they do the numbers, year over year it might be positive relative to the corresponding month the prior year. If you read the "January Jump" subject you can see that by comparison January 2007 was bad, but compared to a miserable January 2006 it's positive. I agree it's the difference between ugly and fugly.
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PostPosted: Sat May 26, 2007 12:55 am GMT    Post subject: From whence the monthly price data points? Reply with quote

Forgive me if this is painfully obvious, but as a cautious first-time buyer I'm trying to grasp month-to-month (seasonal) price trends. Are the monthly price medians derived from recorded closings, or something else?

For example, if these are coming from closings, I might conclude that April's figures reflect offers made and accepted mostly in March (assuming a 2 month average lag from offer to closing). What I'm really trying to do is figure out the best time to start making offers if I want to catch the August-September seasonal dip.

I realize that this chart isn't about seasonal variations but rather adjusting the year to year price differences --and it's quite useful as such. But as a relatively naive buyer, I find the year-to-year consistency in seasonal price variations quite striking, and want to make sure I'm drawing the right pragmatic conclusions about timing.
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PostPosted: Sat May 26, 2007 2:26 pm GMT    Post subject: Reply with quote

Quote:

Forgive me if this is painfully obvious, but as a cautious first-time buyer I'm trying to grasp month-to-month (seasonal) price trends. Are the monthly price medians derived from recorded closings, or something else?


It's not painfully obvious. It's not even painlessly obvious, unfortunately. The MAR report doesn't say how the prices are derived. I have always assumed that it represents closings since that seems to make the most sense, but that is just an assumption.

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PostPosted: Tue May 29, 2007 3:16 pm GMT    Post subject: Reply with quote

admin wrote:
One thing that I forgot to mention in the original post above was this quote from Tuesday from the Massachusetts Association of Realtors:

Quote:

"The housing market continued to trend in a positive direction for the month of April," Doug Azarian, president of the Massachusetts Association of Realtors, said in a statement.


The price change was most certainly not positive, and the continuing trend is down, as evidenced by the above graphs. The MAR's spin is misleading at best and obviously does not apply to prices.

- admin


I believe any non-brainwashed person should not pay any attention on what that "realtors" are saying after years of shameless public lie we have been hearing from NAR and local ARs.
What still surpirse me is why most mainstream mass medias are so eager to quote those liars!
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tt



Joined: 02 May 2007
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PostPosted: Wed May 30, 2007 12:56 am GMT    Post subject: Reply with quote

Anonymous wrote:
admin wrote:
One thing that I forgot to mention in the original post above was this quote from Tuesday from the Massachusetts Association of Realtors:

Quote:

"The housing market continued to trend in a positive direction for the month of April," Doug Azarian, president of the Massachusetts Association of Realtors, said in a statement.


The price change was most certainly not positive, and the continuing trend is down, as evidenced by the above graphs. The MAR's spin is misleading at best and obviously does not apply to prices.

- admin


I believe any non-brainwashed person should not pay any attention on what that "realtors" are saying after years of shameless public lie we have been hearing from NAR and local ARs.
What still surpirse me is why most mainstream mass medias are so eager to quote those liars!


What is amazing is the number of brainwashed people, absolute denial.....
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john p



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PostPosted: Wed May 30, 2007 1:14 pm GMT    Post subject: Reply with quote

If you go back a few pages in the discussion topics back to February 2006, I posted a topic called "Massachusetts Association of Realtors". I was picking apart what I thought was propaganda and posted the links to their "economic analysis".

I went back to re-read them, and it seems that the MAR decided to hide the evidence and take them down...
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PostPosted: Wed May 30, 2007 1:47 pm GMT    Post subject: Reply with quote

john p wrote:

I went back to re-read them, and it seems that the MAR decided to hide the evidence and take them down...


I've been trying to pepper the news links and forums with quotes and predictions from those that the media cites as experts so that there is some semblance of long term memory and they can't just erase their track record like this. I'm not sure that it matters since anybody who thinks to research an "expert's" track record before relying on their advice is probably going to also be alert enough to realize that the NAR, MAR, et al, are most likely biased to begin with. It would be nice to see the local papers take track records into account, but at least noting them here is something. If you have come across good quotes, feel free to post them to the forum (just keep them brief enough to fall within fair use).

Here's a good quote from yesterday which I think will be interesting to revisit next year:

Quote:

In Brookline, Mass., home sales grew by 32 percent over the same period last year, and the median price for a single-family home dropped by 4 percent -- that's about $50,000 back in the buyer's pocket.

"This is the low point, and if they miss it, they may not have another opportunity like this for years to come," Greater Boston Real Estate Board CEO Gregory Vasil said.


Source: http://www.thebostonchannel.com/money/13408051/detail.html

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tt



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PostPosted: Wed May 30, 2007 2:30 pm GMT    Post subject: Reply with quote

admin wrote:
john p wrote:

I went back to re-read them, and it seems that the MAR decided to hide the evidence and take them down...


I've been trying to pepper the news links and forums with quotes and predictions from those that the media cites as experts so that there is some semblance of long term memory and they can't just erase their track record like this. I'm not sure that it matters since anybody who thinks to research an "expert's" track record before relying on their advice is probably going to also be alert enough to realize that the NAR, MAR, et al, are most likely biased to begin with. It would be nice to see the local papers take track records into account, but at least noting them here is something. If you have come across good quotes, feel free to post them to the forum (just keep them brief enough to fall within fair use).

Here's a good quote from yesterday which I think will be interesting to revisit next year:

Quote:

In Brookline, Mass., home sales grew by 32 percent over the same period last year, and the median price for a single-family home dropped by 4 percent -- that's about $50,000 back in the buyer's pocket.

"This is the low point, and if they miss it, they may not have another opportunity like this for years to come," Greater Boston Real Estate Board CEO Gregory Vasil said.


Source: http://www.thebostonchannel.com/money/13408051/detail.html

- admin


Admin, nice job with your site. It's good to see the number of posts and discussions increasing. See my post regarding this article in the economics section of the forum....
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john p



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PostPosted: Wed May 30, 2007 3:28 pm GMT    Post subject: Reply with quote

tt: I read your post, and support the thoughts...

This website really is a sanctuary for me, kind of like "any port in the storm.. Of stupidity” I like to benchmark my sanity with others so I don't always have to walk around with this surreal feeling like "What kind of idiot pay's 7 times their household income on a house". And that idiot is part of a number of idiots that are screwing me by screwing up the market. So as Arlo Guthrie spoke about how a crazy guy can start a movement, we're all trying to find other intelligent form of life to battle against the stupidity.

When push comes to shove and "followers" are afraid they tend to follow balls over intelligence. 2004 election case in point. Lots of empty headed realtors show up with fancy cars and try to push people around. Followers want to submit. It is their place to submit. They feel comfortable submitting to strength. It is the minority that seeks intelligence and truth nowadays. It is the minority that acts on the facts that stare them in the face. To the followers, it is scary to think and feel uneasy wading through the data; they want to be told by someone that tells them that they are sure. When you ever get that feeling of ease when someone gives you a curiously abundant amount of certitude, ask a few more questions, kick the tires and make sure that they are not a cocky idiot.

The Democrats can't win because they have no balls. The Republicans can't succeed because they have no brains. Our generation, we think we've got housing troubles, how about picking up the tab for this War? We're in the wrong country. Imagine that, step back and think about how stupid the guy is for paying 7 times his household income on a house; this guy is a moron right, well we're in the wrong country spending billions and billions and billions of dollars, money completely flushed down the toilet and we're gaining absolutely nothing; in fact we're building up more hatred of the US. The guy who said the war wouldn't cost $2 billion (laughed at the absurdity that it could cost that much) WAS PUT IN CHARGE OF THE WORLD BANK. THE WORLD FREAKING BANK. I thought he'd have been exposed to being, hmm not so good at numbers. The audacity of the Administration to take poor performers and PROMOTE them. Then he gets pinched for giving his girlfriend a sweetheart deal. What's his reward going to be for this?

These housing troubles that we're talking about lead us to understand the contributing factors, and when we analyze these we can see some of the same things. Cocky meatheads know they can succeed in throwing out red meat to masses of fearful lazy followers. They might be real estate agents, politicians whoever. This is the reality, the context we are operating in. Housing went through a period of irrational exuberance and is littered with predators because it is flooded with easy prey. Until the prey learn how to defend themselves the predators will feast on them.

What started this Country was two things, first, intelligence: Enlightenment, John Locke, and Rousseau, printing press etc. and second, balls: people that would face absurdity, audacity, and punch the bully on the nose. In all fairness, we needed some balls after 9/11 and the Democrats were pussies. The point is, exercise intelligence, but don't forget that balls are important.

Boston has historically had a good balance of intelligence and balls; if we lose this balance our future will not be good.
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tt



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PostPosted: Wed May 30, 2007 3:42 pm GMT    Post subject: Reply with quote

john p wrote:
tt: I read your post, and support the thoughts...

This website really is a sanctuary for me, kind of like "any port in the storm.. Of stupidity” I like to benchmark my sanity with others so I don't always have to walk around with this surreal feeling like "What kind of idiot pay's 7 times their household income on a house". And that idiot is part of a number of idiots that are screwing me by screwing up the market. .


As one from another blog put it, "all you need is a bucket of money and box of stupid".....no shortage of boxes in these parts...
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