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FRED
08-20-06, 04:02 PM
When sales fall, they call St. Joe (http://www.boston.com/news/local/massachusetts/articles/2006/08/20/when_sales_fall_they_call_st_joe/?p1=MEWell_Pos1)
August 20, 2006 (Boston Globe)

Donald Ward Cranley doesn’t need to look at the latest economic indicators to know how the real estate market is faring. He just checks the inventory in his shop, Ward’s Gifts, on High Street in Medford.

If sales of the beige, 5-inch St. Joseph statues are slow, it means the real estate market is strong. If sales are brisk, the market is weak. Lately, all signs point to a real estate meltdown: He’s selling 300 statues a month.

‘‘We can’t keep them in stock,’’ he said. ‘‘Everybody comes in here looking for them. Realtors are buying a dozen at a time.’’

AntiSpin: Again, new evidence indicates that we may have been optimistic in our predictions of the collapse of the housing bubble when we modeled a ten to fifteen year correction (http://www.itulip.com/housingbubblecorrection.htm) in January 2005. Recent reports inidicate a more rapid reversion to the mean.

To get a sense of what's going on, we took a quick look at the Local Market Conditions (http://realtytimes.com/rtmcrtop/home.htm) section for Massachusetts on the RealtyTimes.com site. Local conditions are reported by realtors who tend to be, understandably, more optimistic in their assessments than disinterested reporters, so this is likely the most sanguine view you're going to find.

In Boston and adjacent towns, sales are down but prices are up. As you travel away from the city toward the outer suburbs to rural areas, sales and prices are reported by most realtors as declining.

Starting in the city and working our way out, this report on Boston is typical:

"The Numbers Don't Lie (http://realtytimes.com/rtmcrcond/Massachusetts%7EBoston%7Ekarlpease): The Greater Boston area has been under tremendous pressure this spring to perform in a manor much like last year. It cannot. In fact, the South Shore is off 9.2% in the number of Sales and maintaining its Median Selling Price of $350,000. In Boston the numbers of Sales is off 7.93% while the Average Selling Price is up 28.3%. So with 33 years of looking at market numbers I can say with some degree of surety that we are in an uncertain market."

Not far from Boston, conditions are not so bad but still deteriorating. In Belmont, five miles outside of town:

"DAZED & CONFUSED (http://realtytimes.com/rtmcrcond/Massachusetts%7EBelmont%7Emichaelphughes) describes most buyers and sellers in Belmont and the surrounding areas. Although I'm not quite ready to proclaim a buyers market, the tide has turned and many buyers are now able to capture and negotiate better deals (or value) than has been possible during the past five years. Three major factors have contributed to downward price pressure: interest rates, inventory levels and popular media suggestions of a housing bubble."

Head farther outside of Boston and conditions get worse, such as in Wakefield. This report is typical for suburbs 10 - 15 miles outside the city, showing Wakefield as the extreme buyers' market, rating a 1 on a 1-to- 5 scale of Buyer's-to-Seller's scale:

"It's a great time to buy (http://realtytimes.com/rtmcrcond/Massachusetts%7EWakefield%7Elaurieroy). Interest rates are still at an all time low even though they have crept up a little. Lots of properties to choose from. Plenty of time to make a decision. Prices are coming down."

This report on Boxborough is typical for suburbs 15 to 25 miles outside of Boston:

"For the month of July, 2006 (http://realtytimes.com/rtmcrcond/Massachusetts%7EBoxborough%7Ekarenkearnest), Boxborough, MA has experienced a downturn in the market as compared to the same period in 2005. For July, 2006 there was only one SOLD transaction with 302 days on market and a closed price of $975,000 as compared to July, 2005 that had 4 SOLD transactions with an average of 49 days on market and an average sold price on $750,500. Currently, there are 33 single family homes for sale in Boxborough with an average days on market of 93 and an average list price of $682,539. Houses on the market range from $289,900 to $1,250,000."

Head farther out, 30 miles or so from Boston, and the going is getting really tough, such as in Hudson:

"Like most towns in the area (http://realtytimes.com/rtmcrcond/Massachusetts%7EHudson%7Emarilyngmessenger), inventory is up, time on market has increased, and as interest rate rose, sale prices went down in Hudson Massachusetts. The number single-family homes for sale in Hudson has increased from the number one year ago - 111 vs. 81 and With so many choices and current list prices ranging from $210,000 to $799,900, Hudson continues to provide some excellent opportunities for home-ownership.

"The median list price is $389,900 compared with $425,900 last year at this time. The average list price is also down -- $433,459 from $447,496. Time on the market has almost doubled from 64 days last year to 125 days currently. Sellers who really want to move need to be very realistic about pricing their property correctly."

Head even farther out to places like Palmer, you start to see higher gasoline prices and the cost of commuting taking its toll on the housing market:

"It is now a buyers market here in Western MA (http://realtytimes.com/rtmcrcond/Massachusetts%7EPalmer%7Ebridgetdonato) with Prices on a downslide. With the recent price increase for gasoline there have been fewer buyers flocking to the area for that deal. For every buyer out there now there is a larger inventory of homes for that buyer to chose from, and we encourage our sellers to price their home accordingly, to make their home stand out from the competition."

This pattern of real estate prices collapsing from rural areas in toward urban areas was predicted in Housing Bubble Correction Update - Geographic Regions Cascade (http://www.itulip.com/housingpriceregionscascade.htm). The mechanism is the reverse of the process that led buyers during the housing bubble to head farther from the cities to find more affordable properties; as demand and prices fall in more desirable areas, demand and prices fall even faster in less desirable areas. Further accelerating this reverse process is that during the bubble when housing prices were cascading up and away from metro areas, gasoline prices were much lower. Now commuting costs are contributing to a reduction in disposable income, putting additional downward pressure on home prices in areas that are distant from jobs in cities and suburbs, the source of income for many rural home buyers, furthering the cascade of prices down and toward metro areas.

Jim Nickerson
08-20-06, 04:32 PM
Congratulations on the thoroughness that went into this article. Good work.

jk
08-20-06, 07:14 PM
can someone tell me the symbolism of st joseph in this context?

JD_
08-20-06, 08:04 PM
can someone tell me the symbolism of st joseph in this context?

St. Joseph is the patron saint of house buyers and sellers. Odd that people seek supernatural guidance on real estate transactions but there you go.

metalman
08-21-06, 12:15 AM
St. Joseph is the patron saint of house buyers and sellers. Odd that people seek supernatural guidance on real estate transactions but there you go.

gonna take more than voodoo to turn this around...


http://www.bcaresearch.com/public/data/PRE-20060817.GIF

Charles Mackay
08-21-06, 08:57 AM
gonna take more than voodoo to turn this around...


http://www.bcaresearch.com/public/data/PRE-20060817.GIF

metalman, when looking at this chart you would have thought that 2000 was the top as it was in stocks but the right shoulder produced the vertical part of the bubble.

Charles Mackay
08-21-06, 09:47 AM
They call it a "crash" in Australia and their bubble preceded ours by a year...

http://www.smh.com.au/news/national/housing-crash-puts-sellers-in-debt-crisis/2006/08/20/1156012414995.html

metalman
08-21-06, 10:30 AM
metalman, when looking at this chart you would have thought that 2000 was the top as it was in stocks but the right shoulder produced the vertical part of the bubble.

housing went up during the stock bubble, but was not the focus of speculation. housing fell with the crash of the stock bubble 2000 - 2002, then picked up with the fed reflation action and by summer 2002 itulip noted an early bubble phase. then in early 2004 said how it was going to end... sieze up... then in early 2005 called a top coming shortly and a 15 yr correction. this all relates very closely to this chart. have to say, the descriptions and the timing of these calls is almost creepy. but what I wanna know, is what's going to happen to my metals, darn it! they ain't saying!

Spartacus
08-21-06, 05:31 PM
Thanks for that link

This guy

http://www.institutional-economics.com/

used to post an endless stream of insults against those who would proclaim a real estate bubble. He used to love to point out that Australian prices moderated, or stopped rising, instead of falling, in order to rebut the talk of a US housing bubble.

But in the last several months he's made nary a post about real estate, preferring to shift the name-calling and slagging from those pointing to a real estate bubble to Setser & Roubini.




They call it a "crash" in Australia and their bubble preceded ours by a year...

http://www.smh.com.au/news/national/housing-crash-puts-sellers-in-debt-crisis/2006/08/20/1156012414995.html

Spartacus
08-21-06, 05:42 PM
I forgot to put in

"I should have smelled a rat when all talk of real estate disappeared off there ..."