Boston Area House Prices "Hit The Wall"
The BostonHerald is reporting that some neighborhoods are seeing mortgage defaults and price declines. "Dorchester and Roxbury homeowners defaulting on mortgages rose 35 percent over the past year, said Anderson, of The Real Estate Analyst. And Dorchester single-family and condo prices are falling after record highs last year."
"Dorchester single-family home prices dropped during the same period to $320,000 from $370,000, while condo prices slid to $245,000 from $265,000."
The trend toward subprime loans looks to be a factor. "An economist from the University of Massachusetts at Boston, documented in a recent study that found a 60 percent rise in so-called subprime lending in Boston neighborhoods."
"'There is a whole confluence of factors,' said Anderson, a longtime Dorchester homeowner. 'We've hit the wall.'"
6 Comments:
$370 in Dorchester? Roxbury? It really is a bubble if it's hit Southie.
Whoa! Those foreclosure rates are an eye-opener, and so is the drop in prices! This is just the beginning, folks.
The more of these stories that make it into print, the sooner the bubble will burst. The bubble depends on people's expectations that real estate will continue rising. Contrary evidence will deflate demand. So keep these stories coming!
It's not just Boston that is hitting the wall. How funny. This happens the same time the officials at the Fed say that everything is just fine and there is no bubble in sight. They should buy a new pair of eye glasses or buy a air plane ticket to Boston.
Part Two
http://business.bostonherald.com/businessNews/view.bg?articleid=79359
Having been a research analyst and real estate consultant in residential real estate industry in Boston for two decades, a period that spanned the last downcycle, I'd be cautious about rushing to conclusions based on stats from two communities in Boston, particularly when neither the newspaper nor author specifies whether his statistics are medians and averages. The latter, of course, can overstate the changes really occuring in the market, which may be why the local Realtor association is now reporting median stats. So what's really going on behind this statement?
"Dorchester single-family home prices dropped during the same period to $320,000 from $370,000, while condo prices slid to $245,000 from $265,000, Anderson said."
Karl Case, the economist who gets the final word in the Herald's article, is one person worth consulting. He cofounded a company with Robert Shiller, the famed author of _Irrational Exuberance_, which provides online valuations to lenders and consumers. Comparisons of neighborhood vs. county vs. metro price trending lines are included in each report, and will help blog readers monitor prices changes in their local community. See: http://www.cswcasa.com/products/casa/sample.html
As you can see from their site, they are often quoted in the press: http://www.cswcasa.com/news/
Of course, you needn't be an economist to have an informed opinion about the real estate bubble. So glad to have discovered this remarkable blog for my own daily reading!
Has anyone noticed that many of our major employers in Mass are either going out of business or hurting like Polaroid, Gillette, Putnam, State Street, etc. These and other jobs losses have resulted in a net loss of population to other states. So how's residential housing in the Boston area holding up?
Personally, I think this is going to end a lot worse than the '89 condo crash where at least there were still a number of companies left in the state who weren't outsourcing all of their work. This time, I predict a 70% decline in condos followed by 20-40% in houses.
Post a Comment
<< Home