bostonbubble.com

[admin]

This is the fifth report in what may become a series 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. Reports are based on the published data of the Massachusetts Association of Realtors. The first report was for February 2006 and the previous report was for May 2006.

The Massachusetts Association of Realtors released their data for June 2006 on Tuesday, July 25th. 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/

Based on the adjustment for inflation, the year over year price change set a new, all time low with a decline of 5.80% from June 2005. This is particularly notable because June 2005 was when the all time high price was reached, and so the market has been below its peak for a full year now and is currently 5.80% below the peak. Further bolstering the indication that price declines are due to more than seasonal changes, June 2006 also marks the tenth straight month of year over year price declines with the declines continuing to grow steeper.

One thing that did break with the trend of the past few months was the direction of the revisions made to the MAR's data. In previous months, past data was revised downward, thereby making more recent months appear better in comparison. See the previous Boston Bubble reports for details. However, this time the only revision to past data covered by this report was upward, thereby making the current decline even steeper, albeit ever so slightly. The June 2005 median price for single family homes was revised up from $373,500 to $373,750 (a 0.07% change).

Adjusting for inflation produced the data represented by the graphs below:

One Year Price History




Change in Median Price From One Year Earlier, February 2004 - June 2006

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



The analysis from the May report of the accelerating depreciation is further bolstered by the June data. It appears quite plausible that prices are headed for a steep correction rather than the so called "soft landing" that many in the industry were wishfully giving assurances of (though some have already recanted). Beginning with the peak in November 2004 and continuing to the most recent data point in June 2006, appreciation is clearly in a downward trend (turning into depreciation last September) and there is no indication that the rate is not going to continue to decline further, extending the existing pattern. It is certainly possible that the declines could level off and bring a supposed "soft landing", but claims that a soft landing has already occurred or that the market is merely catching its breath before continuing its ascent are not substantiated by the actual data as demonstrated by the above graph, and for it to occur would require a departure from the current downward trend.

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:

• http://www.bls.gov/cpi/
  
• http://www.marealtor.com/content/monthly_reports.asp
  

The text of this post and the associated graphs are Copyright 2006 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. Attribution should be made via a hyperlink to http://www.bostonbubble.com/forums/viewtopic.php?t=112 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=112

- admin

[Amon -Somerville]

Nicely done, Admin. This data really should always be reported CPI-adjusted ... thanks for doing the legwork.

You've probably already seen this, but there is some great data presented by Robert Shiller (and downloadable in raw form) during a webcast in late July on the "Current State of US Home Prices" ...
http://www2.standardandpoors.com/ ...truncated...

With the data itself at...
http://www2.standardandpoors.com/spf/pdf/index/MetroArea_PriceHistory.xls

This is all based on Case and Shiller's "repeat home sales methodology" where they actually track the increase in sales of individual homes over time. Shiller is pretty measured in this webcast. He's much more explicit about his anxieties over the housing market in this NPR interview from April...
www.npr.org/templates/story/story.php?storyId=4579179

Editor's Note: This post was edited to abbreviate a URL which was widening the page due to the way that the forum software lays out posts. No other changes have been made, and the URL still points to the original destination - only its display has been shortened.

[Frothy]

Nice work plotting this data. I included it in the Wikipedia article http://en.wikipedia.org/wiki/United_States_housing_bubble, but am now told that the "Attribution-NoDerivs 2.5" license that you've used precludes its use there. Would you please release these plots simply under "CC Attribution 2.5"?

Here's the Wiki-rationale:

[admin]

Frothy,

Thanks for asking about the license. Was that a private discussion with a Wikipedia editor (I don't see that comment on the discussion page for the image)? I have some concerns that I'd like to pose to the editor to see if there is a way to address them. Specifically, I am concerned about allowing derivations because:

• The factual accuracy of the image should not be changed. Allowing derivations would seem to allow changes to the meaning and even to the underlying data.
  
• Changes should not be construed as endorsed by bostonbuble.com. For example, if somebody superimposed the text "Call John Doe Mortgage Co. today to refinance into a fixed rate," while that change itself would be fine in general, it could be misconstrued as endorsed by bostonbubble.com given the signature in the bottom left corner of the image and the attribution text.
  

Is there a link to Wikipedia's publicly stated policy on image derivations? Perhaps they already have a suggestion for addressing these concerns. If not, I appreciate your effort in working on the Wikipedia page and am willing to try to figure out a solution here, so please bear with me.

Thanks,
- admin

[admin]

On Wednesday, August 23rd the Massachusetts Association of Realtors released their data for July 2006. For an updated analysis with accompanying graphs which include this new data, see http://www.bostonbubble.com/forums/viewtopic.php?t=119

- admin

PS - Frothy, if you're just rejoining this thread, there's a new post for you above.

[Frothy]

Admin,

Thanks for your response. I believe that the correct answer to your question is that anyone, commercial or otherwise, could take the data you've posted, create their own plot, and cite bostonbubble.com as the source alongside the ad "Call John Doe Mortgage Co. today". So even without "CC Attribution 2.5", something like this could happen. However, without "CC Attribution 2.5" or "GFDL" or something equivalent, this plot must eventually be deleted from Wikipedia. So I would say that not using "CC Attribution 2.5" does not actually protect you from your hypothetical, but it does prevent its use in Wiki. I'd encourage you to consider releasing it under these terms -- the downside is small (I don't think that John Doe Mortgage Co. is eager to show a plot with falling home prices), and the upside is positive. Nevertheless, I'll also post your question at the "featureed article" discussion (http://en.wikipedia.org/wiki/Wikipedia:Featured_article_candidates/United_States_housing_bubble) and see what the experts say.

Frothy

[admin]

Frothy,

[Frothy]

Wiki's selection of copyright tags (both acceptable and unacceptable) are listed at http://en.wikipedia.org/wiki/Wikipedia:Image_copyright_tags#Creative_Commons_Licenses.

It's a bit of a morass, to say the least.

[Frothy]

One easy solution of this would be to simply post an ASCII version of the data you used to generate these plots, then I'll use my own plotting software to create a GFDL version of the plot, and leave you out the loop, except, of course, for an attribution of the source.

[admin]

Frothy,

If you remove the bostonbubble.com signature from the bottom left hand corner of the two images in the initial post of this thread, those modified images can then be distributed under the Create Commons Attribution 2.5 License. Attribution should be made with a link stating that the original version is available at http://www.bostonbubble.com/forums/viewtopic.php?t=112 Just to clarify for anybody else interested, this only applies to the images with the signatures removed and is an option in addition to the previously stated license terms and does not supersede those terms.

Does that sound good?

By the way, graphs which include data for July 2006 are out now and available at http://www.bostonbubble.com/forums/viewtopic.php?t=119 You can also remove the signatures from those graphs and then use them under the Create Commons Attribution 2.5 License with a link stating that the original version is available at http://www.bostonbubble.com/forums/viewtopic.php?t=119

Thanks,
- admin

[Frothy]

An excellent solution. Thank you! Look at http://en.wikipedia.org/wiki/United_States_housing_bubble to see the results.

[admin]

Frothy,

The graphs look perfect. Thanks.

The article looks great too. Good luck on getting it approved as a featured article.

Thanks,
- admin