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Boston & Urban Suburban Condo Market; in good shape!
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admin
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Joined: 14 Jul 2005
Posts: 1824
Location: Greater Boston

PostPosted: Wed Oct 18, 2006 5:57 pm GMT    Post subject: Reply with quote

Condo,

How is it that the estimate for price declines in Q2 and Q3 2006 is 2.2% when the Massachusetts Association of Realtors reported a nominal year over year decline of 6.1% in August alone? I do realize that the MAR data only includes MLS sales, but the more comprehensive data from The Warren Group put August's decline even higher at 8.0%. That is all before inflation is factored in, as well. The declines have been growing steeper every month for awhile now, so I don't see how that translates to a 2.2% overall decline or an indication that the declines are over.

Here is the year over year change in price for single family homes in Massachusetts as reported by the MAR, adjusted for inflation:



The data used to create that chart is taken from these sources:

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Condo



Joined: 28 Sep 2006
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Location: Boston

PostPosted: Wed Oct 18, 2006 8:26 pm GMT    Post subject: Reply with quote

Admin,
I will attempt to contact Zandi directly for a detailed answer.
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BillK
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PostPosted: Thu Oct 19, 2006 12:48 am GMT    Post subject: Employment - Bos Federal Reserve Numbers Reply with quote

Condo,
I'm not sure where Zandi is coming up with the improving employment numbers-
The Federal Reserve Board of Boston Reports indicate that some segments are improving - but, the improvement in the employment picture for Bostonians is lagging when compared to the rest of the US.

Meanwhile the US Census numbers indicate a declining population... I wonder what the income median is for the fols leaving Boston.

Improving Employment areas - Financial Services, Business Services, and manufacturing is continues to decline.

Meanwhile the Debt levels for US Home owners are up over the last three to four years.

Regards.
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Condo



Joined: 28 Sep 2006
Posts: 50
Location: Boston

PostPosted: Mon Oct 23, 2006 3:19 pm GMT    Post subject: Housing prices put at or near low - Globe Reply with quote

Looks as though I am not the only one reading Moody's. Kim Blanton, the typically negative Globe writer, has decided not to ignore some of the undeniable positive data I referenced in this forum a week ago. This would be an answer to Bill K's last response "The state has added 33,000 jobs over the past year and 61,000 since the labor market hit bottom in December 2003. The technology sector has been particularly strong, with payroll employment growing nearly 5 percent in the past year. A growing economy and improving job market translate into more home buyers." Please read..... I look forward to reading the negative, spectacle, fearful rebuttals. (half kidding) As I said ..... many folks are flat out reversing there perspective.

http://www.boston.com/news/local/articles/2006/10/23/housing_prices_put_at_or_near_low/?p1=MEWell_Pos3

More positive perspectives. Bob Carey, CIO for First Trust Advisors in Liesle Ill., say that the stock market is 20-25% undervalued at current levels and should reach full valuation by sometime next year, which means: get ready for a bull market. Carey says the demand for housing is driven by incomes and jobs, and since corporate profits are extremely strong (some stronger than ever before), the out look for income and job growth is great. Carey says " It's hard to imagine Corp America doing well and somehow people not doing well on the employment side"

But the most intriguing evidence that the stock market might not go down because of a housing slump is simply this: So far, IT'S GONE UP! The market is famous for looking ahead, and it seems that investors collectively may have decided not to blow a gasket over housing.
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BillK
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PostPosted: Tue Oct 24, 2006 2:19 pm GMT    Post subject: Plenty of Work in Boston - MAssachusetts - yeh, right.... Reply with quote

Condo,

According to the Federal Reserve Bank of Boston - Total Private Employment in Massachusetts for 2.772 Million in 2003 and has grown to 2.815 Million in 2006
In 2001 there were 3.337 Million Private Emploment Jobs in Massahusetts.

43,000 new jobs since 2003 - WOW - could a large number of these be Real Estate jobs???
http://www.bos.frb.org/economic/neei/current/neei.pdf
Did you know that Home Owners in Burlington Massachusetts are paying higher property taxes because of the High vacancy rates of Commercial Real Estate - I spoke with a friend who has lived in Burlington for 20 years.
But, Companies must be choosing to relocate to other towns than Burlington (correct?).
Raytheon shuttered their facility on South Bedford Street and opened a smaller office in the former GTE Internetworking Building. The Raytheon facility has been replaced by a Mall (a Mall job provides much better money and benefits than a defense contractor). Raytheon is just an example of the loss of good jobs in Massachusetts.

I hope you are right - but, its hard to disagree with data from the Federal Reserve Bank of Boston. Perhaps the Globe has access to more accurate data than the Federal Reserve Bank of Boston.
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admin
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PostPosted: Tue Oct 24, 2006 3:14 pm GMT    Post subject: Reply with quote

As a corollary to the data provided by BillK, I would like to ask: if the 0.5% annualized employment growth since 2003 is going to buttress real estate prices and sales, shouldn't the 8% annualized decline from 2001 - 2003 have conversely depressed prices and sales? Prices were instead on a steep, upward trajectory for the last several years, including 2001 - 2003. Why would mild employment growth be a dominant factor in guiding the market when strong unemployment losses were not?

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Sarum80



Joined: 25 May 2006
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PostPosted: Thu Oct 26, 2006 7:32 pm GMT    Post subject: New numbers Reply with quote

Condo,

What are your sales numbers showing for the most recent month or quarter? Are your numbers showing that the drop in Condo sales are still just a suburban thing?

I look forward to your reply. You add a good balance to this board and I, for one, appreciate that.
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PostPosted: Fri Oct 27, 2006 2:54 pm GMT    Post subject: Reply with quote

Condo (or anybody else who knows),

I'd like to briefly revisit one of your original points about demographics. I recently came across a Reuters article titled Baby boom 2nd home buys steady, but not in cities. The gist of the article is that the migration of baby boomers and empty nesters into the cities was something that condo developers have been predicting and banking on, but that this isn't actually occurring, much to the developers' dismay. However, they don't mention specific cities. Do you have data which shows the yearly demographic breakdown within Boston so that we can see what the local trend has been thus far?

Thanks,
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admin
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PostPosted: Fri Oct 27, 2006 7:44 pm GMT    Post subject: Correction Reply with quote

BillK,

Can I ask where you got the 3.337 Million figure for 2001 from? The PDF you pointed to only goes back to 2003. I did see a bunch of other resources on the Federal Reserve site which go back further, but I didn't see that exact number. This CSV file was pretty close for 2001, but the numbers for 2003 and 2006 were substantially higher than the report you linked to. I'm guessing that has to do with what type of jobs were included or the sampling methodology.

For consistency, I re-ran my calculations using only the numbers from http://www.bos.frb.org/economic/neei/neeidata/emputn.csv The annual decline was not so dire as when the separate resources were used, although it's still substantially worse than the recent increase. According to that CSV file, employment peaked in February 2001 at 3.3729 million jobs. The decline hit bottom in December 2003 at 3.1671 million jobs. In the most recent month, September 2006, the total was 3.2282 million jobs. So the decline occurred at a rate of 2.20% per year and the subsequent recovery has seen increases at a rate of 0.34% per year.

Both numbers are more muted this way, although I think my question is still applicable as to why would a modest recovery in employment bolster property prices when a more substantial decline was not a dominant enough factor to depress prices? Massachusetts has only recovered a fraction of the jobs lost in the collapse of the dot com bubble as evidenced by this graph:



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BillK
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PostPosted: Fri Oct 27, 2006 7:55 pm GMT    Post subject: Boston Federal Reserve - Economic Indicator Numbers Reply with quote

I think I pulled the number from January 2003 Economic Indicator numbers.

Here is the Link for all the back issues of New England Economic Indicators - there is no way to interpret these numbers in a way that is positive for Real Estate - Real Estate is been driven by SUPER Loose financing - If you can fog a mirror we'll give you a loan.
Mr or Ms Cono is either a Real Estate Insider or someone who doesn't understand the the Mortgage MArket is driven by the secondary Mortgage market - if and when those buyers get spook - Real Estate will really slow down.
http://www.bos.frb.org/economic/neei/neeiback.htm
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Condo



Joined: 28 Sep 2006
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PostPosted: Sat Oct 28, 2006 5:27 pm GMT    Post subject: Response to Admin, Serum, Bill Reply with quote

Admin,
In response to your link to Baby boom 2nd home buys steady, but not in cities., My interpretation is that this article focuses primarily on the second home, destination location market (which Boston is not) and only refers to "Metropolitan Cities" in very broad generalizations. I see the demographic referred to in said article coming out in very large numbers in and around the Boston area. Certainly, many folks are in the investigative phase, but the interest and financial ability is, no doubt, present. I have worked in both Chicago and Minneapolis, the trend I speak of is much more prevalent in Boston. Again, dissimilar markets being incorrectly associated with one another.

Sarum80,
I will have the 06 Q3 numbers shortly. I will say this, they are not as strong as 04/05 Q3, which I never believed or stated they would be. However, they are much stronger than the 03' Q3 figures (a tremendous year, best ever a the time). I will go on record as predicting the overall 06 data will exceed FY03 by approximately 25% in total sales absorption.

BillK,
I do understand the mortgage industry very well. I like the fog on mirror comment - funny, and not too far from the truth. But, perhaps there should be an IQ or sensibility test included with the 1003. Similar to people getting in over their heads with Option ARM's, I have no sympathy for them, unless an LO flat out lied ..... financing a home is not something to be taken lightly, READ, analyze the application, GFE, guidelines...there should be some accountability for people who make poor decision or don't investigate the financing vehicle they choose possibly getting themselves in way over there head. People are free do do as they wish....OK, back on track .... Rates are still at historic lows and have been sliding over the last 6+ months. There is nothing in sight to suggest that rates will begin to incline. Simply no reason for it. I understand your concern and I also know the powers that be will take strides to ensure the housing market does not catastrophically collapse. Which it has not, and I am confident in my optimism that it will not, specifically as it relates to the Boston condo market. Sentiment is changing, we are turning a corner in the press, positive figures are being reported for MA: "Mass. economy grows 3.4%, twice US rate" (Globe 10/2Cool"Hub population rose, Census review finds" (Globe 10/2Cool. This second article is a great argument for the not only the RE argument but local politics as well. MA population did not lose 30,000 people over the last 5 years as widely reported ....it gained 7,500! That's a huge delta. Almost a comical error, as it has caused so much controversy on so many different levels the last few years.

http://www.boston.com/business/globe/articles/2006/10/28/mass_economy_grows_34_twice_us_rate/?p1=MEWell_Pos4

http://www.boston.com/news/local/massachusetts/articles/2006/10/28/hub_population_rose_census_review_finds/
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Sarum80



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PostPosted: Sat Oct 28, 2006 7:42 pm GMT    Post subject: Reply with quote

Condo,

I look forward to seeing your numbers. Will they be much different than what the Globe is reporting today?

http://www.boston.com/business/globe/articles/2006/10/28/downtown_condo_prices_fall_for_2d_quarter/
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Billk
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PostPosted: Sun Oct 29, 2006 1:37 pm GMT    Post subject: Condo - is right- Boston is Booming Reply with quote

Condo,

You are right Boston is Booming.

The employees of EMC that I've talked to worry for their jobs are needlessly worrying.

The Software engineer who works retail now is because he hates software.

Raytheon is booming (and they are having their employees work in REALLY SMALL Cubes) - this is how Raytheon is downsizing their offices and keep employees in Boston Area. The Manufacturing facility in Waltham that appears empty (there were big plans to make this office space) - isn't really empty.

The Best investment you can make is Boston Real Estate. Most Maufacturers and Fortune 500 Companies would love to have a location in Boston.
Labor is Cheap - because the cost of living is cheap in Boston.
Wink
Boston is ideally located next to high population areas - New Hampshire and Rhode Island and Vermont.

I love Boston - we left Boston because of the economy. We run into lots of people who left Boston for work.

Condo - whos numbers do you trust the Federal Reserve of Boston or the US Census or the Boston Globe.

Regards.
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admin
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PostPosted: Sun Oct 29, 2006 10:08 pm GMT    Post subject: Reply with quote

Condo,

Thank you for bringing the population estimate revision to my attention. It looks like I will need to correct the main page. I would like to confirm this with the data from the Census Bureau first - would you happen to have a link to the data at the Census Bureau website? That's fine if you don't as I will look for it myself, it just might take me a little while to get to.

It does sound like the revision is specifically for Boston proper rather than Greater Boston. Massachusetts as a whole has been cited as losing population for two years straight and I wonder if there is any change there. The Globe article indicated that the upward revision is due to inclusion of new dormitories and commercial buildings being converted to housing, things which seem like they would be much less prevalent in the suburbs.

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Harry Mudd
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PostPosted: Mon Oct 30, 2006 12:10 am GMT    Post subject: Reply with quote

Condo wrote:


I had no intention of "insulting everyone's intelligence", and frankly, I'm almost insulted by the tone and accusation. I am simply stating what I know to be fact. If developers were "Sweating Bullets" and as you indicate ( thus, they must be less than intelligent) you would not see developers such as Vornado, Tramell Crow, Samuels Brothers, Extell Partneers, Goldman, Beacon Communities, Wassrman, Cresset Development, Regent Battery, Pappas and Atlas Development... to name a few, very recently green lighting projects. That's an awful lot of "unintelligent" people.



Robert Ringer, who sold real estate before he became a self help guru, once said that if a developer could get financing he'd build a four star hotel in the middle of the mohabi desert. No bubble can get this big if the best and the brightest don't buy into the hype. Take a look at Jim Cramer's stock picks from 1999. Cramer isn't just a TV star, he managed a very successful fund. He's no dummy. But he was as delusional about the dot.com stocks as anyone else.

I think similar irrational exuberance is at work here.
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