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Redfin, garbage in garbage out..
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Hard Rain
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PostPosted: Wed Apr 23, 2008 9:59 am GMT    Post subject: Redfin, garbage in garbage out.. Reply with quote

http://blog.redfin.com/blog/2008/04/boston_real_estate_not_clinically_depressed_just_a_split_personality.html

One problem with the Redfin hypothesis, it's wrong. What's selling is new construction not old, it also is LESS expensive per square foot. What they failed to factor in to their equation is knockdowns.

Prime example:

74 Fairmont Avenue, Newton MA.

Sold for 2.9 million in March, the only million plus sale for the entire month ( there are now 93 listings over 1 million , but that is a tale for another day).

Trulia, Zillow and the City of Newton assessors list the house as having seven bedrooms, 3.5 baths, 3,424 sq ft with a build date of 1912. Problem is , the house when sold in march was 7,607 sq feet , 6 bedrooms and seven baths. This is the description taken from the listing ;

"Gracious new home with open layout and beautifully proportioned rooms. Abundant details include substantial moldings, wainscoting and built-ins. The glorious chef's kitchen has a full array of state-of-the-art appliances. Lavish master suite with dressing..."

So when Refin calculated the price per sq foot they more than doubled the actual cost and added 96 years to it's age. This is not an isolated example, three other higher priced sales in Newton during the month of march were all new construction of old properties;

66 Forest Ave : 825,000
75 Manet rd: 845,000
34 Beecher rd: 947,5000

Turns out what is happening is the exact opposite of what redfin claims, brand new lower priced properties offered by developers ( they get it) sell while over priced used homes offered by delusional sellers sit and sit....
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admin
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PostPosted: Wed Apr 23, 2008 1:10 pm GMT    Post subject: Reply with quote

Thanks for pointing that out.

The Globe blog entry on this also has some comments attached about other ways in which Redfin's conclusion may be off:

http://www.boston.com/realestate/news/blogs/renow/2008/04/what_sells_big.html

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jayman
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PostPosted: Wed Apr 23, 2008 7:15 pm GMT    Post subject: need accurate facts Reply with quote

Newton has 73 listings over $1M, and four $1M plus sales already in April.

168 in the last 12 months
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john p



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PostPosted: Wed Apr 23, 2008 8:39 pm GMT    Post subject: Reply with quote

Hey, it looks like some of the boys are posting on the Globe's blog that you mentioned.

Sold at the Top, Hard Rain.

I love the "Fawn Liebowitz" name....

It looks like a "Marcus" dude took a swipe on a realtor for saying that there were bidding wars on new properties and the Globe guy asks "Marcus" to "play nice.." The Globe has always been too flowery. On the one hand, they make this pit bull of a guy who fights predatory lenders their "Man of the Year", and then even after the Federal and State Goverment have come to terms that there has been predatory lending and fraud in the Real Estate Industry, the Globe guy expects people to "play nice".

The guy who say's new condo developments are getting bidding wars is a realtor who brokers new condo developments:

http://boston.condodomain.com/

http://ezinearticles.com/?Boston-Condo-Market-In-Real-Estate-Frenzy&id=462994

It seems the guy predicted a buying frenzy of condos in Boston for 2007.

I thought the guy was harsh with the realtor, so that is outside the strike zone, but questioning the judgment is appropriate to me. Maybe this guy is in a bubble of high end buyers and has a totally different perspective; it is just that it seems that his prior comments are not specific enough, but this go-around, he qualified that "Yuck" condos are suffering.
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admin
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PostPosted: Wed Apr 23, 2008 8:41 pm GMT    Post subject: Re: need accurate facts Reply with quote

jayman wrote:
Newton has 73 listings over $1M, and four $1M plus sales already in April.

168 in the last 12 months


I think that the difference is that your 73 listings was for single family homes and Hard Rain included other types of properties when he quoted 93. I don't think that 4 sales in April contradicts his 1 sale in March either. In fact, ~5 sales over the last two months sound very anemic compared with 168 sales for the last 12 months, which would imply an average of 28 per two months. I know, that's not seasonally adjusted, but still... saying there were 168 $1M+ sales over the last twelve months seems to support Hard Rain's point.

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john p



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PostPosted: Wed Apr 23, 2008 8:55 pm GMT    Post subject: Reply with quote

http://www.boston.com/realestate/news/articles/2008/04/23/downtown_condos_to_be_auctioned/
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admin
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PostPosted: Wed Apr 23, 2008 9:00 pm GMT    Post subject: Reply with quote

john p wrote:

I thought the guy was harsh with the realtor, so that is outside the strike zone, but questioning the judgment is appropriate to me. Maybe this guy is in a bubble of high end buyers and has a totally different perspective; it is just that it seems that his prior comments are not specific enough, but this go-around, he qualified that "Yuck" condos are suffering.


Yes, I remember the same Realtor saying the same thing last year, and possibly the year before that as well. He likes to talk about "over-asking bidding wars." OK, maybe that's true for his market... I don't know. What that says to me, though, is that his market is not where I want to buy. If I won't have a chance to negotiate with the seller and to assure that I get appropriate contingencies, then I'm not interested. If the market there is in the stratosphere and yet is infallible because everybody is rich, then it's not for me because I'm not rich enough (it's not within 4X my yearly income). High prices and an environment in which I as a buyer am at a severe disadvantage (bidding wars), definitely don't make me want to buy. That sort of pitch worked on many people during the bubble when there was a sense of urgency. However, for me it makes me think that I probably want to look in the neighborhoods where buyers have an advantage.

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john p



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PostPosted: Wed Apr 23, 2008 9:37 pm GMT    Post subject: Reply with quote

Right, but think about it like a consultant. Some consultants talk down to their clients and exude confidence. The confidence attracts weak individuals who want to be told what to do. It is a veiled predatory practice technique that is, again, meant to filter out smart people and target the weak. It is kind of like the used car salesmen who first approaches you like you're an idiot because if he detects you are, he'll hose you. The truth is that there are suckers out there, and salesmen are doing their best to use their Jedi mind trick to tractor beam them in. Again, the dumber they are, the more profit predators get. Imagine a building full of people like this. I'd imagine that building would be a magnet for vacuum cleaner salesmen and the like... People who think for themselves and are critical might be considered high maintenance for the dominatrix types. A strong buyer's agent, you'd want to leverage the buyer’s market advantage. I am not sure how he attracts buyers with this approach. I also imagine that in order to get the deals with the big developers you'd have to give the impression that you've drunk the Kool Aid and that you have lofty ideas about the prospects of buyers running with offers over asking. The whole audacity approach seemed to work in the bubble years, but long term credibility is a concern with some realtors and they have dialed back the propaganda. I mean if what he was saying was true, why are they auctioning off condos in pretty decent areas?

http://www.boston.com/realestate/news/articles/2008/04/23/downtown_condos_to_be_auctioned/

For the Globe guy to be defending him is a little sketchy.
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PostPosted: Wed Apr 23, 2008 9:47 pm GMT    Post subject: Reply with quote

john p wrote:
I mean if what he was saying was true, why are they auctioning off condos in pretty decent areas?

http://www.boston.com/realestate/news/articles/2008/04/23/downtown_condos_to_be_auctioned/


Those must be the "yuck" ones. Wink

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jayman
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PostPosted: Thu Apr 24, 2008 1:36 pm GMT    Post subject: corrections Reply with quote

Admin-

His March number was wrong also- 3 SFH, and my April number is through 4/15. 36 $1M+ homes in the last six months. Not saying it's not much slower that last year, just not dead.

I have been on the bubble story since 2004, and all the gloom and doom predictions have not come about. People just don't understand how these markets work.

If you look to the last NE/Boston drop 15+ years ago, the biggest drop in any one year was 7%, and while condos in Dracut may have dropped 50% in that period, the total drop in Weston was only 15%. I thought the economy around here was much worse then.

The $1M+ home situation is an interesting point however. I think right now Andover has a five year supply on the market. Not sure what happens in that situation. The Globe had a story on this.
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PostPosted: Thu Apr 24, 2008 1:58 pm GMT    Post subject: Re: corrections Reply with quote

jayman wrote:

I have been on the bubble story since 2004, and all the gloom and doom predictions have not come about. People just don't understand how these markets work.


I'm not sure what predictions you are referring to specifically, but the bubble hypothesis was that prices were too high to be supported by fundamentals, specifically income and rent. That's not a prediction for how a correction will occur. Prices could continue bleeding slowly for 15 years, like they did in Japan (not my prediction, just an example). And I definitely don't agree that no doom and gloom has come about - foreclosures are soaring, a large number of people are underwater on their mortgages, credit markets have tightened, The Fed had to bail out a top tier investment bank because of its housing related investments, The Fed is pushing for sweeping regulatory changes on a scale not seen in roughly a century, Congressmen are jockeying to bail out the housing market, etc. It seems a little late to argue that everything is contained.

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samz



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PostPosted: Thu Apr 24, 2008 3:14 pm GMT    Post subject: Re: corrections Reply with quote

admin wrote:
jayman wrote:

I have been on the bubble story since 2004, and all the gloom and doom predictions have not come about. People just don't understand how these markets work.


I'm not sure what predictions you are referring to specifically, but the bubble hypothesis was that prices were too high to be supported by fundamentals, specifically income and rent. That's not a prediction for how a correction will occur. Prices could continue bleeding slowly for 15 years, like they did in Japan (not my prediction, just an example).


Personally, I think this is the scariest scenario because it's so insidious. Nominal prices don't go down, so people think that housing is a good place to park their money. Over time inflation eats away at the equity, making it effectively a loss, BUT it doesn't feel like a loss because the dollar amounts are the same.

I feel like I've seen the same thing that jayman is observing: prices haven't really come down in desirable areas. I was trying to come up with some possible explanations:

(1) It seems pretty well documented that the recent economic boom largely benefited a small segment of the population. Those people have a lot of money to burn on real estate, and are buying houses in areas that are traditionally less affluent.

(2) Sellers are holding back, creating a lower supply that matches the lower demand.

(3) People who are buying now have been waiting a long time, accumulating bigger down payments

I heard about a case of (1)/(2) in Arlington: there was a "bidding war" on a house on Udine St. (originally listed at $465, I think). The "winners" of the bid were people who could afford something much more expensive, but wanted to be in Arlington. They had sold a house at the peak and had been renting (and presumably growing their down payment) for a couple of years.

But....

Who are the people buying now? In general, where does their money come from? How many of these people can there be? Can they alone support the price structure?
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Hard Rain
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PostPosted: Thu Apr 24, 2008 3:19 pm GMT    Post subject: Reply with quote

Jayman,

Please list the addresses of the other two March Sales. What else do you claim I got wrong? "His March number was wrong also- 3 SFH"

FYI, there have been 7 million plus properties added to the Newton inventory in the past week. Four sales for the month and seven new listings in a week, you do the math...
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samz



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PostPosted: Thu Apr 24, 2008 3:22 pm GMT    Post subject: Reply with quote

Hard Rain wrote:

FYI, there have been 7 million plus properties added to the Newton inventory in the past week.


Wow, 7 million new listings! That ought to push prices down. Wink
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jayman
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PostPosted: Thu Apr 24, 2008 7:05 pm GMT    Post subject: Newton inventory Reply with quote

go to newenglandmoves.com. it draws from MLS. you have to register.

go to any town you want.

run the report for "recent sales"

it will give you all the info you want. newton 3/08 >> 15 harwich road, 74 fairmont avenue and 315 otis street if you're too lazy to do that

i'm not disputing that there are issues out there, but the point is that the nicer towns continue to sell okay and prices are probably back to 2003 (in my town andover at least), but it had it's biggest runup (%) in 1998-99 and is still very high.

the forclosure numbers of course are soaring on a percentage basis- they were at incredible lows. andover currently has only a couple foreclosure and a few more short sales, all on very marginal property and some involving flip renovations. big deal.

the crappy areas of boston metro are going to get killed. prices ran up (for a variety of reasons, some illegal) to levels far above demand and people who couldn't afford homes bought. many other areas will stagnate for a while with prices on a flat/down trend.
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