bostonbubble.com

[Pete]

My family is planning to move back to Boston (Westford/Groton area specifically) and have been carefully studying the market from afar. We are currently living in Raleigh NC and have flexibility to when we move. Should it matter, our target home is an antique on 1+ acres that needs work/has long term upside. After moving several times over the past decade, we hope to be in this home for 10+ years. Our current plan is to look to buy during this coming winter and take advantage of seasonality, but perhaps we should wait longer. Thoughts?

[admin]

Pete,

I think buying during the winter is a good strategy in general and will be particularly more advantageous over the coming years. For starters, check out this graph and discussion of how prices have varied by season over the last several years in Massachusetts:

http://realestatecafe.blogs.com/real_estate_cafe/2006/04/housing_price_s.html

As you can see from the graph, the prices tend to be better in winter. Typically, the down side to buying in winter has been that the selection is much more limited. Given that you have some flexibility, that probably wouldn't be a problem since you wouldn't have to buy if you didn't find something you liked in the more limited selection.

However, selection has exploded recently and inventories are at new highs. Check out the second graph from the top on this page:

http://masshousemarket.blogspot.com/2006/08/july-market-wrap.html

While the seasonality is still there, note that for the beginning winter months of this year there was more inventory during the winter than all of the seasons for most other years. So there will probably be fewer homes to choose from in the coming winter compared to right now, but the selection will still be vast relative to what has been the norm any time during the last several years.

Given that the winter appears to be a very attractive time to buy, the question then is which winter? Check out this graph of year over year prices changes adjusted for inflation from the recent Boston Bubble Report for July 2006:



It looks like we're just at the start of a downward trend. The graph starts at 2004, which is unfortunately the earliest that year over year median price changes can be extracted from the Massachusetts Association of Realtors' reports. If there was older data, it would be evident that the boom in housing had been going on for several years prior to 2004 as well. So while the graph may make it look like the downturn is roughly equivalent to the upturn that preceded it, in reality it is nowhere close (yet).

For myself, winter 2008 (including December 2007) is an optimistic target for when I might start to look to buy a place. My hope is that the dramatically increased inventories will have been appropriately factored into the price by then and that prices will have returned to their historical ratios to income and rent. A very large number of ARMs are going to reset next year, which should produce additional inventory and pricing pressures. I have no idea whether we will have actually experienced a sufficient correction by then, but I do see that as a best case scenario and would be somewhat surprised to see it before then.

- admin

[DRACULESS]

prices of homes still not dropped from www.bostonhomes.com.
after a yr.
a drop is at least another yr away when mortgages creep up.
this is not a buyer market - how can it be when mortgage rate now
6.5% from 5.75% last yr and house prices still went up from last yr.

[AgentGrn]

I personally like the tracker here: http://www.benengebreth.org/housingtracker/location/Massachusetts/Boston/

However, by those numbers, prices are holding steady. Granted, this handles what is listed and not what things ultimately go for. I was expecting the panic to hit after Labor Day, but it seems as if the not-so-serious sellers are pulling out of the market. However, inventory is still high. It's a tug-of-war where a lot of people are going to lose once the slide picks up momentum.

I chuckle every time the prices go up because as a first-time buyer, I'm priced out, and my wife and I do fairly well for ourselves. It should be nice to see where the numbers are in another year or two.