bostonbubble.com

[Guest]

[Condo]

Hi Guest,
Amazing isn't it!!!! Completely contrary to what we are lead to believe in the local media. It absolutely blows my mind that they miss it this badly. I'm not denying your quote ...but, that's last years data. The data I provided is current, pulled from MLS & LINK, and periodically cross referenced with the registry of deeds for updating and accuracy. All public record my friend..... you just have to do a little work, and you can find it for yourself. And, by the way, the numbers do not include pre-sales at new construction. So, in some instances, #'s are higher. ( Including Natick and the new construction project at the Mall, sales are going well I hear).

Hey Admin!
Great, isn't it!!! It's really not as bad as most pessimists are pushing out to the public. You really have to focus on specific areas, I'm not going to tell you that sales are fantastic in Mattapan & Lynn. I'm not hear to state that the RE market in MA or NE, as a whole, is the best it has ever been....but I'm also tired of the negative press...although, it's gotten much better. Bubble???? When was the last time you read a local bubble story? (That's behind us) Now it's on to Sub Prime stories. National stories about over building in NV, FLA, Southern Cali, really has nothing to do with our local, conservative, primary residence market. ( Down town presently has about 4.6 months of supply!!! That's fantastic...don't you agree?-- MetroWest: 7.0 months, South Shore: 10.5 months, Norfolk: 7.7 months) While we are on the topic...lets discuss. Do you, or anyone out there, know of anyone who was foreclosed upon? I don't, and I don't know any brokers, who know anyone, who was foreclosed upon. Look at the downtown Boston numbers, I don't know them off hand. However, last time I checked, it was under 5. The reality is this: Sub prime problems are extremely isolated to poor neighborhoods, in which predatory lending took place. I just got back from lunch with a regional manager with Wells Fargo. He oversees urban projects. I asked him if he knew anyone, or had any clients who have been foreclosed upon. He said " No, not in my patch". You are not seeing the young professional couple who purchased a 650K condo in downtown Boston getting whacked. Just not happening!!! The press is going after anything it can grasp..... and trust me, I know a few people, who have had conversations with Globe Editors ....and they now know the are getting a lot of it wrong....or at the very least, not telling the whole story.

Absorption, and I'm the only one talking about it? OK, take the absorption figures out of the equation, the straight sales numbers are also compelling. Wouldn't you agree? 189 homes off the pace of record year 2005 ....maybe I'm missing your point. OK, lets add in the absorption numbers...looks to me like not only can folks afford Boston, and many of the surrounding areas...but the prices are being driven up by demand!

Case-Shiller Index? I'm not saying that it's wrong... but I'm also not saying it's correct. Does it take into consideration that Boston has the most densely populated pool of students in the country, many of whom are renters? ( I honestly don't know, but I would hope he takes that into consideration, because it most certainly effects the #'s) The index has certainly not been right to date, the numbers I provide fly right in the face of his predictions. Remember, Case was one of the first to predicted the whole Internet Bubble, with a very similar formula. He and his little Yale buddy Shiller were also the guys who started this whole frenzy with the Real Estate "Bubble" speculation in Fortune Magazines Oct 28th, 2002 edition. Many extremely bright and well respected economists don't buy it. Publicly opposed to his theories about some major cities; Joseph Gyourko of The Wharton School, Christopher Mayer of the Graduate School of Business at Columbia University and Todd Sinai, also of the Wharton School. They wrote a paper called "Superstar Cities", which includes Boston, SF & NYC. It's a 53 page paper which is extremely interesting, and supports my position. A few key points are that these cities, and a few others, are "affluent", have diverse economies and have geographical and political restrictions, impeding the ability to create new inventory. Thus, these cities will continue to have a thriving RE market with upward pressure on pricing due to the basic laws of supply and demand. Boston has always been out of line with national numbers as far as affordability is concerned ....it always will. So, people just need to stop grouping it in with national headlines. Glass half full ..............

[admin]

Condo,

I think there is some misunderstanding here about what the S&P/Case-Shiller Index is. It is not a method for predicting where prices are heading, as seems to be your impression. There is a futures market for the index, and that could be seen as a predictor, but the index itself measures sales which have already occurred. It is a measurement of the past, not a predictor of the future, and I brought it up because it has been indicating a clear decline in prices of Boston area single family homes, whereas you are arguing otherwise.

One of the defining characteristics of the index is that it is based on same-home sales. This is so much better than the median and the average (and absorption) because you are truly comparing apples to apples. The most recent median price quoted by the MAR was $345K for April, 2007, down from $353K (nominal dollars) one year earlier - but what if the homes being purchased also increased in size and quality? Then a home that cost you $353K in 2006 may have cost you even less than $345K in 2007 and the median, average, and absorption distort this reality. That is why it is so helpful to normalize for previous sales of the same homes.

There are many other details that go into how the index is calculated as well. Professors Case and Shiller spent years perfecting the methodology. As far as I know, it is the only housing index which is accurate and reliable enough to have derivatives traded on it on a major financial exchange (i.e., the Chicago Mercantile Exchange).

- admin

[admin]

PS - congratulations on your new place. I hope it works out well for you.

- admin

[Condo]

Hi Admin,
You're correct...I got the Case-Shiller Index wrong. My bad! Read "Superstar Cities"...I'm sure you'll find it fascinating.

[Guest]

[john p]

So Guest: what you're saying is that the Metro West region that Condo has qualified has had transactions drop from 1136 to 624 in the corresponding periods of 2005 and 2007? That's crazy. I'm not saying you're wrong, but wow.

Condo's numbers almost showed a trend that the South Shore and the quadrant south of the "Metro West" region are picking up. I wonder if they are a more attractive alternative to the very high priced Metro West.

I would like to know Condo's take on the Warren Reports. I know he thinks that the media is not putting out accurate reports, but I'd imagine that the Warren Group does.

I admire Condo for footnoting his sources, and being pretty open about where he derives things, but I am uncomfortable that there is this very big discrepancy. If the Boston Globe had the biggest story in 2006 "The Real Estate Bubble Deflates"

http://www.boston.com/business/globe/articles/2006/12/24/year_in_review_boston_globe/

It is hard to imagine that the Globe would prop up this story as the top story of the year and blow it on the numbers. If it was a side story deep in the paper I could see them having a loose sheep here and there, but the main story of the year and they choke on the numbers. I don't think that the Globe is that junior varsity.

I wonder what Condo thinks of the Warren Group's reports?

[JCK]

I would interested to hear how both "Guest" and Condo are pulling their numbers from the registry of deeds, where the discrepancies are coming from.

It's not trivial to go through those websites carefully and capture all transactions.

[Condo]

Hi Guest,
Not sure where the discrepancy my lie, or your overall methodology. I confidently stand by the data, taken from the same source as Banker & Tradesmen ( The Warren Group). You seem to be accurate on Holliston.( I just took an arbitrary town to double check) ......sometimes the registries have long lag periods. Thus, the figures will be revised upwards.
You state Holliston: 46 for 2007. I show "Sold", from MLS, for the time period we are working with: CC = 10, SF = 47. (57)
This topic presents itself as a very small example of the challenges different entities encounter when analyzing data, in many instances, the data originating from the same source! I'm happy this came up!

[john p]

Superstar Cities:

http://real.wharton.upenn.edu/~sinai/papers/superstar_cities_06-16-06-final.pdf

I think this is the report Condo was referring to.

[admin]

[Guest]

[john p]

Here's to the Superstars!

Shake and Bake!

http://media.monstersandcritics.com/articles/1232395/article_images/shakeandbake.jpg

[Condo]

Nope...that's not it. Sold is a definitive word, not pending, not under agreement. I checked today... there is most certainly delays...got this email from someone with much more knowledge about the recording than I.... "Not so sure about how far backlogged the registries are, but they are backlogged.... Norfolk, Middlesex, etc....."

[john p]

Someone's right or the source is unreliable. What other options are there? Come on, we're superstars.