Forum Index
Boston Bubble - Boston Real Estate Analysis
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

Go to: Boston real estate bubble fact list with references
More Boston Bubble News...
DISCLAIMER: The information provided on this website and in the associated forums comes with ABSOLUTELY NO WARRANTY, expressed or implied. You assume all risk for your own use of the information provided as the accuracy of the information is in no way guaranteed. As always, cross check information that you would deem useful against multiple, reliable, independent resources. The opinions expressed belong to the individual authors and not necessarily to other parties.

Boston Bubble Wrap: The Real Story for MA - Feb 2012

Post new topic   Reply to topic Forum Index -> Greater Boston Real Estate & Beyond
View previous topic :: View next topic  
Author Message
Site Admin

Joined: 14 Jul 2005
Posts: 1824
Location: Greater Boston

PostPosted: Thu Mar 29, 2012 9:43 pm GMT    Post subject: Boston Bubble Wrap: The Real Story for MA - Feb 2012 Reply with quote

This is a brief report 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. This report is based on the published data of the Massachusetts Association of Realtors, though it should be noted that the S&P/Case-Shiller Index for Boston is a superior data source.

The Massachusetts Association of Realtors released their data for February 2012 on Wednesday, March 28th. 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 Adjusting for inflation produced the data represented by the graphs below. Prices for January 2003 and earlier have been estimated by applying the earliest reported median from The MAR, February 2003, against the S&P/Case-Shiller Index for the Boston area. Suggestions for improving this estimate are welcome.

Full Price History

Change in Median Price From One Year Earlier, February 2004 - February 2012

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

Some observations:

  • The real decrease from February 2011 to February 2012 was 6.43%.
  • Real prices are once again lower than the same month in every year in the time period covered by The MAR. Additionally, the real median has plummeted back below the estimates for prior years and is now the lowest it has been since the estimate for 1999.
  • Prices have resumed their downward trend after a one year period where most months saw year over year increases. Those were the only year over year increases since August 2005 and they all occurred after the most recent renewal and expansion of the home buyer tax credit. The moving average turned negative in April 2011 for the first time since the end of the tax credit. Price declines are once again the norm after being briefly interrupted by buyers being misled into mistaking one of many backdoor bank bailouts for a good buying opportunity.
  • Prices are now 42.31% below the peak set in June 2005. This is the result of a 31.77% decline in nominal housing prices and a 15.44% decline in the purchasing power of the dollar. Note that this ignores seasonality.
  • The cumulative price decline from the beginning of the MAR's data (Feb 2003) is 28.41%, which is an annualized decline of 3.64%. The change from the start is especially pertinent this month because the February versus February comparison factors out seasonality due to the time of year (although the unusually warm winter this year might itself make this season atypical).

Of particular note this month, the volume of sales was way up this February, 21.0% higher than last year. Undoubtedly, this was partially due to the difference between the two winters. It was probably also partially due to mortgage rates falling even lower than they had been the year before. As declines in volume foreshadowed the forthcoming declines in price at the height of the bubble, so might increases in volume now foreshadow increases in price, if only in nominal terms. It is still far too early to tell, especially given the aforementioned factors, neither of which is necessarily permanent. The weather obviously is not permanent, and exceptionally low interest rates may or may not be - their rise would present a downside risk to real prices just about everywhere, though.

The January report was skipped last month due to time constraints. One observation from January that bears noting is that the single family median sale price for January 2012 was revised down a little in the data just issued by The MAR for February 2012.

The S&P/Case-Shiller Index for Boston is likely superior to the data above as it corrects for many flaws that are inherent when using only the median price. The S&P/Case-Shiller Index also has the advantage that futures contracts can be traded against it, thereby offering an unbiased insight into where housing prices are expected to be in the future. It also has more extensive historical data available. The MAR data was used for this report mainly out of inertia and might be replaced with the S&P/Case-Shiller Index in future reports.

As usual, please do try this at home. Double checking of the math used to construct the above graphs and analysis is strongly encouraged in order to help ferret out any errors. The data was derived from the following sources:

The text of this post and the associated graphs are Copyright 2012 by 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-No Derivative Works 3.0 Unported License. You may additionally scale the graphs to fit your work. Alternatively, if you remove the signature from the bottom left hand corner of the images within this post, those modified images (and only those modified images) can then be distributed under the Creative Commons Attribution 3.0 Unported License. In all cases, attribution should be made via a hyperlink to or 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

The latest version of this report can be found at

- admin
Back to top
View user's profile Send private message Send e-mail Visit poster's website
Display posts from previous:   
Post new topic   Reply to topic Forum Index -> Greater Boston Real Estate & Beyond All times are GMT
Page 1 of 1

Jump to:  
You can post new topics in this forum
You can reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum

Forum posts are owned by the original posters.
Forum boards are Copyright 2005 - present,
Privacy policy in effect.
Powered by phpBB © 2001, 2005 phpBB Group