Housing bubble trouble - Mass. home sales plunge 11.1 percent

The bubble hasn't burst, but the air may be leaking out.

Massachusetts may be finally entering a buyer's market for homes, experts said yesterday after new data showed the volume of single-family house sales plunged in May by the largest amount in nearly three years.

About 4,142 single-family homes sold last month, down 11.1 percent compared to the same period last year. It was the second straight month in which the number of year-over-year home sales declined in the Bay State, the Massachusetts Association of Realtors reported.

The decline was the sharpest since August 2002, when sales drooped 14.1 percent in year-to-year comparisons.

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<<Karl Case, a Wellesley College economist, said ``people are really getting spooked'' by media talk of a housing bubble. ``People are getting cautious with their bids. So it's partially a self-fulfilling prophecy.'' >>

Case is a specialist in housing/real estate issues. He's one of the experts who says the bubble burst isn't here yet. Nicholas Retsinas, a former HUD undersecretary now at the Joint Center (Harvard) is another.

When prices stop rising and sales fall, watch out. The year-to-year appreciation rate of 6% is low for Mass., but is still positive.

</sarcasm>

money during his Presidency!

It's Clinton's penis's fault.

Seriously, if talking up the crash is all it takes, let's talk it up. No other development, short of $5 a gallon gas, would be more likely to take out the foundations of this regime's Potemkin electoral "mandate" by making people WAKE THE FUCK UP!

RCM

for talking it up. I find the whole situation enormously depressing...

:eyes:

Now that is gilding the dandelion. Local bubbles make small pops, local pain. The cataclysmic collapse of the entire bubble isn't as like as the gentle fizz and some areas getting walloped hard. The panic issue hasn't arisen thanks to cheerful spin like "a buyer's market".

A buyers market compared to where prices were at the peak, but a long, long way from the bottom. A buyers market is bubble talk. It may be a buyers market in 2010.

But it won't take much of a decline to take the wind out of the sails of the consumer borrowing against equity that has been shoring up the economy. We're in for a rough ride.

buyers slowed their buying?

Part of it may be the normal real estate cycle. Spring is normally a busy season for real estate sales. Sales slump during the summer, pick up a bit in the fall then drop off till the next spring.

This combined with the fact personal income growth has declined, banks have sold mortgages to just about every possible consumer they can, and the economy grinding to a stop may be a factor.

Oh,,, and MA is the bluest of the blue. But that probably does not have anything to do with it.

So, seasonal trends are taken into consideration.

Your second point is spot on. Practically all refinancing has already occurred. There's not much left to fuel the economy and it has been driven by cheap money via refinancing. The bubble that was the Nasdaq has been shifted to the real estate market. No more bubbles to pump, since credit is maxed out.

Please. The media hysteria around this is making me nuts. There is no bubble. Prices are not dropping. The number of sales may be slowing, but maybe, just maybe, most people have bought the home they are going to in for a while withing the last two years. I believe that the folks who are buying on mere speculation are tapped out from buying so much property.
As I said in my opening line, houses closing now for the most part were put under agreement in March and April.

When I sold my apartment in Boston in 2000 for $275,000 I thought it was the top of the market then. Now, in 2005, it has sold twice, the last time for $445,000. Go figure.

Your former apartment has been sold twice so far this year, and has almost doubled in 5 years. But there's no bubble. Okay..... move away from the kool-aid.

Yikes, to have sold twice in 2005 would be crazy.
And no, there is no bubble. Remember, the media created it and the media can take it away.

I, for one, would love to see a return to normalcy in housing prices.

That housing will be just fine. Think, the cost of lumber and some other materials and the transportation to get it to the build site is just going to go up and up. You would think labor would go up over time. Also, our population keeps increasing. Short term of course anything can happen. I wouldn't bet either way on this.

who never intended to live in the house. They just planned to flip it and pocket the six figure appreciation. Look out below when they all start to jettison their investment properties at once!

By Mac Mansions that they could not afford because they were told they could flip them in a year and make 6 figures......

housing shortage. Right.... I've never seen so many "for rent" signs on lawns (NJ). If there's a housing shortage, how come there are so many vacant homes?

Either homebuyers are collectively much richer than they look, or there's a whole bunch of people just fixin' to get lucky.

for those who have seriously overextended themselves.

and high commodity prices. The resale market may suffer, essentially turning houses into appliances. "Used" houses might lose their premiums. If the economy locks up, home-owners could get stuck with mortgages that are far higher than the resale value of their homes. At the same time, local gov'ts may be forced to raise property taxes to replace shrinking payroll and income tax receipts. The people who profited so handsomely from the housing boom may find themselves turned into serfs who must work just to pay rent to the banks which own the mortgage.

...you are locking yourself into ad valorem taxes much higher than your neighbors who bought only a few years earlier because of limits on annual increases on real taxes.

If I bought the same home today that was purchased three years ago, I would pay about 50 percent more in price but twice the taxes. If I tried to upgrade to a better home, I would pay three times the annual tax bill.

Becuase of lack of insurance regulation and increases in construction costs brought on by commodity inflation, insurance costs would be of a similar nature.

These sort of cost increases represent the hyperpole on the utility curve that change human behavior. In my immediate area, non-qualifying exchanges in used homes represent more transactions than arms length sales. This by its very nature creates a fictional housing price market.

Non-qualifying exchanges keep tax consequences and housing appraisals down.

I just became a first-time homeowner in April. ;(

its going to have to really shake the speculators out!!! A bunch of them are already getting out while the getting is good!!!

What goes up must come down. The reality is that people cannot afford homes that are 8 - 10 times their income. And they're going in with nothing or practically nothing down, to boot! The sad thing is that a lot of young people are naive to the fact that housing DOESN'T always go up.

Could speculators selling out cheap push the prices down and be the pin that busts the bubble?

and go back to stocks & bonds, or even gold if that becomes necessary. Whatever is growing is where the smart money will go.

now, and that it won't take much to put it over the edge. Fasten your seat belts!

being built than there are buyer's and they can't sell it as they thought they would be able to... Also, yesterday, I was kinda driving around, I saw so many house with sale sign's. So, I have no idea what is going on with the market, but it doesn't look good.
I also see another problems... Bank is loaning money "Interest" only loan. I don't like the sound of this at all.