The story of the local markets plays out on a bigger stage
Wanted to make sure everyone saw this post on Bloomberg, which I thought was a good look at what's happening across the country.
For those of you who are regular readers, you know that the market has been much better than perhaps what the papers and the National News Media have been saying. It's not their fault, really, they are looking at National numbers and I just have to write about what I see here, both anecdotally and with the statistics that back it up. And Massachusetts has been ahead of the pack, both from when we went into the housing decline, and when we came out of it. At any rate, using excerpts from the above piece, I thought I'd show the similarities between their reporting and what we're seeing here. All quotes are from the piece on Bloomberg.
"Real estate agents, who spent the six-year U.S. housing collapse coaxing buyers off the fence, are now hunting for sellers as home inventories hover near lows last seen in 2005".
Many towns in Metrowest have struggled to maintain inventory levels for buyers, and now this is starting to show up across the country. It's old news here though, as inventory levels actually dropped as far back as 2007, and continued to decrease a little bit more each year since.
"The places where the market is most competitive -- like Washington, D.C., Phoenix and San Francisco -- are where sales volume is actually declining,” Redfin Chief Executive Officer Glenn Kelman said in a telephone interview from Seattle, where his company’s based. “The limiting factor on sales volume isn’t a lack of buyers. It’s a lack of sellers."
I did a larger piece on this at one point, where I discuss that normally, looking at housing transactions is useful, but not in this market where so many folks are underwater. This is a scenario playing out nationally at this point as well.
"The average person who bought in the last decade would lose money on a sale, because home prices have plunged to October 2002 levels, the S&P/Case-Shiller index of home prices in 20 U.S. cities shows. About 11.1 million homeowners have negative equity, or owe more on their mortgages than their homes are worth, which limits their mobility, according to ... real estate data provider CoreLogic Inc. (CLGX)"
Home prices are about 2003-2004 levels in Metrowest, a little better than the National Case-Schiller numbers, but transactions are really held up by not just people who are underwater, but those whose homes have just declined in value. I talk with people every week who say they aren't going anywhere until prices "recover". That's going to be a while, and that's why inventories will stay tight for years.
"In Florida, the state with the largest share of homes in the foreclosure pipeline, median prices are rising and transactions have declined for bank-owned homes. That defies predictions the state would face a flood of distressed properties, according to John Tuccillo, chief economist for the Florida Association of Realtors".
I've been looking for signs of the "Shadow Inventory" - the flood of homes that are going to hit the market - in every report I write for a year. There's been scant evidence that things have worsened, certainly not noticeably. Turns out, that's not just in MA, but also in Florida, where I would have expected it. I think the banks are doing a better job than people think of disposing disappointing assets, but the pundits aren't noticing (or believing) the banks (and for good reason). Regardless, things are better than anticipated on this front, and if things improve, we should see price increases.
I think a real turning point has been that Worcester itself seems to being tipping back to a neutral market, with sales outpacing actives. That tells me there's growing optimism, rising rents, and little to buy East of Worcester. As prices in Worcester stabilize, it will put pressure on prices all the way to Middlesex County.
Hope you found this helpful!
