20 Responses to “Boston real estate: one moment in time” »»

1. confused
   Comment by confused | 10/08/08 at 2:08 pm

   I looked and couldn’t find any information on the NAR web site as that it is down. But the data was reported that “pending sales” have increased. So what does an increase pending sales mean? I see two ways of viewing that term. A pending sale is counted when two parties agree to a sale. The total number of agreements are tallied for a time period. The second is that as two parties agree and this sale is put into the pending sales category where it sits until the sale is finalized. After it’s finalized it moves out of the pending category and into the closed category. Do you know which? or is it computed in some other fashion?

2. Buyer?
   Comment by Buyer? | 10/08/08 at 3:05 pm

   Personally, I’m waiting for lower prices.

   A place on the street where I’m renting is asking $539k and doesn’t even come with in-unit laundry. Half a million freakin’ dollars and I have to schlep to a laundromat? Note to seller: good luck!

   This is ridiculous. Prices have to come down. This place would have gone for maybe $400k in 2003. MAYBE. This is 2008 and the economy is swirling down the toilet.

   I suspect other buyers are waiting to be certain they’ll even have JOBS in 6 months.

3. condobuyer
   Comment by condobuyer | 10/08/08 at 3:24 pm

   I too am waiting for lower prices. We’ll see… Like you Buyer, I was shocked when I saw a unit priced well above $1M where you had to go up two flights of stairs to get to the unit and another flight once inside to get to the main floor. The bldng has no elevator and the owners bought it for 400K in mid 90s and want 1.5M. Good luck to them!

   I don’t know what your definition of “high end sales” is John, but my albeit recent experience of looking at properties just under to a little over $1M convinced me that these particular properties were not moving. With the exception of my example above most of the other owners had bought 04-06 and were offering for the same price but still NO takers. If the definition is $2M + then I defer to you…

4. Mark
   Comment by Mark | 10/08/08 at 3:57 pm

   Agreed. I have been looking for a condo in Boston for about a year now. At first, many sellers dropped their prices quickly for fear of the impending recession. That eliminated all of the motivated selllers. Now, the recession is here and looks like it could be heading towards a depression before long. This may shake out some folks that are hanging on and just barely making their mortgage payments, but from what I have seen out there the sellers right now are mostly a bunch of fisherman (and women). They are trolling off the boat hoping some sucker will bite on an overpriced $500k condo that should never have been purchased for $400k in the first place. I agree with “Buyer” and see my decision as a home seeker as such:
   Why should I pay $500+ more per month (vs. renting) for an overpriced condo in that may decline even further in value? At the same time my anxiety over job security goes through the roof and I also have to jump through hoops with banks in order to get a mortgage to buy the overpriced unit in the first place.

5. John Keith
   Comment by John Keith | 10/08/08 at 4:33 pm

   You lost me at “we’re in a recession”.

6. Buyer?
   Comment by Buyer? | 10/08/08 at 5:21 pm

   John - You’re joking, right?

7. Anon
   Comment by Anon | 10/08/08 at 5:24 pm

   John,

   The U.S. is in a recession. It just won’t be official for another 6 months. The financial system meltdown is going to have an immediate effect on the “real” world.

   Anon

8. John Keith
   Comment by John Keith | 10/08/08 at 6:37 pm

   Oh. Didn’t know there were psychics reading the blog. Thx.

9. Kitty
   Comment by Kitty | 10/08/08 at 8:06 pm

   Oh god John you have really lost it. What planet are you living on?

10. John Keith
    Comment by John Keith | 10/08/08 at 8:32 pm

    GNP went up in 1st-quarter 2008 and in 2nd-quarter 2008. Third-quarter 2008 has not yet been announced; I expect it to be flat, at best, but January 1009 is a long, long way away.

    Don’t believe everything you read in the newspapers.

11. Buyer?
    Comment by Buyer? | 10/09/08 at 8:28 am

    I’m not reading the newspapers, I’m reading my investment account statements, K? Thx.

12. Mark
    Comment by Mark | 10/09/08 at 10:01 am

    With all due respect John, Martin Feldstein, president and chief executive of the National Bureau of Economic Research said, off the record, he believed the economy was in a recession back in March. He also acknowledged that the NBER usually doesn’t even identify recessions until they are over.

    Furthermore, US GDP growth was less than 1% and INCLUDES government spending. So our government’s wonderful contributions to our national debt is actually propping up the >1% figure that you are relying on. A recession is also marked by significant increases in unemployment. I believe we all read the articles describing how the economy shed 159,000 jobs and US unemployment had increased by 1.4 percentage points over the past 12 months.

    We are most definitely in a recession and well on our way to a depression. You are seeing many of the world’s economies following suit and using deposit guarantees to attempt to rescue their financial institutions and economies. Iceland is on the verge of bankruptcy and Russia has had to suspend trading on its stock exchanges several times in the past few weeks to prevent a market crash.

    Here is my main issue with real estate right now. In the past 4 years housing pricing have outpaced wage growth by over 50%. Money was cheap and people were stretching themselves well beyond their means and doing it with horrendous interest-only adjustable rate mortgages. If a safe mortgage is typically around 3 times a buyer’s annual income I think we can agree that real estate was trading more like 5 to 8 times buyer’s incomes. Now, at a time where real estate either needs to fall by 30% or wages have to increase by 30%, which do you think is more likely to happen? Considering that Boston is now facing layoffs like NYC and the rest of the country, I’d say we can rule out the latter.

13. John Keith
    Comment by John Keith | 10/09/08 at 12:13 pm

    Hi. I’m not worthy of your respect; it’s just my opinion, nothing more.

    In this respect (oddly, it has a different meaning in this context …), Marty Feldman (the comedian?) was wrong. The wrongest he could be. 180-degrees wrong. The country wasn’t in a recession in first quarter and wasn’t in recession in the second quarter. No wonder he wanted to be “off the record”.

    If you are trying to make the point that economies are in trouble and the system on life-support, you’ll get no argument from me.

    However, until I see quarters of contraction in production and sustained increases in unemployment, I’ll withhold judgment.

14. confused
    Comment by confused | 10/09/08 at 8:35 pm

    it is hard for a person understand something their job requires them not to understand

15. John Keith
    Comment by John Keith | 10/09/08 at 8:48 pm

    I guess.

    Oh, about that “official” calling of a recession? Today on Bloomberg.com:

    Declining output would open the way for the NBER, the arbiter of U.S. business cycles, to declare a recession. Robert Hall, the Stanford University economist who leads the NBER panel that makes the call, this week said the group was in “waiting mode” as gross domestic product had yet to shrink significantly.

    The market turmoil will spark the longest and deepest recession in at least three decades, Harvard University’s Martin Feldstein, another member of the group, said yesterday in an interview on Bloomberg Television.

    The Cambridge, Massachusetts-based bureau defines a recession as a “significant” decrease in activity over a sustained period of time. The group does not follow the common rule of thumb of back-to-back quarterly decreases in GDP.

    There you go.

16. Rob
    Comment by Rob | 10/09/08 at 9:05 pm

    I wished I had read this posting earlier. John, you are probably right. Tons of people loosing jobs, banks have no money to lend, housing prices are over extended, the average American is living pay check by pay check, and the tremendous amount of fear are not likely to impact the real estate market. I totally agree with you… The media is reporting false news…

17. John Keith
    Comment by John Keith | 10/09/08 at 9:29 pm

    Rob, are you calling me a looser?

    From the wire:

    The International Monetary Fund says the world economy is facing a major downturn with the United States and Europe either in or on the brink of recession.

    It says the world economy is entering a major downturn in the face of the most dangerous shock in financial markets since the 1930s.

    This is predicted to exact a heavy economic toll as investors wrestle with a crisis of confidence and a credit crunch.

    IMF’s new chief economist, Olivier Blanchard, says the rash of crises in recent weeks had convinced world policy-makers that it was time to work together to find a way out of the credit turmoil, which has raged for 14 months.

    In its World Economic Outlook, the organisation slashed its 2009 forecast for world growth to three-percent, which would be the slowest pace in seven years, from a July projection of 3.9 percent, and warned that a recovery will be unusually slow.

    I had always been under the impression that there had to be negative growth for two consecutive quarters in order for it to be called a “recession”. From what Mr Fellstone says above, it seems to be that a reduction in growth in two quarters is the definition; so, going from 1.5 percent in Q2 to 1.3 percent in Q3 to .09 percent in Q4 would mean we were in a recession. Those are two different things.

    Still, being “on the verge” of a recession and “in” a recession are two different things.

    And that’s about all I have to say on the subject.

18. Rob
    Comment by Rob | 10/10/08 at 11:12 pm

    No, I am not. Your job is not to forecast. Like most real estate brokers, your job is to state the current facts when they are in your favor and present the historical facts when current facts are unfavorable. Thus. there is never a bad time to buy real estate.

19. Kitty
    Comment by Kitty | 10/11/08 at 8:34 am

    Ooo my, Rob… Kitty says ‘MEEEEOW!” LOL

20. Mark
    Comment by Mark | 10/12/08 at 11:17 pm

    The article you posted complete contradicted itself. First, it said “the group was in “waiting mode” as gross domestic product had yet to shrink significantly” then it said, “The group does not follow the common rule of thumb of back-to-back quarterly decreases in GDP.” What? So they are waiting to declare a recession because of GDP, but they don’t use GDP as their rule of thumb? Hmmm okay.

    Like I said before, the group usually doesn’t call it a recession until it is already over, so that would mean we are in one right now and have been for quite some time. Also, again, GDP includes government spending and national defense. If our national debt was shrinking and GDP had a less than 1% increase then I would agree with you, but it is not. That means our exports - imports are not necessarily increasing. Any trade statistics I have been able to find have indicated that our exports have dropped.

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