A prelude of what’s to come?

From the Boston Herald:

Year-long ‘correction’: Home sales worst since ’90s bust

New figures show 2006 was the worst year for Massachusetts real estate since the 1990s housing bust.

Market tracker The Warren Group yesterday reported that total 2006 sales volume fell back to 1995 levels, while prices dived more than in any year since 1990.

“Sales are still falling . . . and prices are still under pressure as buyers and sellers are sorting out the market,” Warren Group CEO Tim Warren said.

Warren reported that median house-sale prices fell to $325,000, down 5.8 percent – the biggest one-year drop in 16 years.

It’s also the first time prices have fallen for a year as a whole since 1993.

Additionally, Warren said the number of houses changing hands declined 14.4 percent to just 54,203 properties – the lowest volume since 1995.

Warren added that, despite 2006’s weakness, “we still see this as more of a soft landing than a crash (for houses and condos). We’ll be watching closely in the next few months for signs of stabilization.”

The expert predicts the market will bottom out around mid-2007. “Housing isn’t a bubble that’s bursting,” Warren said. “It’s a market that’s correcting itself.”

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8 Responses to A prelude of what’s to come?

  1. bergenbuyer says:

    What’s the definition of the terms bubble, crash and correction?

    “Housing isn’t a bubble that’s bursting,” Warren said. “It’s a market that’s correcting itself.”

    What % drop do you consider a burst or just a correction?

    I’d say a correction is less than 5% drop so that inflation catches up in a year or two and I can buy a house for $500K and sell it in 2 years for about the same price.

    However, that is not what is happening. If I bought a house in 2005 and I had to sell it in 2007 at a 10% price drop I’d sure be pissed if someone told me that $50K I just lost was just “a correction.”

    All these guys ever give are key words with no definition of what they mean to cover their ass when they’re wrong.

  2. gary says:

    Didn’t the realtor tonic sales people last year say that growth was moderating? Now it’s a correction? When water’s being poured on the flames in 2008, what will they call it?

  3. James Bednar says:

    When water’s being poured on the flames in 2008, what will they call it?

    Traffic on the taxiway as the plane waits for a gate to free up.


  4. RentinginNJ says:

    During every bust following a boom, the pundits and true believers will continually call for stabilization and declare, “the bottom is here”. In every single “existing home sales” press release put out by NAR this year, they described market conditions as stabilizing even as conditions continued to deteriorate.

    If you read the news reports following the dot.com bust, the mainstream consensus story line is that the NASDAQ become a little overheated, but the fundamentals remain strong because our future will be a high tech economy, and the sector will soon rebound. Well, its coming up on 7 years and the NASDAQ is at less than half of its March 2000 high. I’m still waiting.

    During every bust, the analysts call for a soft landing. It just never seems to actually materialize. This is just part of the anatomy of a bubble.

  5. JerseyCitySidelines says:

    Why did Boston’s bubble burst first?

  6. RentinginNJ says:

    Boston was one of the earlier markets to boom. If you look at the OFHEO housing price index, Boston starting seeing double digit growth in 1999, while this area was really just getting heated up.

    I think Boston’s market just ran its course earlier.

  7. gary says:

    I know, it’s only a flesh wound.

  8. Better lower your prices fast THE RACE TO THE BOTTOM IS ON says:

    D.R. Horton: Housing Slowdown in “Early Stages”
    “Most downturns are longer and deeper (than people expect), and we are not seeing anything on the horizon to change that opinion.”
    D.R. Horton Chief Executive Don Tomnitz, Jan 23, 2007

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