It may seem as though every where you looked during the past decade you saw new homes going up and new condos being constructed.

Far from it.

According to data I collected from the Center for Urban and Regional Policy (CURP), The Boston Foundation (TBF) and the Warren Group (the Warren Group), Boston and Massachusetts saw little housing stock added, on a percentage basis.

This is a warning sign for those hoping for drops in housing prices during the next years and decades.

While average and median sales prices have dropped during the past three years, in fact, most of this can be attributed to “which” homes are being sold. More homes at the lower end of the price scale were sold during the past couple years; homeowners at the higher end just held onto their investments and will wait til the market improves.

Here’s a breakdown of single- and multi-family building permits issued in Massachusetts, during the past ten years;

(Boston, with 250,000 units of housing in 2000 and 255,000 units of housing in 2006 issued permits for 1,000 additional units, in 2007, after the housing bubble burst.)

Notice how the “explosion” in permitting began in 2003, months into the the economic expansion. In fact, it jumped from 2003 - 2005 and only started cooling off after that, after the first warning signs were already evident.

How does Massachusetts compare to other states?

According to the Warren Group:

By comparison, Arizona — which has a similar-sized population as Massachusetts — issued almost four times as many permits in 2005 (91,436). Three years later, the number sank to 25,232 – still much higher than the permitting activity in Massachusetts.

Tennessee, another state that has about the same population as the Bay State, also saw more building. In 2005, more than 46,000 housing permits were issued – almost double Massachusetts’ level. By 2008, there were 21,699 permits – 57 percent more than Massachusetts.

Is “overbuilding” better or worse than “under-building”? Why, or why not?

(Caveat: Keep in mind, even though permits are issued, the developers may never end up starting construction. As well, the permits are for any type of housing, rental or owning.)

The National Association of Realtors is trumpeting a fourth consecutive monthly gain in their report of pending home sales. The index tracks the number of contracts signed on homes, which increased in May by just 0.1% from the previous month. Pending sales are up 6.7% from a year ago.

In the past those contracts would give a pretty good indication of what existing home sales would look like when the NAR reports its May numbers a few weeks later. These days the report’s reliability as an indicator is shakier. More pending sales appear to be falling through, as financing becomes harder to reach or as buyers and sellers renege on pricing.

In April, for example, contracts signed on homes rose 6.7% from the previous month, but existing home sales in May—when a lot of those contracts should have closed and been reported—increased by just 2.4%. Indeed, for nearly a year, the pending home-sales index appears to be over-predicting closed sales relative to historical levels, notes independent housing economist Thomas Lawler.

Here are three reasons why:

Mortgage Rates: April and May figures should face pressure because mortgage rates spiked sharply at the end of May, rising from around 5% to as high as 5.79%, according to HSH.com. While rates have resettled into the mid 5% range since then, that’s still up from springtime lows that went as low as 4.75%. Some buyers won’t be able to get financing at higher rates; others will probably reconsider buying.

Short Sales: Another big factor for the de-linking of pending and existing home sales are short sales, where a home is sold for less than amount owed to the bank on the property. Realtors often mark short sales as “pending” once a buyer and seller have agreed on a price—even though the bank still must sign off on the transaction. When that doesn’t happen, the pending sale falls through.

Appraisals: Also, in cases where appraisals come in lower than the sales price, the buyer may decide to back out of the transaction.

New appraisal rules that Realtors say are too conservative bore the brunt of the blame from Lawrence Yun, the NAR’s chief economist, for the higher fall-out of pending sales. “Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy,” he said in a news release.

File Under: Real Estate Spin

Looking for Boston condo or Boston real estate for sale or rent.

Source: Wall Street Journal Blog

The Wall Street Journal, Real Trends and lore Magazine ranked the top 100 real estate brokers. Agents across the U.S. were ranked by numbers of sales transactions in 2008. I’m sorry to report that I didn’t make the list. Well actually, no one in Boston Massachusetts made the list.

File under: There’s always next year

Click here for a larger version

The Mortgage Bankers Association just released its weekly index of applications to buy a home or refinance a loan, and the numbers aren’t good: it fell last week by 19 percent — the biggest plummet since February. As you can see from the above chart, applications have fallen by over 50 percent since April. The data suggests that the Obama administration’s plans to help out the housing market aren’t entirely working yet.

If your one of the few still buying a Boston condo visit our Boston real estate web site for today’s new listings.

Source: NPR

On June 23, the Warren Group reported the following, regarding May condo and single-family home sales.

The median selling price for [single-family] homes dipped 13 percent to $280,000 from $322,000.

The median condo price slipped 10.4 percent to $257,000 in May from $287,000 during the same month last year.

While both seem to be going down, the difference in prices between buying a condo and a single-family has narrowed during the past half-decade. In 2005, for example, the difference was $72,000 (25% more), according to the Warren Group.

That’s in Massachusetts, as a whole.

In Boston Proper, however, you aren’t going to find the spread narrowing, if only because there are fewer single-family sales when compared to condo sales and because downtown single-family mansions skew the results.

In the outer boroughs, prices may be similar, but what you get for the money is not. In fact, condos cost more.

In Jamaica Plain, there are 8 single-families for sale between $400,000 and $500,000 and 9 condos in that price range.

I randomly picked three homes and condos priced $539,000, $549,000, and $599,000.

For $539,000, you can get a brand new 1,350 square foot, 2-bed, 2-bath condo at the American Brewery Lofts or a 2,260 square foot, 4-beds, 1-bath home at 1091 Centre Street.

For $545,000-$549,000, you can get a 1,700 square foot, 3-bed, 2-bath condo at 509 Centre Street or a 2,700 square foot, 3-bed, 2-bath home on Forest Hills Street.

For $599,000, you can get a 2,400 square foot, 3-bed, 2-bath condo on Green Street or a 2,100 square foot, 4-bed, 3-baths home on Moss Road.

These results are obviously the opposite of what you’d see in the suburbs, I believe, where condos always run cheaper.

The economy will not recover until housing prices stabilize. Housing affects not just American families but banks, credit markets and construction business and jobs. Wall Street Journal Economics Editor David Wessel explains.

From the Boston Herald:

Home prices are still falling, but the rate of decline - at least locally - has slowed, according to the Standard & Poor’s Case-Shiller Home Price Index.

Boston was one of only three major U.S. cities where home prices fell in the single digits while the rest of the nation saw double-digit losses. Case-Shiller tracks sales in 20 cities. In Boston, prices were down 7.7 percent in April compared to a year ago. Prices in Sun Belt cities like Las Vegas and Phoenix fell by a third.

Read More: Boston Real Estate