8 Responses to “Boston MSA prices drop 5%, year-to-year; conforming loan jump seen as panacea” »»

1. Gus
   Comment by Gus | 02/05/08 at 12:06 pm

   Yes, the Case-Shiller indexes have their problems. The don’t track condos and the numbers are published two months after the fact. But I think calling them useless is an overstatement. Because they track the repeat sales of the same homes, the index has the unique advantage (along with the OFHEO, which is based on the same principle) of eliminating distortion of the numbers due to a change in the mix of units sold over time. They show far more stable trends than those indexes tracking median and average prices, for example. Also, they’ve been around for over 20 years, so you can do historical comparisons. So I think it’s important to keep them on the list of indexes one should track. The new Radar Logic indexes are very interesting too.

   As to expanding the loan limits, you have to wonder how much good they will do. In order to get a conforming loan, you will probably need more of a down payment (the requirement for these is going up, as reported), you have to document your income and assets (many jumbo loans in the last few years have been no doc). For buyers with credit scores below 680, Fannie and Freddie are now adding surcharges that can raise the interest rate near to what the non-conforming market is charging.

2. John A Keith
   Comment by John A Keith | 02/05/08 at 12:14 pm

   Yes, they are good for those reasons.

   You made me remember one other weakness in their numbers. One, or both, only include conforming loans in their data. This definitely skews the numbers, downward possibly.

3. anon
   Comment by anon | 02/05/08 at 1:37 pm

   To add to Gus’ points, the S&P/Case-Shiller Index is also not useless if you intend to buy a single family home rather than a condo.

4. Sidelined
   Comment by Sidelined | 02/05/08 at 3:44 pm

   THanks for pointing out another tool for analysis.

   As a sidelined buyer waiting to buy in the western suburbs I do not feel compelled to make my move for at least another year. I have the cash, just not the faith in the values of the homes going up.
   Market timing is everything.

5. John A Keith
   Comment by John A Keith | 02/05/08 at 3:52 pm

   Well, prices certainly aren’t going to go up!

   If you’re thinking of buying within the city of Boston, I’d say wait until March – April -May and re-evaluate your options, then. If not then, wait until the fall.

   Outside the city? Yeah, what’s the worst that could happen? Interest rates aren’t going to go up, prices on average aren’t going to go up … unless your life situation makes you feel confident that you’ll be in the same home for five years+, why rush?

6. Robert
   Comment by Robert | 02/05/08 at 11:31 pm

   Robert Schiller was just interviewed on Wealthtrack this past weekend along with Charles Ellis (no dummy). As I first posted about 4 months ago his predictions were bleak for housing. His current assessment is that the acceleration in falling home prices continues unabated. He fully understands this can’t go on forever, but sees no improvement i.e. no bottom on the horizon yet. When pressed for his best guess as to a recovery he responded confidently with “years”. He admonished that homes will no longer be wealth creation tools and that people still haven’t realized that. Take home message: Whatever you do don’t buy now, and when you do, buy small.

7. Kevin
   Comment by Kevin | 02/06/08 at 6:10 am

   I’m with you Robert.

   There’s no way on god’s green Earth I’m gonna jump into this market right now. Yikes.

   Recession brewing, prices wobbling or sinking. Scary.

8. Bob
   Comment by Bob | 02/06/08 at 9:32 am

   Assuming interest rates stay the same there are some deals now that are pretty amazing. I have a customer who is purchasing a three family in Cambridge. He is putting only 5% down and with rental income will be living for less than $1000 per month in his unit. This does not take into account the fact he is paying down principal and the fact that there is significant tax advantages with his rental units.

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