“Given no further substantial deterioration of consumer confidence, the
Greater Boston market should benefit from increased sales and prices. On the
other hand, if consumer confidence improves, that expansion should
accelerate,” said Hall.

While the number of sales in the Greater Boston market area (the six
counties surrounding Boston and their 167 cities and towns) is presently
down 7.9% year-to-year, February 2009 sales figures show that for the first
time in nine months, month-to-month sales increased, rising 15.5% over
January of 2009 from 1,617 to 1,868.

Moreover, the decline in the average sale price for closed sales has slowed
down to 4.6% in the last three months, and most significantly, for the first
time in months, the month-to-month average sale price in February showed an
increase over the preceding month – from $351,205 in January to $355,271 in
February – another significant indication that better times could be on the
way in the Greater Boston housing market.

“These are very healthy signs,” said Hall, noting that the wellbeing of a
specific real estate market can be measured by documenting and analyzing
three primary indicators: number of sales, average sale price and the supply
of unsold listings.

In keeping with the positive trend indicated by the most recent number of
sales and average sale prices, figures also indicate that year-to-year the
supply of unsold listings has dropped 13.75% from an eight-month supply to a
6.9 month supply. “A six month supply of unsold homes is considered to
reflect a Balanced Market Hall said, “with the number of sellers and buyers
about equal and home values holding steady.”

“The current trend is even more positive, showing an acceleration of
improvement in the market over the last three months,” said Hall, noting
that the supply of unsold listings dropped 8% over that time period, from
7.5 months in December of 2008 to 6.9 months this February.

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As to the referenced article, I question the conclusion. Housing prices were significantly and increasingly out of whack with supply vs demand for the first five years of this decade, stopping their rise only when anyone who could fog a mirror was already in the game. Why should we be convinced that prices will respond immediately and rationally now?

This goes for many news articles now coming out that say prices or sales have fallen below their long term averages or below some purported “rational” level. It is entirely possible that this condition may continue and intensify for an extended period.

That is generally what happens in the aftermath of a bubble. A quick example is the Dow Jones Industrial Average for stocks took 25 years to return to its 1929 high, and were quite cheap compared to company earnings for most of that time.

Here’s the report: http://www.mass.gov/Ehed/docs/dhcd/media/thestateofmahousingm.pdf

Still looking it over, but I’m not sure if their “housing shortage” language is what you think – I think they’re more referencing affordable housing, not hosing stock in general.

From the paper:

“Statewide annual housing shortages have been in evidence since 2000. While slow population growth and increased construction narrowed the gap in the early 2000s, current and projected slowdowns in building will likely lead to continued housing shortages through 2012.”

Mike