Back on April 19th, the Boston Herald had a story about the state of the Boston real estate market. Basically, it said that the number Beacon Hill sales had fallen precipitously, and that prices in Dorchester and Roxbury had fallen. (The story is in their archives, here.)
Here’s a direct quote from the story:
If you’re wondering what it will be like if the real estate bubble bursts, ask some homeowners in Dorchester and Roxbury.
The gas is running out of the recent real estate run-up in both neighborhoods, according to local housing researcher John Anderson. Dorchester and Roxbury homeowners defaulting on mortgages rose 35 percent over the past year, said Anderson, of The Real Estate Analyst. And Dorchester single-family and condo prices are falling after record highs last year.
The jury is still out whether the bad news is just local – or a warning of a larger Boston area decline. But a cooling off could hit Dorchester and Roxbury particularly hard, thanks to a growing number of high-interest, subprime loans.
"There is a whole confluence of factors,” said Anderson, a longtime Dorchester homeowner. "We’ve hit the wall.”
Well, of course, he’s wrong. Totally wrong. At least about sales prices. I have no idea about the defaults issue, since they don’t quote where he got his data from. However, although 37% sounds like a huge increase, keep in mind that the raw number of foreclosures was 48 in 2003, and 65 in 2004 – certainly not a number to be concerned about, considering the Dorchester neighborhood has 60,000 residents.
During 2003, MLS reports that 214 condos were sold, for an average list price of $237,000 and an average sales price of $231,000. During 2004, MLS reports that 368 condos were sold. (It’s not even funny how large an increase in sales took place – 50%!!!)
Unfortunately, I can only get historical data for 250 properties or less, so I pulled the data for the first six months and the second six months. In the first six months of 2004, 164 condos sold for an average list price of $248,000 and average sales price of $243,000. Second six months, 204 condos sold for an average list price of $263,000 and average sales price of $257,000. (Days on market lengthened, slightly, from 47 to 53 days, on average.)
(Single family homes increased in price and number, as well, from 126 to 173 total during those 2 years, with average sales prices going up from $323,000 to $362,000.)
I don’t know where he got his data. I do know, based on the slant of the entire article, that the guy quoted has a pretty negative outlook on things, overall. It’s not surprising, therefore, that he made the data fit his opinion. Too bad the Boston Herald didn’t do a better job of verifying his numbers.
Actually, this is now really burning my ass. I am all for a serious discussion about the housing market and bubbles, and all that, but people have to use real data and be educated, if they want to be taken seriously.