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Par Vendez tout ! , le 1 mars 2006
Roof collapses on housing boom
By Jerry Kronenberg
Wednesday, March 1, 2006 - Updated: 07:20 AM EST
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Massachusetts house sales plummeted 21 percent last month, stoking fears that the housing bubble may have burst and could send shock waves across the economy.
It was the biggest year-over-year sales drop in almost 11 years - as Realtors recorded the slowest January since 1996.
What’s more, one of the worst fears of homeowners appears to be coming true: House values have dropped nearly 8 percent since August.
The screeching slowdown “has ramifications far beyond the real estate market,” said John Bitner, chief economist at Boston-based Eastern Bank.
The Massachusetts Association of Realtors reported yesterday that only 2,345 houses changed hands last month.
That’s down more than 20 percent from January 2005’s volume and an even steeper 34.4 percent from December levels.
“Higher mortgage rates, increased inventory levels and bold predictions of major price corrections” kept buyers on the sidelines, said MAR President David Wluka.
The MAR also said median house-sale prices fell to $345,500 in January, off 0.1 percent from January 2005 and 2.4 percent from December. All told, median prices have dropped 7.9 percent from August’s $375,000 peak.
Wellesley College economist Karl Case said the latest figures show “evidence of a bubble, but housing-market bubbles don’t unwind the way stock-market bubbles do.”
Case said house prices rarely “pop.” Rather, he said would-be sellers often take properties off of the market rather than accept low-ball offers.
Bitner noted that “cash-out” refinancings and other hallmarks of the recent housing boom gave consumers plenty of money to spend.
But now, the economist warned, a pullback could “really (hurt) consumer spending and that accounts for 70 percent of our economy.”
Still, Wluka noted that the latest figures measure sales that closed in January, not who’s looking now.
“Since the first of the year, we’ve seen significant increases in activity,” he said. Additionally, figures out yesterday show the state’s condo market holding up better than the house sector.
The MAR said median condo-sale prices hit $270,000 last month, down 1.8 percent from December but up 1.9 percent from January 2005.
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Article : http://business.bostonherald.com/realestateNews/view.bg?articleid=128534&format=&page=2 |