Real Estate Market: December 2007 Archives
This question was asked on Linkedin.com and this was my response:
Real estate is local so some areas have hit bottom and many areas have not.
A good indicator is when the days on market start declining and the absorption rate is six to seven months or less.
The absorption rate is derived by dividing the active properties on the market by the number of homes that have sold in the last 12 months so if no new homes come on the market the inventory would sell in x number of months.
In my town of Foxboro, MA at the height of the market the absorbtion rate for single family homes was 2 to 3 months. It went up to around 8 to 9 months and now this morning, Nov. 25, 2007 it is at around 6.5 months. I'd say my home town is getting near the bottom or is close to the bottom.
The days on market for the first six months of 2007 in Foxboro were 164.12 days and the second half of the year so far the days on market is 144.44 days.
The stats came from my local MLS.
If you want to really get into this you could look at different price points and see if the lower end is doing better than the higher end or vice a versa.
Real estate is local so some areas have hit bottom and many areas have not.
A good indicator is when the days on market start declining and the absorption rate is six to seven months or less.
The absorption rate is derived by dividing the active properties on the market by the number of homes that have sold in the last 12 months so if no new homes come on the market the inventory would sell in x number of months.
In my town of Foxboro, MA at the height of the market the absorbtion rate for single family homes was 2 to 3 months. It went up to around 8 to 9 months and now this morning, Nov. 25, 2007 it is at around 6.5 months. I'd say my home town is getting near the bottom or is close to the bottom.
The days on market for the first six months of 2007 in Foxboro were 164.12 days and the second half of the year so far the days on market is 144.44 days.
The stats came from my local MLS.
If you want to really get into this you could look at different price points and see if the lower end is doing better than the higher end or vice a versa.
This question was asked on Linkedin.com and this was my response:
Real Estate is local. So the bottom is going to be different for different areas.
Even in the Boston area the better perceived towns will bottom out first and the lesser perceived towns will follow. It also differs depending on what price range you are in.
People were moving farther away from Boston to find affordable properties and now these people are not having to go so far. The towns closer to Boston and the Boston neighborhoods are benefiting from this migration back to the center. The towns farther out will suffer.
It's hard to over build in Boston. We don't have large tracts of land to build large number of homes. The towns south and west of Boston have restricted growth of homes through the increase of lot sizes that reduce the number of lots per acre. The towns have done everything to reduce density. The Commonwealth has done what it can to push back. So, what ended up being built due to this struggle have been 55 and older complexes and rental units in the towns that still have less than 10% of their housing inventory deemed affordable. Once you hit the 10% threshold the Commonwealth fast track permitting doesn't apply. The other area of growth is areas around train stations which gets special treatment/incentives by the Commonwealth.
The macro is having an effect but the micro economics of an area also has an effect on the real estate market. You have to look at both for each area to see the overall effect.
Real Estate is local. So the bottom is going to be different for different areas.
Even in the Boston area the better perceived towns will bottom out first and the lesser perceived towns will follow. It also differs depending on what price range you are in.
People were moving farther away from Boston to find affordable properties and now these people are not having to go so far. The towns closer to Boston and the Boston neighborhoods are benefiting from this migration back to the center. The towns farther out will suffer.
It's hard to over build in Boston. We don't have large tracts of land to build large number of homes. The towns south and west of Boston have restricted growth of homes through the increase of lot sizes that reduce the number of lots per acre. The towns have done everything to reduce density. The Commonwealth has done what it can to push back. So, what ended up being built due to this struggle have been 55 and older complexes and rental units in the towns that still have less than 10% of their housing inventory deemed affordable. Once you hit the 10% threshold the Commonwealth fast track permitting doesn't apply. The other area of growth is areas around train stations which gets special treatment/incentives by the Commonwealth.
The macro is having an effect but the micro economics of an area also has an effect on the real estate market. You have to look at both for each area to see the overall effect.
