Real Estate bubble? Boston is still going stong... (Newton, Brookline: credit, jumbo loan)

[smarty]

Just saw this from the Globe... Basically Boston, Brookline, Newton price did not drop much.
Here's condo sales data
Condo sales and median prices for Massachusetts, June 2007-08 - Boston.com
They also have single family data.


Downtown condo sales slide 15%
Dearth of new units cited for latest drop

By Kimberly Blanton
Globe Staff / July 24, 2008

A slowdown in the number of available modern condominiums contributed to a 15 percent decline in sales in the downtown Boston real estate market during the second quarter of this year.

Moderator cut: copyright issues

[skytrekker]

Many areas of New England caught on to the real estate 'bubble' later then California, Nevada, Florida--- but price still rose rapidly after 2003.

It seems that price declines will start later as well here- we have yet to see the end of them-

[Xenos]

The Boston area does not have the extensive subprime problems you see in the bubbly western states, but it does have a serious 'Alt-A' problem. By that I mean non-conforming jumbo loans, with variable rates, put on overpriced houses that will be worth a lot less when the loans reset to higher interest rates. The majority of Alt-A resets will not take place until 2010-2011.

Until then, these house, even if on the market, are just not selling quickly, but the sellers hold out hope that a greater fool will come along and buy their houses and save their posteriors.

So I predict that the market will sit on this ledge for at least 18 months more, and then our local crisis will begin in earnest.

[BGF]

I wouldn't use the $700k - $2 mil condos as the canaries for the health of the market. To seriously play in the $2 mil market, you'd need a job that pays $400k or have $4 mil in the bank, and those who can get that kind of job or have that much money in the bank are either business owners or pretty high up in finance or law, not your run-of-the-mill professionals. Look at the low end of the condos in the $200k-$400k range. That's where the majority of the people live.

[Xenos]

That is a good point -- I was thinking about real estate in general, and single family homes in the Boston area. The issue here is Boston condos, which have held up pretty well so far. Maybe a lot of them are held with conforming, fixed loans, and will weather the credit crunch pretty well.

[LeavingMA]

That is only taking statistics from over the past year. The top of the real estate market was in 2005 and since then has been either steadily declining or falling, depending on location. Some areas took the decline earlier while others are feeling it more now, but if you look at prices from 2005 and early 2006 until now every town and place has been effected. There will most likely still be more correction in the next few years, and high energy prices won't help the real estate market.

[smarty]

So... Is the consensus that Boston Condo has bottomed out (within a couple of percent)? or the bubble will burst with big drop in price in the next couple of years?

Any one want to guess why condo prices in Boston are holding up relatively well at this time?
Area Jobs (from what industry)? High net worth individual? VC money? Foreign investment? High student population?


What will make it burst...
Oil price? US dollar? Deficit? Reduce government spending? higher taxes?