Boston Real Estate

I have taken the liberty of making some corrections to this oh so scholarly report
that is just plain wrong.

Job growth Economic growth will be the key factor in whether the U.S. real estate market can extend a recovery after the end of the federal homebuyer tax credit, according to a Harvard University study.

High unemployment Lack of growth in the economy is fueling the foreclosure crisis and discouraging the household formation that drives property demand, according to the State of the Nation’s Housing report issued today by Harvard’s Joint Center for Housing Studies. The labor market weak economy resulted in people “doubling up,” or sharing residences, rather than buying their own home, the report said.

“What happens with jobs will matter How fast the economy rebounds will matter the most to the strength of the housing rebound,” said the executive director some guy from the center in Cambridge, Massachusetts. “If employment growth economic growth surprises on the upside or downside, housing numbers could too.” Consumer confidence Growth in the economy now needs to improve for the market to sustain itself, he said in an interview.

This Harvard Study is Backwards Baloney

The truth is that unemployment is a LAGGING indicator. Unemployment and housing are the last to recover. At least they have been in the last 5 consumer lead recessions. Think about it, the people that were doing the layoffs are human and this letting people go has an emotional and psychological impact on the company’s management. They feel bad about cutting workers out of their jobs thus they will wait until they see clearly positive growth in the economy before hiring again.

Another reason that they wait so long is that they are enjoying the reduction of operating costs. The money they are saving on salaries goes straight to the bottom line, helping the company recover from the recession. To see statistical improvements in Boston Real Estate would mean more transactions. That is what we mean when we say recovery in Boston Real Estate as we have not had a rollback in prices in the downtown Boston neighborhoods. We have to wait at least 6 months after the economy recovers and we see a few consequtive quarters of positive GDP. Then you will see a recovery in housing as well as employment statistics following in tanden after the GDP stays positive for two or three quarters.

Here is a walk down memory lane. As you can see from this chart housing prices gained as recovery in the economy took place.

Please believe me when I say that stock traders don’t watch the unemplyment rate. Its common knowledge on the street that the number is useless. What they do watch are predictive numbers like CPI (Consumer Price Index) and PPI ( Producers Price Index) along with the GDP numbers of course.

And for those who think the we have experienced a recession in prices for Boston Real Estate, I offer this chart that shows a flatline in prices since 2004/2005. As real estate agents we are looking for an increase in the number of transactions as evidence of recovery, not prices. Prices have not gone anywhere.