Homes
Wednesday awaits CPI releases from about half the G10 countries. In short can you imagine if any report implies that Consumer Price Inflation is at worrying levels at the tail end of the worst recession in 2 generations? It's one thing for a central bank to state that they need to rid their ZIRP policies but its another if they state that CPI is a worrisome factor right now. So in short we're skipping those graphs today and looking at something far more interesting.
Have you received your tax notice yet? If not check your mailbox. Of course I'm referring to the latest Assessment notice on our property values. When I saw our letter I initially wondered how much value that we had lost. Then I opened it and apparently the City of Boston thinks property values have increased over the last 3 years by a nice little sum. So what did I do, I hopped on www.zillow.com of course and this is what I found out:
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Boston |
MA |
US |
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| 1 year |
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5.70% |
2.50% |
-5.50% |
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| 5 years |
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-7.40% |
-13.40% |
-6.20% |
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| 10 years |
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77.00% |
62.90% |
55.70% |
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| Note: Value trends are based on Zestimate and Zillow Home Value index values, not sale prices |
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We keep hearing how house prices have taken a mighty hit per Case-Shiller and the rest. Well per the City of Boston and Zillow.com this is just not true. As you can plainly see in the table above, prices are actually holding their own per Zillow.com. Over the last 5 years the average price for a home in the US is down 6.2%. In Massachusetts, a state (or Commonwealth) which is considered to be one of the more affluent states with 1/3rd of the population within a 40 minute train ride to downtown Boston and a highly educated bunch at that, the average home price is down 13.4% over the last 5 years. But it is also UP 2.5% over the last 12 months. Up, that is interesting and that matches what the City of Boston thinks as well.
You may ask why is Mass worse off than the rest of the country over the last 5 years? Well you may find this hard to believe but Mass has been hit very hard by the recession, in fact there are over 300k unemployed in this state, which by comparison is roughly 40% of the unemployed in all of Australia!
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So maybe house prices haven't lost much in value and are starting to see some appreciation right? Well not so fast. The City of Boston needs tax money and the citizens are saying no to quick fixes such as expanded gaming and a shut-down in services. Unless you want to take the time to fight your Assessment then you'll be paying higher taxes per Prop 2 1/2. If you have a look at the OFHEO figures, or now called FHFA, the average purchase price for a home in the US topped out in the 2nd quarter of 2007 at $224k. Since then the average home price is off more nearly 11% since then, but that only reflects actual purchase and sales.
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Again per the FHFA estimated house prices in Boston have fallen by 3.2% y/y, not up by 5.7% as we saw from Zillow.com. So that upward tick in house prices may be a 'false alarm' right now. As we discussed on Oct. 28th (http://www.hedgeforward.com/oct28rba.html ) house prices are still headed downward, whether its new or existing home prices. But don't tell that to the tax man.
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