Boston-area housing slump hits 28 months

The Boston Globe reports:

The most widely respected index of home prices reported yesterday that Boston's real estate downturn reached 28 months in January, as prices dropped about 3.5 percent compared to the same month last year.
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Prices now have fallen 11 percent from the peak of the local market in September 2005, according to the S&P/Case-Shiller housing price index.

Other home sales data for February, released this week suggest the market may have improved slightly since January, but it will be another month before the more reliable Case-Shiller numbers are available.

The multitude of different reports on real estate prices can be overwhelming, but boiling down the latest round suggests three things: The Boston market is bad. Local problems are still growing, but the pace has stopped accelerating. Many other markets are much worse.

As for the future, history may provide some indication.

"We have to look back to 1990 and 1991 to see sales trends that resemble what is happening now," Timothy Warren, chief executive of Warren Group, a real estate data publisher, said in a statement yesterday.

The last major downturn in Boston-area housing prices stretched 43 months from July 1988 to February 1992, according to the Case-Shiller index. Another five years passed before prices reached and then surpassed the high-water mark of July 1988.

In other words, a person who bought a home for $200,000 in the summer of 1988 would have had to wait nine years before being able to sell it for $200,000 again.

From peak to bottom, prices fell almost 17 percent.