Here’s a take on the Massachusetts housing market by someone who has been in the business for 30 years, and has seen all the ups and downs of the various cycles: “(The housing market) is cooling down, but the plane is not crashing. It’s going to land. Maybe a bump or two on the way down, but the plane is going to land.”

David Wluka said that in the past few years, buyers typically outnumbered the supply of homes for sale, which caused prices to escalate. He said the roughly 20% decline in sales volume from January 2005 to January 2006 is a sign that prices are stabilizing.

You just can’t maintain an overheated market forever. There were three or four years of double-digit appreciation and it just couldn’t be maintained. It’s a natural thing, (housing) markets go up and they go down.

For example, the cumulative appreciation from 1990 to 2000 was 6 percent in Massachusetts. From 2000 to 2005 it was 84 percent. The expectations of people are really up there.

Read the whole article here (Patriot Ledger).

For better or worse, baby boomers are the major stakeholders in the current real estate boom. With the majority of their accumulated wealth invested in real estate - be it primary residences and/or investment and vacation homes, boomers are shouldering most of the risks of the real estate boom should it take a turn for the worse. As with any investment, diversification is key to maximizing profit and reducing risk.

Amazingly, boomers own 57% of all vacation/seasonal homes and 58% of rental properties. And a full one quarter of boomers own two or more properties, according to the National Association of Realtors’ “2006 Baby Boomer Survey.”

“Mass affluent investors have heavily tied their financial futures to the real estate market, which has been so hot for so long that many believe it has virtually no place to go but down. If the real estate market begins to crack, it is the mass affluent who will likely feel the effects both faster and with greater force. The fact that these assets often carry outstanding mortgages increases the risk further still,” said Catherine S. McBreen, Spectrem’s managing director.

When investing, the fundamentals still apply and diversification remains a cardinal rule.

Read the whole article here (Realty Times).

Reinforcing the idea that real estate is by nature a local business, trends from across the country are showing wildly diverging data in regards to this year’s home sales. Here’s a tale of two markets - home sales in western Washington dropped 8.6% in April from a year ago, while existing home sales in New Mexico rose 26.2% in the first quarter of 2006 compared to the first quarter of 2005.

Other markets on the rise are Louisiana, where first-quarter sales rose 22.9% from a year earlier, Montana, which experienced the third strongest gain, up 17.5%. Six other states recorded double-digit sales increases from a year ago.

According to the “Real Estate Cycle in 2006″ study by First American Real Estate Solutions published last week, places like California, Florida, New York City and Las Vegas, which have already had rapid price rises, may have passed the high points of their cyclic price fluctuations. Other areas, especially America’s heartland, may provide more fertile ground for investment and purchase, the study suggested.

Reports from heartland states like Illinois bear this out. Single-family home and condo sales rose 2.1 percent in the first quarter compared to a year ago, the Illinois Association of Realtors reported in mid-May.

Read the whole article here (Inman News - subscription).

In some cooling condo markets such as Las Vegas, luxury condo developers are pulling out all the stops to sell their backlogs of condos before rival new constructions are completed. While some are offering perks such as finish upgrades and great financing options, others are going all-out with celebrities, showgirls, circus performers and fireworks displays worthy of the Fourth of July. Sales incentives ranging from alligator-leather-covered notepads in Manhattan to $10,000 diamond-encrusted cuff links in Fort Lauderdale are dangled before guests.

In Fort Lauderdale, Las Vegas and Manhattan, an estimated 167,600 luxury units are due to hit the market in coming months. In Las Vegas, where 62,600 new condo units are planned, there’s greater pressure because projects often are larger and developers can’t get construction financing to build without selling a certain number of units in advance. Three condo projects already have been canceled and a half dozen are being re-evaluated in light of slowing sales.

“No matter how elaborate the party — if behind the scenes they haven’t nailed down their construction costs — the odds of it going forward are very low,” says attendee Bruce Hiatt, a broker and owner of Luxury Realty Group Inc., in Las Vegas.

Read the whole article here (Wall Street Journal).

The meteroic rise in second home sales seems to have stalled in Naples, Florida, where sellers are finding that the only way to compete is to lower their asking prices - sometimes as much as 40%. While second home sales are still healthy in most of the country (second homes now account for a full 40% of all homes sold in America), a combination of overbuilding and super-high pricing has dramatically slowed the action in Naples and other vacation communities along the Gulf Coast.

Vacationers long have been attracted to Naples’ proximity to water, the Everglades and shopping at the likes of Saks Fifth Avenue. Last year alone, buyers bid up the area’s median price by 30%, to $482,400. Charles Ashby, president of Naples’ VIP Realtors, recalls that one of his sales associates was able to go down to a local bar and sell 26 units in a nearby Fort Myers high-rise the first night contracts were being accepted.

Today, about the most visible activity in that area is the 400 or so daily additions on the multiple listing service — and price reductions by the dozens. In the 35 years that Ashby has been in the business, this is the first downturn he’s seen, even counting recessions. “The mule died,” he says.

Read the whole article here (Barrons).

If you’re thinking about buying a home, but cannot even imagine saving enough cash for a downpayment, Money Magazine has you covered with some sound saving advice. True, you could go the no-money-down, 110% financing route, but those types of loans are looking increasingly dangerous as home price appreciation slows and interest rates rise. As far as paying for your dream home goes, a 20% downpayment is still the most sane route to responsible home financing.

But where to begin, especially if you have neither a trust fund nor a large inheritance?

Look at what you spend each month, and imagine what you would do if you had, for instance, $150 less at your disposal next month. You’d adjust.

After a month, you won’t miss the money. Honest. Call the account your House Fund or something - my wife (our CFO) dubbed ours the Crib Kitty. Any time you win a bet or get a bonus, tax refund, or other surprise income, you’ll know where to put it.

Read the whole article here (Money Magazine).

Would you commit to buying a home without knowing exactly how much the house costs? That’s exactly what buyers desperate to get into the red hot Alberta (Canada) housing market are doing right now. Consumers are putting substantial deposits down on new construction homes without knowing what the final price for the finished home will be.

It’s a bizarre situation that contractually binds borrowers to pay a final price yet to be determined. Although it doesn’t seem to make much sense, it’s the only way builders can agree to sell a home because their costs are rising so quickly, and demand for housing is so strong.

The influx of out-of-province workers into Calgary, flush with cash from jobs connected to the energy sector, has created a surge in demand for homes. The Calgary real estate board said last month existing home prices were up more than 37% from a year ago.

New-home prices are rising quickly in the province, up about 30% in Calgary in the past year. Canada Mortgage and Housing Corp. said this month Alberta is one of the few provinces in the country where new construction activity will rise this year from 2005.

Read the whole article here (Canada.com).

Seeking to cool its superheated housing market, China’s cabinet has taken some aggressive steps to curb rampant speculation, including tighter lending standards and higher minimum down payments. Like some US housing markets, China has seen rapidly rising real estate prices due to vast numbers of speculators entering the market with no money down.

China’s leadership has periodically tried to rein in the economy, which has galloped along at about 10-per-cent growth for each of the past three years. In April, the government called for renewed efforts as investment in housing, factories and other fixed assets rose, prompting fears that banks were lending carelessly and could end up with bad debts.

Housing prices have been a particular concern because their rapid climb is touching off resentment among working-class Chinese and widening a politically volatile gulf between China’s rich and poor.

Read the whole article here (Globe and Mail).

It looks like builders are slowing down their activity in some of Oregon’s hottest housing markets after years of record-breaking construction activity. Some take this as a good sign since the market was becoming saturated with too much new construction. In the town of Medford, only about a third of the permits for new single-family houses were issued last month as a year ago.

And statewide, experts have mixed reactions on the news that builders aren’t recording as many new lots.

“It could signal a shortage of lots for the future, and it could mean a slowdown for the future,” he said.

While the number of permits issued by the city jumped 42 percent in the first 10 months of fiscal 2004-05 from the previous year, they have grown by just 3 percent so far this fiscal year.

Read the whole article here (Oregon Live).

Some major developers are getting priced out of one of the hottest real estate markets in the nation - Las Vegas. According to Reuters, even developers with deep pockets can’t make their numbers work with land prices so high on the Strip. Trump Entertainment Resorts Inc. Chief Executive James Perry told Reuters in a recent interview that “We don’t see … having an opportunity there in the short term.”

It’s no wonder competition is so fierce in Vegas - the gaming industry offers stable cash flows and mega-high returns to those companies lucky enough to get into the market.

Having a casino in Las Vegas also boosts the value of a company’s brand, Dunay said. “It’s a prestige thing to say that I own a casino on the Strip.”

But he added, “That’s going to be tough.”

Read the whole article here (Reuters).