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Lies, Damn Lies, and Boston Real Estate Statistics

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Here's the latest installment of Bates By the Numbers, a weekly feature by broker David Bates that drills down into the Hub's housing market to uncover those trends you would not otherwise see.

Which numbers most accurately describe the state of today's Greater Boston condominium market?

There seems to be a divide.

On April 17, Boston Real Estate Now quoted a source as showing, "Only 3.3 percent of all Boston-area homes are selling in the first two weeks." Their source concluded, "That makes us the 'slowest selling market' in the country."

Greater Boston is the slowest selling market in the country? Really? I looked at diverse multiple-listing-service data showing 20 to 40 percent of Boston condos found buyers in less than two weeks.

Last Friday, Boston Real Estate Now opined, "It may be a bit of stretch to say condos are selling like hotcakes." Conversely, my numbers describe the Boston condo market as hotter than the hypothetical projected sales of $3 hotcakes stuffed with $10 dollar bills.

In addition, a recent press release by the Massachusetts Association of Realtors showed a 4.3-month supply of condominium inventory in the state, an amount which reflects a neutral market where neither buyers nor sellers hold distinct advantages. On the other hand, I have been posting that Boston has roughly a one-month supply of condos, an amount which reflects a dictator's market, a market where the seller can dictate exactly how he wants the buyer to write an offer.

Clearly, these are wildly different interpretations of the strength of the market. What's causing the difference? One of the biggest differences is that these sources are often trying to report statewide on what happened in the market, while I am almost always trying to post about what is happening in the Greater Boston market. As a result, there is a difference in the data we look at and timing of the data we draw conclusions from.

For example, while they report on closed sales, most often I post about under-agreements.

While they wait for the month's end, I often cull data at various times within the month, going back a month from the end date which I take the data.

While they do not report their findings until the fourth week after the close of the month, I often post a few days after I gather the data.

Here's an example of how timing and focus changes the nature of what we are seeing.

According to the Realtors association's April 23 press release, statewide it took March's condominium solds 99 days on average to find buyers. I thought this market time looked way too slow to reflect what is happening in our local markets, so on April 26 I surveyed condominiums which had gone under agreement in the previous month (March 26-April 26) and which were still classified in the MLS as under agreement. This is what I found for median market times by neighborhood:

Somerville: 8 days.
Brookline: 9 days.
South End: 12 days.
Jamaica Plain: 13 days.
Cambridge: 15 days.
South Boston: 22 days.

Some of my median market times were 10 times faster than their median market time. Slight difference, ya think?.

Some folks think there are three types of falsehoods in the world: lies, damn lies and statistics. Charles Wheelan, the author of Naked Statistics, notes, however, that while in a variety of ways statistics aren't perfect, they can provide a very good way to "collapse complex information in to a single number." In our numbers-driven world, you are likely to follow some set of numbers. Which numbers do you think most accurately reflect today's condominium market? What's your thought?
· Our Bates By the Numbers archive [Curbed Boston]