bostonbubble.com

[showgunx]

Hopefully early next year. What do you think?

[Bluefin38!]

It may take years, patience grasshoppers. The slide may have begun 36 months ago when rental vacencies began to rise. Now rents are 10 to 20% lower and people are beginning to notice. The people in their mid twenties(the ones that have not left Boston) will not be so quick to buy. The soft rental market is causing landlords to sell properties. The smart money was out 12 to 24 months ago( ie Dick Dewolfe, and Mr. Flately). The greatest fool now owns the paper and has virtually no equity. If they walk away the banks will be screwed. However, there is much speculation that the many banks will be OK , but that it will be the pension funds or other bond holders that will ultimatly take the hit.

[drac99]

I have been following this Boston Bubble for the last 3 years and it seems that the price appreciations follows with other states where there has been large appreciation in house prices. I think if the real estate market flattens when the house prices keep going up and it becomes too expensive to buy that is when jobs in real estate will get hit. Only then when a recession in that market occurs prices may go down 1-2 years away).
It will take a long time for the us bear market to miraculously rise sharply especially with all the job outsourcing going on.

[drac99]

Even though Boston leads the bubble, i don't see a significant drop in price in the market till fall 2006. regardless of the economy and interest rates. The mentality of homeowners is to hold onto the home until they can no longer meet the mortgage payments on time or stock prices are rising exponentially, both of which will not happen this year since most consumers still have alot of spending reserves.

[UNREAL ESTATE]

could be sooner than you think. spending reserve based on equity lines, paper money, false wealth. that 'spending reserve' can dry up very quick from just long term rates moving up.

[mayor_mumbles]

I have been saying for 3 years that prices have to come down and still think that. Just seems nuts the prices they are asking for sh*tholes. Its unbelivable.

I was checking out Hudson MA. They have a new development up there with 1600-1700 sq ft houses on 6000-13000 sq ft lots. They just recently dropped the price $20K but they are still $418k - $439k each. The builder agreed to have a private road to get the small lots. So they have a $85/mo fee per house to cover road maintainance.

They big kicker is 8 of the 30 units are selling as "affordable units" to minorities (black, asian, native american etc) and low income familys (preference given to 4+ members). The same units are selling for $180K. Imagine knowing your neighbor bought the same house the same day but paid 60% less than you. I guess I just need to stop working, get busy f*cking, and then I might too be able to buy one of these houses.

Ok, Im done with my soapbox.

I do think there is a bubble.

[Guest]

[quote="mayor_mumbles"]

"They big kicker is 8 of the 30 units are selling as "affordable units" to minorities (black, asian, native american etc) and low income familys"

Generally, these homes have to be resold to low income folks again, so while the price is lower, the return on investment is as well...

[draculess]

I still check the www.bostonhomes.com website for homes 3-4 times a day
but even when the mortgage rates went up from 5.75 to 6.4% 90% of the
homes are still not reduced. As for the ones reduced they take 10 - 20k off
the price which is much less that the mortgage rate hike.

[draculess]

20% drop in boston home prices in 2006
fingers crossed.

[socal]

Forget statistcs-talk reality. Boston prices have gone up but its nothing like california. Since I sold my home there (a tiny 1900sf house) in 2000 its price has more than DOUBLED. That's crazy. Boston is old, has no land left to develop, a diverse economic base-there are jobs here and they pay better than many other places in the country. Fact is its easier to buy a home now despite prices. Its used to be if you didn't have 20% down you had to pay PMI and those costs alone were very probinitive to owning your own home-and the interst rate was 8-9%!. Now its no money down and 1%. I would caution about hoping this 'Bubble bursts"- think of the ripple effect. Historically, prices retract slightly, they don't slide away 10 years of appreciation and if there is a "pop" and banks are left "holding the paper" on hundreds of properties, what you'll have is an average house cost of 400K instead of 450K and to purchase that house you'll have to come with 20% down again...so start saving-since salaries are only going up at about 4% a year it will take many years so save that 80K! I've seen rises and I've seen crashes-and in more places than Boston. Prices should ease some in 2006 but if mortage rates rise it won't make an ounce of differnce on your bottom line.

[admin]

socal,

What you describe has only been the reality for the last six years or so. If you really want to look at reality, as you put it, then you must also look at the century before as well. For over a hundred years housing prices have roughly tracked inflation, and the last few years are very out of place. The statistics that have been gathered for the last 100+ years are reality - there is no separating the two.

I think that a good number of people who are concerned about a bubble are worried that the creative financing that you describe is one of the primary causes of the bubble and is not sustainable. The widespread use of these tools has never been widely tested before and the risks have never been strongly tested throughout disparate economic conditions. What I worry about is that people are inappropriately discounting the risks involved (Greenspan has hinted at the same). This isn't wishful thinking, it is a concern.

Your argument that housing is more affordable today is not correct either. Consider this quote from the article from The Economist entitled A home-grown problem: America's housing boom is causing an enormous misallocation of resources:

[showgunx]

I started this thread July 2005, at the time that 90% of people don't think the bubble will burst in Boston any time soon. Now is March 2007, all medias availble are pointing that Summer of 2005 was the top of the national real estate market, and it goes down hill since then. So Boston market should have starting to go down around that time as well. It just the shameless medias would like to point the other direction, just because of their own interests (ad money mainly).
So let's guess when will be the bottom of this down term, I would say around the end of 2008, early 2009. Then the recovery would take another 3 to 4 year, so to get back to the 2005 home price level, it would be the year of 2014 or later.
I am thinking about buying a house at the end of 2008...

[AgentGrn]

I think it'll take much longer for a full recovery, especially to 2005 levels.

Subprime was the huge pump for this bubble, and I don't think we'll be seeing that resurrected anytime soon. 2014 is far too early considering just how far out-of-whack the 2005 prices were.

My gut puts the bottom at 2009-2010. A lot can happen between now and then, however.

[catalyst]

Employment, Employment, Employment

The difference between the soft landing and a CRASH, is going to depend on what happens to employment levels in Boston. Who are the top employers in Boston? Partners Healthcare Group? Fidelity? Colleges? Are they downsizing, outsourcing, relocating? Are they profitable? What percentage of unemployment would need to rise before the Market would CRASH?

Are any of you working at large companies and the company is not making its profit margin?

[wireless]

As one of the datapoints from the recent economic report stating that technology and healthcare are driving the Mass. economic expansion (4x the national avg), I can throw my observations out here...

I am in the process of relocating to Mass. My position is convergence of technology and healthcare in IT. I have been house hunting since late Jan. of this year and finally have a contract where we are closing at the end of this month. Since we are in Northern Mass. we bought a house in Southern NH. I found the choice of homes in Mass. unappealing - they are small, old, and on small lots, and more expensive than NH. The homes in Southern NH are new, larger, on large lots (1+ acres) and much more appealing. Even tho I have the double wammy of Mass. income tax and NH property taxes, it was easily our best option.

I knew it was a buyers market when I accepted the position, but was pleasantly surprised to see how much of a buyers market it is. I ended up extending our price criteria up to $625k even tho my limit was $100k below that. Home sellers are desparate and we had more than one seller ask us what it would take for us to buy their house.

However I was a bit worried that more buyers would be coming in with the warm weather and things would pick up. I can't say that I saw that, but the realtors I spoke with said this year was already an improvement over last year. The home we are purchasing had 2 other offers which proved to me that if you find a hot property it can still act a bit like a sellers market.

I wonder if NH will continue to attract buyers like me. It certainly seems like it should with newer energy efficient homes on large wooded lots.

Anyway, my view from the buyers side. One datapoint....