bostonbubble.com

[OBrien839]

Hi All,

I am a potential buyer currently renting in Southie (eastside.) I would like to stay in Southie and I am considering a new condo in the area. I have lived here for 2 years and I have seen more and more people my age (mid-late 20s) move to the area and several new (some very expensive) condos pop up. I know this is a real broad question but does anyone have a positive outlook for Southie real estate given us yuppies wanting to live here? I am not expecting to make a massive profit in 5 years but I don't want to sell my place for less than I paid for if I need to move.

Thank you for any help in advance...I have enjoyed reading the posts and the info is very helpful

[john p]

You have to be honest about how long you might stay in a place and how much time you will wait to see it turn around.

Certain places may have great access to the city, beaches, etc. etc. but never seem to make it. I sometimes scratch my head and ask why Quincy, Revere and Lynn, oh, and Hull aren't more sought after areas. South Boston's beach used to be pretty polluted before they built Deer Island and pumped the sewage further out into the Ocean. Massachusetts people tend not to deviate from historical impressions about cities. The only places I've seen turn are quiet farm towns turning into exclusive bedroom communities. The only exception that sticks out in my mind is Charlestown by the Navy Yard.

I had a friend buy a townhouse in South Boston back in what... 2000 and then sold in 2007 because the schools weren't good enough and he saw a lot of street kids in South Boston so he ended up moving his family to Needham.

If you have a short window of time before you potentially would move out, I would avoid areas that aren't already the place you want to be.

The way Capitalism is working, business moves to where it can make the most profit. The Unions and big political machines have driven certain jobs away from the cities. I'm reading a book about the Next One Hundred Million in America and it talks a lot about how some smaller cities are growing and big cities are shrinking. It talked about the Pioneer and Happy Valley, beautiful rural areas that talented people are moving to. In California it got so expensive that people are finding beautiful rural areas to set up shop in technology fields. The author does talk about Boston having "superstar" status. He says, however, that these new cities lack a balance of opportunities as well as a sense of community. The "Superstar" cities are really trying to sell their elite status and entice younger talent. The trouble is that they're not offering as much as other areas because of it. Of the "superstar" cities, Boston isn't that bad, and even in Boston, you can have a world class career and find a small affordable community and have the best of both worlds. Some guys on this blog are looking at housing more as an expense and hope to live in a rural boutique or country-chic area

South Boston's access to the financial district is really valuable, and the new development on the waterfront as well as the Rose Kennedy Greenway will help it for sure. It may take ten to twenty years to really blossom so if you're window is three years, I'd keep my expectations realistic. I guess I'd think about what you think the future of the financial industry is going to be. I've heard this theme from a few people. I knew people that were making a good amount and got laid off. Basically, if a compensation model ends up overpaying, the companies eventually dial back the compensation .

When I was younger (15 years ago) people were moving to Florida and Atlanta because you could get a much better quality of life for your money. I think that these areas have experienced sprawl and overcrowding so this new growth is being a bit more careful and these new little pockets of boutique industries in really pretty remote areas would sound cool to me if I was ten years younger. My wife called earlier today and wants us to move to Seattle.... She says this all the time when she comes back from a cool place. She was totally into Vancouver.

In the next few decades I'd be afraid of moving to a very high cost of living area because your competition might come from smaller more affordable cities or nations.

I would really keep my mind open and not fall for the whole overpaying for a historical elite reputation. Ask yourself, do the jobs follow the people or do the people follow the jobs?

The guys don't like it when I talk about politics, but in Massachusetts, we still have this voting block that will vote for any Democrat regardless of their track record or lack thereof. Deval Patrick got elected in 2006, before this financial meltdown caused by the risky lending. We find out that Patrick was on the Board of Ameriquest, one of the worst predatory lenders that targeted the poor and minorities. Even though all the politicians are blaming these predatory lenders, certain people will ignore the fact that our Governor was making hundreds of thousands of dollars working for a company (essentially providing political cover) for one of the worst predatory lenders. Now, Obama's second largest donor was Goldman Sachs and he got the second most money from Fannie and Freddie. My point is that unless you get checks and balances, spending will get out of control like it did in New Jersey, simply because if it is one party rule, nobody wants to say "No" to anything because you don't get ahead saying no you make enemies. This is why Obama voted 97% of the time with his Party as a Senator and voted "Present" in all of his tough votes in Illinois. Everyone loved him because he never said no. Now, when the local papers, the press, like the Boston Globe doesn't even provide a check to balance power sort of like Citizen Kane, then you get a go along and get along culture. If I was younger I'd be nervous investing long term in a place that didn't have a healthy balance of power where spending was kept in check, otherwise the younger generation will be paying for the prior generations debt. Think of it this way, prior generation didn't want to pay taxes but wanted the wealth generated by government spending so the result was debt that future generations had to pay. Now, basically that means that future generations will be paying the taxes that should have been paid by prior generations. So, if I were young, I'd consider how big a hole prior generations dug. Massachusetts has the highest debt per capita in the Nation, so I'm really pushing for balance and when people won't hold Patrick accountable for making hundreds of thousands of dollars from Ameriquest, while they bitch and moan about the predatory lenders, that makes no sense, it is just blind loyalty and they are being exploited for it. Unless people come to their senses, the abuses and debt will just pile up. I think the younger generation should be aware of this and actually try to speak out and try to end the culture that is driving industry away.

[GenXer]

I know some 'investors' bought a bunch of rental properties in the area. Nobody can predict where the market goes, but given higher taxes, less services and potentially higher crime in Boston (as well as more 'affordable' housing and bailouts), its hard to think that any Boston real estate will appreciate in the long run (given that it is still overpriced compared to what people are making in the area). Also, the jobs front is not clear, so that's a big minus. I guess the bottm line for you would be whether it is chaper for you to buy by a healthy margin vs. rent. Don't even think of this as an 'investment'. And a 5-year horizon is a blip on the radar. What if you are forced to sell? There are other major trends influencing the prices than yuppies, and betting on a perceived trend while being ignorant of its real effect would be akin to gambling. When they decide to move to suburbs, who's going to buy their tiny, old apartments with no parking? Why do you have to buy anyway? If it's an investment, I have a much better investment in mind. A 5-year bond almost guarantees you get your principal plus interest, so I'm not sure why you want to gamble with money, unless you can buy this condo without taking on a mortgage.

[JCK]

If the original poster was a troll, I'd say that was well played.

[CL]

It sounds like your investment timeframe is fairly short (say 5-7 years). And south end is probably not the best place to raise kids (school and safety reasons) so you may need to move in 5-7 years. Which means you have less ability to ride out the volatility of the market, given your aversion to take loss.

I would advise you to continue to rent, then later buy in an area that you are reasonably certain you don't need to force-sell (both financially - large downpayment, good cash buffer, etc and personally - good school for kids, enough room so won't out-grow the house, etc) in long time horizon (say 15 years)

[GenXer]

[Guest]

Governors Weld, Cellucci, Swift, Romney

[john p]

With these Republican Governors we had more checks and balances here in Massachusetts. The Legislature provided us the social liberty that we sought and the Republican Governor would try to reel in spending.

California and New Jersey is what I fear us being like. Would any of you want to make a long term investment in a State that could go bankrupt?

In a book MPR recommended I read this analogy to "Governors" in machines. Basically, it was a device that regulated the speed of a motor so the revolutions per minute were consistant despite the resistance it encountered.

We have to "govern" ourselves. My issue with the dominant party here is that the impressions are so deep that people can't climb out of them and see clearly. For instance, Deval Patrick became Governor in 2006 (before this whole real estate crash and financial meltdown). The term "Predatory Lender" wasn't really mentioned in everyday discussions about real estate. Now that this is all past and we can look back and see who was doing what, I was totally shocked that people didn't hold accountable those that were caught with their hands in the cookie jar.

Obama got the second most in political donations from Fannie Mae and Freddie Mac, and Obama's second largest donor was Goldman Sachs. Now, we all know that both of these organizations were caught screwing the pooch, and this week we were watching Democratic Senators wagging their fingers at Goldman Sachs and Obama preaching about the influence of these Wall Street banks on our politics. I mean the worst offender, Goldman Sachs was his second largest donor. When Obama gives us these straw man arguments, the straw man is often one of his biggest donors. What on earth is it that allow people to overlook this? We gave the banks a temporary loan and they all paid them back with interest. Now they are raising the ceiling of allowable losses of Fannie and Freddie while their leaders are making huge money. In addition, Fannie and Freddie along with the automotive manufacturers aren't included in these new financial regulations, and Obama's saying we can't allow "Too Big to Fail", except for those that contribute to him.... I mean Chris Dodd is exempting insurance companies, because he's from an insurance company state...

Mark Calabria in the NY Post states:

[OBrien839]

Definitely not what I expected but thanks for reading my post. I am not a "troll" and perhaps I should have specified more clearly what I am asking.

I am interested in South Boston, not the South End, Quincy, South Shore, Hull, etc. Based on looking at the figures for homes bought in this area and the current demand it seems like real estate prices would slowly climb.

I am not looking to get rich off buying a condo. I want to live in a nice, new place and my thinking is that instead of paying rent, I can pay a hundred dollars a month more to build equity and find enjoyment in knowing I own the roof I am under. I plan on living in this condo for about 5 years. After that I will most likely have very young kids and want a house in the suburbs. At that time I would either sell the condo or rent it.

If I was to buy a place for 400k and sell it for 450k I would be extremely happy at the end of 5 years. My question is do you think this is possible in SOUTH BOSTON?

Thanks again

[CC]

[Kaidran]

Seriously John? A guy asks about condos in South Boston and you just cannot hold back can you?

Can you please, please, please put these rants in the Open Discussion section?

[GenXer]

[john p]

Kadrian:

South Boston was hot during the Bubble because of the great access to the financial district. What the future of the finance industry will be will have a very big effect on South Boston.

In case you hadn't noticed, the Federal Government is currently voting on financial reforms, the likes we haven't seen since the Great Depression. This isn't a small matter. Understanding the politics that will determine these decisions is therefore essential because it is the primary force acting upon it. The government is getting away with collecting money from the same people they are trying to reform. The guy driving the policy is letting insurance companies off the hook because he is from an insurance State. Likewise, in the Health Care Bill, the Pharma companies could have been totally screwed if they changed the laws and forced lower prices of prescription drugs. The Pharma companies bought off the Democrats and spent more money lobbying during this Health Care Debate than both Parties did during the 2008 Presidential Election and their investment paid off in that they avoided any significant cuts in their profits, they were successful in vilifying the Insurance Companies. If you get who's in charge, who's buying them off, who the people in charge are vilifying and who's going to vote for what and why, you will be able to know where the wealth is headed and with that knowledge is power. Sorry if that bugs you.

In financial analysis you don't just say, hey, the historical average temperature in Boston in May is 64 degrees so tomorrow will be 64 degrees or somehow it will revert to the norm as many here talk about. What you'd do is turn on the weather and let a meteorologist tell you about low and high pressures and the jet streams and you can see what is in store for the next few days. Now, I sometimes want the person to just cut to the sex scene and tell me what the weather is going to be, but the goal is to teach people how to fish for themselves and have a deeper understanding of the forces that are acting upon them. Now the average temperature is critical when you're planning six months out, like a vacation. I mean you don't want to be flying during hurricane season in Florida or plan a beach vacation on Cape Cod in March. I am trying to help this guy because he's asking a "Forecast" natured question and I'm telling him that things are potentially stormy and he could get hit with a rogue wave so look out.

Beyond that, buying a condo in today's market might lock someone into a situation where they will be stuck or require other taxpayers to bail them out. We had a young guy with an MBA a month ago or so who was upside down because he didn't consider the risk carefully.

I honestly think that the person who stands to gain most from what I say is you Kadrian. You're new here and I don't think you realize yet how the current situation is entirely different than ever before in the past three decades. Ask your friends or people you trust if you don't like me, ask them if the government is doing things today that are any different than before. Things won't moderate until we have stronger moderating voices. We have a 2010 Midterm Election in which we will get a temperature reading from the public. The people on the extremes are trying to drown out the moderate voices or opposing voices and characterize their views as "Rants". Until people can speak to the merits of a person's positions they shouldn't try to silence others like you are. I hope someday someone like you can offer me some data to support an opposing position.

Lastly, when people are young and have their whole lives in front of them, they can fall into the first impression that they encounter or what their family and friends tell them, or they can step back and look around for a while. I wasn't aware of the trends of professional industry moving to cheaper cost of living areas in the nation until I recently read about it, but it makes sense because business moves in the direction of greatest profit. Is South Boston's geographical advantage - relative to the Financial District going to make it more valuable in the future or not?

Kadrian, what are your thoughts on South Boston? I'd love to hear them. I'd bet you don't have a clue. Could you tell me what gangster worked for who and what pubs they hung out in, and what politicians controlled what, what families were tied into Boston Edison, or the MBTA. Could you tell me how much influence they had in Washington D.C. in bringing home the "Bacon", how much they were able to squeeze out of the Fan Pier Developers, the Big Dig, and why they scared off Bob Kraft? Could you tell me where the people in South Boston have moved to and from and who is moving in in their place? If not, you don't know if the money is flowing into or out of South Boston and that is a trifle important in answering this kid's question don't you suppose? Do you know the MCAS Scores of their schools and if they are up to the standard of someone who wants to raise kids?

I am on this site because nobody was out there when I need them. All these people who claim today that they gave a shit about the abuses during the Bubble are liars, except for a very small handful. People like Mark Zandi actually faced character assasination during the Bubble because he actually talked about a day of reckoning. What you're doing Kadrian, trying to silence someone you disagree with is exactly what happened and caused the Bubble. I sort of feel like Ron Paul on this Blog because I've followed this long enough to see the pendulum to swing back and forth and what is very interesting is how guys like Kadrian push hard with this "Group Think".

http://en.wikipedia.org/wiki/Groupthink

[Kaidran]

If you want to argue Patrick's love of rapists please do it in the Open Discussion. It has nothing to do with South Boston condos.

Again your posts are just an attempt to steamroller your political point of view. They do contain some relevant points but separating them from what you were told to think on Fox News last night is more work than it is worth.

[CL]

OP - I think 5 years is a very very short time frame in a real estate transaction, and with your plan to move to suburb, it really make sense to rent.

Remember, taking a mortgage to make a house is akin to a leverage buyout. It works if you have very stable internal cash flow, when financing is cheap and have a very long investment horizon. I don't think your time horizon is long enough to consider buying.