bostonbubble.com

[john p]

Kadrian:

The point is that people aren't holding Patrick accountable. What this tells us is that people are still dumb and aren't independent thinking.

It was herd behavior and group think that caused the bubble and people still aren't thinking independently.

To have an advantage you have to keep your finger on the pulse of what the herd is doing, and then think independently on your own to figure out what is really going to happen.

Who's doing the bullying here Kadrian. Don't ever tell me to do anything do you got that?

Until you come up with well supported positions I am going to keep smothering you with facts. I will swamp you incessantly until you provide factual infomation otherwise. In time, people will realize that you know nothing and that your only defense is character assasination.

Cite anything that Fox News said last night that was incorrect.

You can't can't you? I am tired of holding back so I think I'm going to start having some fun with you.

I can show you what a bully is if you like, but for now I will just flood you with facts and you can just use your only defense: make fun of Fox News, the Tea Party without ANY facts or substance.

I want now to expose you as not being able to back up those cheap shots.

I've asked you three questions now and you haven't been man enough to answer them.

Show us that you are a subject matter expert on Real Estate? Give me any evidence that you know what you're talking about.

What I'm talking about is the epicenter of the future of real estate in Massachuetts.

Are we going to get inflation or deflation Kadrian? Answer Kadrian.... Nothing... more insults of Fox News.....

Are we going to have a double dipped recession and when will things recover Kadrian?..... answer.... The Tea Partiers are racist...

Is Boston going to maintain it's status as a Superstar City? Kadrian? Anything on this???

Doesn't relate to buying a place in Soutie huh Kadrian? What's your anser kid? You gonnna answer Kadrian. Huh Kadrian?

Let's see how smart you are Kadrian? Give us anything Kadrian.....

[Kaidran]

CL: I agree, 5 years seems like a very optimistic timeframe to turn around a house. I would definitely believe GenXer when he says there are better ways to invest. It just seems like such a roadblock to get over the desire to buy even when the numbers dont work. I know I have it myself.

John: Pretty please, with sugar on top, take it to the Open Discussion.

[JCK]

To the original poster. Five years is the bare minimum to even consider buying. In your case, I'd advise against.

Keep in mind that buying and selling real estate is very expensive. If you buy now, sell in five years with a Realtor, and buy again, I'd figure that you'd be out $35-50k in transaction costs.

So even if your $400k place is worth $450k in five years, subtract out what you'll need to pay to buy and resell from that (i.e., most of the appreciation). If it doesn't appreciate, you'll be net negative over those five years.

In addition, you're going to be on the hook for maintenance and condo fees, plus any unexpected repairs and assessments, which will probably be several thousand more.

Be sure to add that in when comparing the cost of your rental to your mortgage.

Personally, if I were in your situation (planning on kids in the relatively near future), I would only buy a place that is kid-ready. Otherwise, save your money for now.

And you're not realistically going to want to keep the condo and rent it out once you have a kid.

Basically, don't lowball the cost of owning a place in order to convince yourself that it's a good idea to buy. Just start putting the few hundred dollars/month away into a savings account until you can buy what you actually want (house in the 'burbs).

[john p]

Hey Kadrian:

What do you know about the local real estate market? What do you know about economics?

Don't tell me to do anything, you got it?

If you ever address me again you better have data to support your claim or data to dispute my claim.

[JCK]

Wow.

[Kaidran]

No John, I won't. I have only been posting here for a short time but I have been reading for a while and posted on enough forums to know: don't wrestle the pig.

Your opinions permanently boil down to "Democrats are bad", and it is dull and uninformative. I am here to try to learn about real estate and a little about economics. If I wanted to go discuss politics I'd go to a different forum. You seem permanently determined to bring any conversation round to how it is all Democrats fault. I'd be prepared to bet you are harming the growth of this community since people presumably find this site to read about housing, not tea parties.

Again John, please put your political posts in an appropriate thread. I can even start one especially for you if you would like. I really just dont like repeatedly seeing an interesting conversation starting then getting hijacked for your agenda after a couple of posts.

[Guest]

I agree with Kaidran about the partisan politics on this board. I don't have the time, interest or energy to read long political diatribes.

[john p]

I have been on this blog for a number of years and have seem people come and go typically surrounding their house search. I have tried to focus on helping people identify the biggest risks in front of them.

I talked about inflation versus deflation when the cost of capital was the prevailing risk.

I have talked about emergency funds and having money set aside for the older housing stock in and around Boston.

I have not always talked about politics, and I hate to talk about politics, it is that today, the biggest risk in the economy PERIOD is government intervention. If you don't believe me, ask any real estate expert to tell you how the $8,000 first time homebuyer credit affected the housing market last year. We don't know if this will be extended or if there will be any other type of intervention to support prices or keep mortgage rates low.

Two years ago I talked about how the FED was going to do things to keep mortgage rates low. Almost EVERYONE on the blog disagreed with me saying oh, John, silly John, the FED doesn't do anything directly to affect mortgage rates. I dealt with those guys as polite as possible and then the FED started buying Mortgage Back Securities

http://online.wsj.com/article/SB126291088200220743.html

Then the FED buys treasuries to keep interest rates low.

http://seekingalpha.com/article/154858-why-is-the-fed-buying-treasuries

Now I wasn't a pig Kadrian, I was ahead of the curve. And do you know why I was ahead of the curve? Because I am smarter than you Kadrian and that bugs the hell out of you. I read every day about the forces on the market and I have been doing it for years. I have been in the Boston Globe 3 times, I know the Massachusetts Residential Building Code, designed new homes and additions in several communities, know the Wetlands Protection Act, and actually the person who was responsible for implementing it under then Governor Michael Dukakis. I've read Chapter 40B and been at a number of public hearings, been involved in Historical District review, written new sections of Zoning Ordinances as a City Planner, been involved in auditing Town Budgets, worked on Open Space Plans, Downtown Revitalization Plans, been in senior roles in Award Winning Architectural Projects, one that was 1/4 of a Billion Dollars. I have a Master in Business Administration, routinely read the Wall Street Journal, the Economist, Bloomberg's Businessweek, Planning Magazine, Architectural Record etc. etc.

Although I have all that to draw from, the biggest risk a new buyer has is politics. Governments haven't been paying people's mortgages, this whole loan remodification thing is totally new. If you are young and think this is the way things normally are that is dangerous and you need people to clue you into the fact that government is bailing out people and picking and choosing who the winners and losers are going to be. We don't know if mortgage rates will go up or down because we don't know if the FED is going to continue buying Mortgage Back Securities or Treasuries or if they are going to give us a Value Added Tax or keep their word and not tax us. Universal Health Care has an enormous impact on our future. Again, this is HUGE and not all of the costs are covered so until they are identified people should be careful. This is all I am trying to do. The "rants" are observations that you can't take what the politicians say for the truth. People's love affair with Obama could actually hurt them. Government is getting involved in the affairs of the financial industry which will have an ENORMOUS impact in Boston. I personally know people that were making a killing in the financial industry and have seen their companies change compensation models where they lost huge income streams, I've seen people lose their jobs and their clients go to other portfolio managers, so when someone asks me about South Boston, a place that houses many young people in the financial industry, yeah, I'm going to mention the financial regulations and I don't care if it bothers some smug kid who doesn't contribute any valuable data to this community. I ask him time and again, what research or expertise he has and again and again he offers none, yet calls me a "pig". Maybe we should have a section for you Kadrian and call it "Amateur Hour".

Another important issue regarding politics today is that we are deep into an economic contraction. The President has issued a "Stimulus Package" and has increased spending to historical highs never since seen since World War II. My tone reflects the magnitude of this issue. Now Obama said that he was going to increase infrastructure spending to the levels of post WWII. In Massachusetts right after WWII we built the Mass Pike, the 128 Belt, several MBTA Lines, commuter rail lines, hundreds of roads and bridges, etc. etc. We're doing none of that now, they scuttled the Silver Line project, stalled the extension of the Green Line to Medford Square etc. They used the Stimulus money to meet payroll for government jobs and they extended unemployment benefits. The Stimulus didn't make it to the private sector. Bill Clinton, the last Democrat President loved the private sector and talked about how government needed to be smaller so that the private sector jobs engine could create the abundance necessary for us to prosper. The current political climate vilifies those that seek profit. It is a very anti business climate and that is the absolute last thing we need right now. Now for those of you that aren't very bright, this does affect the housing market because the higher the unemployment, the more desperate sellers there will be which will drop house prices.

On a local level, spending is controlled by the political dominant coalition in a community. In a big city, they value a politician who can "Bring Home the Bacon". Basically this means they have enough contacts in Washington or Beacon Hill where they can bring money to their city. Typically people allow these people to take some sort of piece of the action and give their family members jobs and such. This is real, this isn't a delusion I have. Take US House Rep from South Boston Stephen Lynch, he got federal money for a non-profit that his wife runs at and there are reports that his wife barely shows up to work. Many in Southie say, hey great, he's bringing home the bacon. Well in those communities the people that show up to vote are those that typically have their hands out for a special self motivated deal. In a small town, the people that typically show up to town meetings are the elderly, the town employees or again, any special interest that wants taxpayer money. During good times most people don't get involved in local government and what they're finally realizing is that while they haven't been paying attention, government salaries have skyrocketed, infrastructure has been neglected, and these big political spending machines are fully entrenched. Now that we're in a contraction you see the Tea Party. The Tea Party is basically trying to create a tone that it is not cool to spend for things we don't need or can't afford. Palin's politically iconic statement was "I said no to that Bridge to Nowhere". She was saying no to the bringing home the bacon mechanism and value. Now we know that she is a cartoon character but we shouldn't get caught up in the medium and the message realm issues, these Tea Party people don't have a leader because all the politicians are trying to get special deals for their districts. Now yes, many of the Tea Party people benefit from this spending, but they realize that the bring home the bacon mentality is unsustainable. And do you know what, they're right. Instead of looking down your noses at them, maybe try to connect with their values and help them because they're right, the bring home the bacon mentality is absolutely killing us. Now again, for those that aren't very bright, this affects the housing market because if a town or city has a political machine that is too strong and the tax payers can't break the dominance of the big spending machine people that show up in force and make a big presence politically, the politicians can't say no to anything and the spending frenzy and looting will bankrupt the community. Again, my tone reflects the amplitude of the issue. In my entire lifetime you never hear of a State like California potentially going bankrupt or even a Country like Greece. I am asking new buyers too look before you leap and if the political environment is spend spend spend, that means that you will have to pay the debt, the tab of prior generations and that is not cool. If the political machines are too strong businesses will flee to areas where they can make more profit. So what does that mean Kadrian? That means that if I were young, I'd look to buy a house in an area that had a lower cost of living, had a competitive advantage, good financial position without a lot of debt from prior generations, and was poised to have a lot of business moving in along with a value for education and a very lean and mean attitude towards spending. If when I say these things, it sounds like a rant to you that is because it might not be true for the areas your looking. Lastly regarding the local level, the State is weighing two totally different things: Massachusetts Democrats are talking about repealing Proposition 2 1/2, which basically limited growth in local government to track inflation. If the Democrats win local spending will go wild and property taxes will skyrocket like in New Jersey. The new New Jersey Republican Governor has actually adopted our Proposition 2 1/2, which has served us since the late 1970's. Now if the Republicans win we might get Pension Reform where they'll cap pensions at $80k or something. The Fire Chief of Amesbury retired because he was afraid of losing his pension for his $165k salary. The fire chief in my town makes half of that. If the town you're thinking about living in pays out salaries like Amesbury you'll have higher property taxes, especially if they repeal Prop 2 1/2. If you want to get comparative data go to the Massachusetts Municipal Association, and ask for Geoff Beckwith.

Lastly, directly to a house purchase, we have had historical benchmarks of affordability. You use 3.25 times your salary, not spend more than what 38% or so on your mortgage, etc. Now during the bubble people were buying up to 4-5 times their household salary here in Massachusetts and like 7-8 times their salary in California. What I'm trying to say is that things might not just go back to 3.25 times your salary here in Massachusetts, it might go back to like 2.75 or so because if we do get taxes, the likes that would actually cover the sea of red in our spending, taxes will bite so much into our salaries that our buying power will reduce significantly. I'm not talking about politics because it is my favorite subject, it is about trying to get people to be aware of an enormous risk which is the looming tax potential. Now, the midterm election would have brought more moderation to government because the Senate couldn't use Reconciliation to steamroll their political agenda. The Democrats are now engaging in race politics to get the hispanic vote with this whole immigration thing. If the Democrats succeed they will continue to run the table throughout Obama's term which will be an entirely different outcome than if the Republicans come in like they did with Newt Gingrich during Clinton. I am trying to help you guys understand the mechanisms that will generate our future and our future will have an impact on your house purchase. Now, my brother in law lives in Washington D.C. and he says that condos are selling in days above asking price. He missed like five or six places for this reason and he bought a place over asking price. He has a nice secure government job and as Washington grows richer and takes our money, its housing prices do as well. It is wealth redistribution from one to another and I am trying to help you guys understand this direction of flow so you can understand how to position yourselves.

If you don't like what I"m saying you better come up with better research, better positions to get me to stop posting. Until you prove to be correct and I see myself being incorrect in my assessments I will not yield to someone inferior. I will try to tone down my presentation, but if the matter is of historic proportions it won't help you to not hear it as it should be presented. I remember being a carpenter and one of the old guys yelled at me because I was holding a skill saw incorrectly. I was used to an academic setting where people were very collegial but I realized that in construction you could get hurt badly and not to take offense if someone was trying to help you and protect you and understand that it was coming from a good place. The guy that will be nice to you is the sleazy realtor or mortgage broker, they'll kiss your ass and make you feel real nice.

So Kadrian, I'm not going to yield until you can prove to me that you know more and you can offer the people here sound advice and reliable data. If you can take me you will be in a better position to give your family the best you can. Until one of you guys step up and start flooding us with data that gives us the edge against the Realtor's Organization Propaganda machine, I'll continue to do the swinging. Those organizations tried to fuck with me and my family and if you fuck with me, I will haunt you forever. The dummest thing the sleazy realtors and predatory lenders did was to fuck with me because I have dedicated a lot of myself to empowering people to staying head and shoulders above them so that they won't get preyed upon.

[Kaidran]

I read the first line, anyone who reads that whole post is crazy. I know you have been posting for a long time and have the most posts, perhaps in some way you feel like you own the forum.

I would welcome your views on relevant topics but every post of yours I have read turns into a diatribe on how everything would be great if it was not for the Democrats. If you can control that I would not have a problem.

[Guest]

The RE bubble took off when the Republicans were in charge.

[Kaidran]

Arrgh.. Please dont your start too

[Guest]

OOps. You're right. Comment withdrawn.

[john p]

Do you two zeros have anything to add about the real estate market?

What is your prediction of the market in South Boston?

I bet you two losers couldn't construct a logical position.

I dare you to prove me wrong.

If you can't make a decent and well researched case I will continue to belittle you.

Are you realtors?

You can't find any data to disprove any of my points and for some reason it is driving you crazy. All you have to do is use your brain. Come on aren't you smarter than me? Show us what you know. If not, you're a zero.

You two want to mow my lawn for a few bucks?

[mpr]

[john p]

MPR

What is your prediction? I feel sorry for you because all you do is academic semantics. I've never heard you build a case for anything. You parrot conventional wisdom but you're in puppy love with Obama. Every time he breaks a promise the more you understand that you were wrong and instead of getting mad at Obama you demean the guy who told you.

Just go to youtube and key in obama broken promise.

I have been saying that government intervention is a total wild card in this market. Do you disagree that the government isn't manipulating the market? If you do agree, wouldn't it make sense to then analyze their agenda?????

Every time I read posts I hope to learn something. I feel bad for those that all they can do is make wisecracks. I'm hoping you'll surprise me MPR.

Don't let Kadrian off the hook. If you believe in him let him show us what he knows.