bostonbubble.com

[wherzmyhome]

So I am writing after a long time with still no home to call my own. Earlier this year I decided to move from my 2 bed/1 bath apt in Waltham to the metrowest town where I would "like" to own a home. Since I was not finding any house that was moderately priced AND not scooped up in 10 hours after listing it, I decided to move to this town by renting....it is a 2 bed 1.5 bath townhouse with a little more privacy and a nice little deck and backyard compared to Waltham. Rent is almost the same, except I now pay abt $150 in utilities. So far so good, although I would love to own a house some day for my kids who are growing up soooo fast.

What is with metrowest anyway. The Boroughs, Hopkinton, Ashland are just hot hot markets, it looks like. This property got listed on 29th July for $499k. Next day the buyer decided to up the price to $529k, and by the same day evening the house was under contract! Really?! Was there ever a recession here? Is the housing market really turning ppl? I still think a lot of ppl cannot afford the prices of single family homes, but then who cares about affordability anymore. I spend sleepless nights thinking of $2200 mortgages, $600 prop. taxes and $500 of util/maintenance with a SFR compared to my simpler living of abt $1600 right now - but I guess its not the same for others.

[FormerOwner]

Everyone is convinced that this IS THE Best time to buy a home because Interest Rates are low. Of course, Low interest rates lead people to borrow even more money driving up the costs of homes in the short term.

What will happen? The economy rebounds and we are living in a world of rising interest rates and raising home prices. Or perhaps inflation becomes a massive problem because of the Federal Reserve keeping interest rates low and pumping liquidity (CASH) into the economy.

But, this rebound in the economy would have to match the 1990s to make up for the impact of rising interest rates.

Real Estate is directly correlated to interest rates - and no one believes that housing prices will ever go down -

Have some portion of your house fund in things that go up with inflation - Gold,

[still_looking]

I hear ya, wherzmyhome. We're in the same boat: been looking for a LONG time, and the kid is just growing up way too fast. I like being able to save money for the long term stuff and being debt free. I'm also having trouble wrapping my head around the idea of paying an extra $600/month just for the sake of owning. Do people not take into account taxes and such when buying? Perhaps that tax break is really that big! The way it's been going for us, is that if I start looking at a certain town, that town almost certainly goes up in median price. We're probably going to end up renting in the town we're hoping to buy in, and just take that route. I told hubby that if we don't buy before the kid is done with HS, we're taking the trip of a lifetime with the down payment once he is sent off to college!

[JCK]

[JCK]

[CJ]

[CL]

In today's post credit crisis world, a reoccuring theme is while the cost of credit dropped (in form of mortgage rate), the access to credit remains high at least compare to bubble times.

Which means, for buyers who actually have access and ability to carry credit, they can have lots of it in a cheap price. And if you can actually safely borrow a large amount of mortgage, you naturally want to buy a better house, ie in a better location. People don't upgrade your house by going 2500 sq ft to 3500 sq ft. They upgrade by going from Watertown to Newton.

Thus I think the main beneficiary of low interest rate is Lexington/Wellesley/Newton/Brookline/Belmont of the world, where you can hear news of crazy bidding wars. Less desirable location will have a MUCH tougher time for recovery.

[wherezmyhome]

[Guest]

[JCK]

[JCK]

[marcssteve]

The interest rates are not low even now also, yeah, but on the other hand it can be said that they are comparatively lower than the interest rates of the future. Many people do not buy the houses, waiting for the interest rates to come down. The probability is very less. Hence its better to own a house now than to own in the future. Moreover the recession in the markets also cannot be predicted.

[admin]

[CL]

Have to say though, after the annoucement of QE3, the mortgage rate (as noted in Fannie Mae MBS price) is dropping like a stone. And with the QE3 being an open ended commitment to purchase MBS (thereby keeping rate lower and possibly pushing it even lower) until unemployment improves (therefore housing market can stand on its own feet) fully recovers, I have to say I will be more bullish to housing market than before.

If anything else, I think the risk is not not having a recovery, but the forming of another credit bubble 10-20 years down the line.

[marcssteve]