bostonbubble.com

victorgbishop · Joined: 03 Oct 2016 Posts: 25

Wife and I are hoping to stay in Boston and live either in or just south of any neighboring town to Boston. However, we've been priced out of Boston and other towns. Why? We make a combined salary of $135K, which qualifies us for only a $380,000 mortgage. Now we are a family of 3.5 people(expecting soon) but we just can't come up with 50k-70k for a deposit to help us reach a mortgage of $450k to $470k. (now this is only South of Boston. Cambridge and other places have much higher prices)

2 questions:
Is it us (my wife and I) who are not making enough to justify a higher pre-approval amount? or is this everyone else?

I'm trying to poll the Boston Bubble visitors/guests - If you don't mind me asking - what is your current combined salary?

Guest · Posted: Thu Dec 01, 2016 11:05 pm GMT Post subject:

Dude, $135,000 annual income should get you mid 600,000 mortgage with no issue. You better shop around on your mortgage.

victorgbishop · Joined: 03 Oct 2016 Posts: 25

Guest · Posted: Wed Dec 14, 2016 3:48 pm GMT Post subject:

I tend to be more financially conservative than most. We saved up $350K for a down payment, $100K cash for emergency fund, and $400K in tax-deferred retirement savings before we pulled the trigger on an $800K house this year. We saved/invested that dough over a period of 10 years, with a gross household income of $100K in 2006, stepping up over the years to $260K in 2016. Hate to say it, but $135K gross income in Boston is just not that much. Particularly if you pay over $20K/year per kid in day care. Good luck.

Guest · Posted: Fri Dec 16, 2016 11:05 pm GMT Post subject:

Guest · Guest

We make $80K and $95K.

Guest · Guest

Listen people, I've been reading this blog from afar for some time. The answer is simple: leave. Boston is simply not worth it. Maybe there will be a "correction" some day and we'll return, but if not I'll survive.

Don't fool yourself. If you're reading this blog it's not time to buy its time to go.

Ps. My wife and I make $185k.

Guest · Posted: Sun Dec 18, 2016 5:06 pm GMT Post subject:

Guest · Posted: Tue Dec 20, 2016 1:45 pm GMT Post subject:

Guest · Posted: Tue Dec 20, 2016 1:51 pm GMT Post subject:

admin · Posted: Tue Dec 20, 2016 2:19 pm GMT Post subject:

Former Arlingtonian · Joined: 23 Oct 2013 Posts: 141

I will sound like a broken record - but, this real estate boom will end and you don't want to have over paid for a home when that happens.

Turn on the time machine and you can read about what CASE-Shiller learned from studying the 1980s boom.

The Boom last from 1983 until 1988 and the hang over was frightening.
Read it here
https://www.bostonfed.org/-/media/Documents/neer/neer294d.pdf

Sitting out a real estate boom is not for those without intestinal fortitude. There is rental stock out there and yes it won;t be as comfortable as signing up for a $500K Mortgage like all of your friends. You can expect to be ridiculed, you can expect to be considered a financial luddite, and one day you will be very thankful to have waited.

Boston is a center of education, finance, and government with means that real estate booms go more extreme because of the money flows connected to education, finance, and government.

Interest rates are at 5000 year lows and it might be the most dangerous time in history to buy a home.
http://ei.marketwatch.com//Multimedia/2016/06/13/Photos/NS/MW-EP161_chart1_20160613094902_NS.jpg?uuid=963be77e-316d-11e6-8156-0015c588dfa6

Former Arlingtonian · Joined: 23 Oct 2013 Posts: 141

Guest · Posted: Thu Dec 22, 2016 10:40 pm GMT Post subject:

I found out a few folks recently purchased homes with over million dollars price tag. Their families are in similar situation of having 2 or more kids, and both husband and wife work to earn decent incomes. I am guessing their household income level should be in mid $200,000 level.
All of them are upgrading, by selling what they currently have, and put the profit as down payment, and carry $800,000+ to $1,000,000+ mortgage. They all buying in towns famous in public school system, so they can pull their kids out of private school. They are not willing to pay the tuition anymore, all fed up with the private school cost.

From their cases, I see a few things that worth thinking about.

1. Banks are really willing to lend just to everyone, as long as they are willing to take the loan.
2. People are willing to take a lot of risk in housing market.
3. Any home below $700,000 in any decent town is crap. Compare to what you will get for $700,000, you actually will get more than twice the value, if you were willing to bump up the price you are willing to pay above the million dollar mark.
4. private school(education) cost is too high, people are more than willing to buy a very very expensive home in town with good public school system, than paying 2+ kids through private school.

The conclusion is, if you still want to buy a decent home today, you need to make the top 20% income level in your local market, and still willing to buy more than you could afford, then you actually will find yourself some good deals. And that is actually a much better alternative, compare to keep in the line of your affordability, and pay 700,000 for a shit hole that you will feel ashamed to live in.

This is alarming, but who is judging? Happy betting in the housing bubble.

Guest · Guest

I thinks it's fine to buy a house that needs some work. Make it just the way you want it. And you don't have to live in Wellesley or Lexington for your kids to get a good education. Lots of towns get kids into top colleges.