bostonbubble.com

john p · Joined: 10 Mar 2006 Posts: 1820

A trusted buyer's agent who's not afraid to low ball and does so frequently for your price point in your target market will have the best insight. If you frequently low ball and test the waters to see how people respond (counter offer) etc. you'll get a feel. If you're selling, be careful about tipping your hand to your selling agent, if they get a sense you'll take a lot less, they will most likely tip their hand to the buying agent...

Keep in mind, even the experts don't have a clue let alone some of the knuckleheads that are realtors, so ignore the majority of their feedback and just force them to lowball and if tell them that if they are not willing to lowball that you don't want them.

The segment I'm curious to follow are those families that want to hit the school cycles and the amount of time they give themselves to make a deal. I would imagine they'd sell their place first then buy. I wonder what the tolerance the market will have for contingencies for a seller to find adequate housing...

Guest · Posted: Tue Apr 29, 2008 6:20 pm GMT Post subject:

john p · Joined: 10 Mar 2006 Posts: 1820

I think the difference between many successful people today and others is that they see "interest" as something that is paid to them as opposed to paying to someone else.

If you can get a nest egg and have it grow and gain interest, you'r making your money work for you as opposed to working for your money.

I'm wondering, is it possible to have the stock market and economy go up and house prices go down? I think that if someone is saying, hey, I'll sit on the sidelines and wait for house prices to drop while my investments grow (I'll have more of a down payment for a cheaper house). I think that prices will drop when the economy drops and vice verse. Lower interest rates heat up the economy and higher rates cool it off. Affordabiltity seems to track right along that 3% unless you get anomolies like the price of oil.

As far as your red neck cabins comment; I kind of get what you mean, many sellers are dreaming with what they're asking. What I see, however, is communities like Coconut Grove, Miami, Carmel California and Madrid, New Mexico where you have these really cool artist communities. Somerville used to be a cool place. I guess one person looks at someone and says yuppie or metrosexual, and the other person thinks redneck. I have dear friends spanning lots of lifestyles and appreciate a variety of lifes that are carved out of a certain environment. Cool people take what is available and make it cool. It's weird how a place like Somerville could be so expensive, yet a place near the ocean in Lynn is seen as less desireable. Historically there has always been a stigma to certain areas in and around the City. People who aren't natives don't know the depth of this so they buy expensive places in Dorchester, South Boston or Somerville. I think it is great that people are investing because there could be a revitalization of many areas around the City. As long as there is crime, drugs, graft and poor school systems in certain areas, I just don't see them as being good areas to invest in as well as the immediate neighboring areas.

ranch:
http://www.atomic-ranch.com/

cape:
http://www.royalbarrywills.com/high/large/index.htm

http://www.phoenixrealestateguy.com/images/carmelhouse2.jpg

http://www.freewebs.com/keping/KPA/T1_A-Carmel-OldTreesInACourtyard.jpg

admin · Posted: Tue Apr 29, 2008 7:24 pm GMT Post subject:

john p · Joined: 10 Mar 2006 Posts: 1820

I remember pretty well that period, and the going position was that you'd better buy land because they weren't making any more of it. Real estate was a sanctuary for the dropping equities bubble. So if the economy is going to collapse like many on this site are saying, where is the wealth going to go this time?

Don't you think the rhetoric and wild numbers being thrown around are a bit out of the realm of high probability?

admin · Posted: Tue Apr 29, 2008 9:08 pm GMT Post subject:

john p · Joined: 10 Mar 2006 Posts: 1820

I'm not entirely sure how to read that Case/Shiller Chart.

If a house is selling for say $300k now, what is it saying it will sell for at the end of the chart?

Thanks

balor123 · Joined: 08 Mar 2008 Posts: 1204

I've wondered this as well. I think this is the way to read it. Some context is needed to explain how to use it. At a basic level you can use it to predict relative prices. If the index is 160 today and a year from now the futures predicts 150, then you expect a house priced at 300k today to cost 281k a year from now. Another question that I've wondered is about the exact timing of the data. The futures bottom out in Nov so if you want to buy at the expected bottom, using the index to determine expected values, then when should you make an offer? Here's my logic. The index is composed from recorded selling prices on a given month so houses selling in Nov were offered 30 - 60 days prior. Looks like the index is 153 in Nov and 157 now so I assume that you would have a competitive offer for a 300k house today for 292k in September. It appears to me that Aug - Sept is when asking prices start dropping which reinforces my understanding. Around this time the sellers with a deadline start dropping their prices so that they don't have to stick it out through the winter when volumes drop.

admin · Posted: Wed Apr 30, 2008 1:01 am GMT Post subject:

balor123 · Joined: 08 Mar 2008 Posts: 1204

Glad to hear that I'm understanding it correctly. I agree that the timing is difficult to take advantage of but of course it's worth trying at least for two reasons. First, a significant amount of money is involved. Second, the housing market can be timed. Unlike stocks, there are few, if any, professional investors so the market is inefficient. House prices don't move in response to news like stocks do. Right now this dampening effect isn't helping us. The writing is on the wall that prices are dropping but sellers are waiting to see if that will be the case. When the writing changes we'll be in a better position.

john p · Joined: 10 Mar 2006 Posts: 1820

Thanks for the help Admin and baylor. I just find it pretty hard to believe that a $300k purchase price house today will be purchased for $280k in 2012.

If that is true what is it suggesting? Whatever it is, it's pretty bold: Stagflation, Deflation, Depression?

balor123 · Joined: 08 Mar 2008 Posts: 1204

Futures aren't reality yet, just expectation. It could mean stagflation, deflation of housing prices, or recession. It could mean none of these. Housing is not affordable right now to many people who already own houses so income can rise and housing prices will still come down. In many cities the price to income ratio is still 5x. Immigration could explain this ratio but we know that Boston has emigration and it is expected to get worse with retiring baby boomers. I don't know what the historical norm for Boston but nationally it is about 3x. The rise was fueled by credit, not affordability, and the drop in prices will occur because of lack of such credit. Rising income could still make up for that of course.

admin · Posted: Wed Apr 30, 2008 1:55 pm GMT Post subject:

john p · Joined: 10 Mar 2006 Posts: 1820

Check out the Money Supply in the past 10 years; don't you think it is possible that the money suppy could hav buoeyed up many assets?

http://en.wikipedia.org/wiki/Image:Components_of_the_United_States_money_supply2.svg

I am not debating people on prices, I'm talking about affordability. Admin, I have read enough of your posts to understand that waiting for prices to drop is part of a winning strategy. Along with it is growing a down payment in the meantime, so that with falling prices and a growing down payment, the mortgage interest rate becomes less of an issue. That is fine, but the whole package needs to be thought about. If people are out pissing their money away on dinners and brunches, think that rents will remain flat despite more and more people sitting on the sidelines, and plan to put a 5% down payment in a few years when all the pent up demand will be moving into buying and interest rates could make affordability no different than it is today, these folks will be bummed out. I think that if you plan to wait, you better be studying the equities market like Jim Cramer. My concern with this strategy is that if the equities market goes up, wouldn't house prices as well?

I don't care if I'm a punching bag for everybody if it makes you guys stronger and more on your toes. I could be wrong, so I accept and embrace the criticism; I promise I want the best for you guys...

john p · Joined: 10 Mar 2006 Posts: 1820

And another thing. I had this watermelon "Jolly Rancher" at my desk and I hate candy flavored watermelon. Anyway, I knew I'd never eat it and because of that, somehow I would never throw it away. I would have to be like that guy who got stuck on the island talking to the volleyball "Wilson" bad to eat this thing. Well today, I popped that Jolly Rancher in my mouth and it tastes as bad as I projected. It is kind of sweet and disgustingly bad but is a kindred sensation and somehow that Jolly Rancher is alone and unwanted so I befriended it.