bostonbubble.com

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[Former Home Owner]

Is the belief that Inflation will drive rents higher?

A good or service inflates when there is lots of competition or interest in it.

If food and gas continue to inflate is there enough money in the economy to drive Rents higher? In the 1970s many more employees were Union members and there were Union contracts that forced employers to give Cost of Living Increases in Salary. There are Many fewer Union employees today.

Any thoughts?

[balor123]

Home prices deflating?

Cambridge Condo on Redfin

Sold in 2006 for $430k, now asking $469k 1.5 years later for just over 10% appreciation or 5% per year. Granted, this house will probably sell for less than that, maybe $450k, which gives an appreciation somewhere around 2%/yr. If there has been a correction, I don't see it in the properties that I'm looking (those like this one). Even inflation adjusted properties like these are at least holding their value and many are still appreciating. Income has remained the same and perhaps even lost to inflation since 2006 but cost of living (food, gas) has increased and the state continues to lose people.

Boston has long been unaffordable and it's not clear to me how the city maintains that status. Only in this city would a median home to income ratio of 4.2 be considered a bargain:

Homing in

Why do people in this state do this to themselves? That is, force themselves to live month-to-month and carry large amounts of expensive debt in generally poor quality housing.

I should probably disclose at this point that I am a Texas native and not just any Texan but one from San Antonio, among the most affordable markets in the country, and so I am somewhat biased against housing in Boston (when I first moved here, I thought the whole city was poor juding by the look of houses here!).

[balor123]

I went through Redfin postings looking for properties 0 - $650k, 3+ beds, 2+ baths, last sold in the last 5 or so years and separated them by gainers and losers.

Gainers:
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Losers:
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As a whole, based on asking prices, homes in Boston suburbs don't seem to be hurting that much. The yearly appreciation on these houses is about 4% on average (2% adjusted for core inflation, 0% for real inflation). While these appreciations aren't huge, they don't exactly indicate a correction either. Incomes have risen at about the same rate so it looks like affordability hasn't changed much either for these houses.

You can find deals around the Boston area but it seems like the further away from Boston you get the bigger the drop in housing prices so while the greater Boston area might be experiencing a correction, the lesser Boston area is not.

Does anyone know what's going on in Wayland? It looks terrible there. One house sold two years ago for $700k and is now asking $500k.

[Hard Rain]

It's not only Wayland ,most of the suburbs are getting crushed. Lastest sale in Sherborn :

114 woodland st:

sold for 1,025,000.00 on 5/15/2008

Previous sale date 2/2004 for 1,525,000.00


Ouch!

[Teavo]

[balor123]

1. I'm not saying that these people are making money. Just that their housing values are holding up.

2. $400k in 2002 is definitely worth more in 2002 however $400k was more arffordable in 2002 than $500k is today. There's also no doubt that housing has made a poor investment relative to other options but it appears to be keeping up with inflation. A lot of the examples in there are more like $400k in 2006 $420k in 2007. I didn't include houses that looked like they'd had a lot of money put into them. Many of those houses are new construction so wouldn't need it anyway. Those are typical listings if you start selecting at random in those areas you will find the same results.

I consider places like Waltham and Newton to be suburbs. Places like Wayland and Sherborn are far from Boston. They're hurting in large part because of transportation inflation. Living in Wayland and commuting to Boston might cost $200/mo more than it did 2 years ago, which is $200 less that can be spent on mortgage.

It is also worth pointing out that mortgage rates have dropped a little this year since the low in Jan. They are now closer to 5.5% but the Fed has indicated that they won't be lowering rates anytime soon and will likely be increasing rates starting in 2009. They notes also indicate expectation for a worsening economy and increasing core inflation. MA is supposed to be hit with a bunch of missed payments starting this month. We would have seen foreclosures starting in August but MA recently passed a bill that would extend that deadline by another few months. Thus, while foreclosures were supposed to be tapering off in 2009 I think we'll see the rates remain high through early 2009 and not start to fall until mid 2009. These are all bad factors for housing.

On the bright side, very few housing permits have been issued over the past year so if the state grows at all (see previous post) then there is a little support for existing homes.

[Teavo]

[Guest]

Check this BS out-- 75 days listed-- no offers-- so what do they do-- raise the price by 4k...

11 Rider Ter
Newton, MA 02466
Beds: 4 On Redfin: 75 days
Baths: 2.5 Year Built: 1950
SQ.FT.: 2,167 Lot Size: 7,102 sf
$/SQ.FT.: $369 MLS# 70737102
Status: Price Change
Last Sale: $410,000 (08/22/2007)
Listing: Allied Realty Advisors

[guest]