bostonbubble.com

[melonrightcoast]

I haven't posted for a while, but I wanted to give an update on our house search:

1) there is LESS inventory in our price range now than there was in January
2) sellers are putting their properties on the market at very high prices (way out of our price range)
-some sellers have already pulled them off the market and are trying to rent them out (one was listed for sale at $699K and is now for rent at $3600/mo)
-some sellers have dropped their price and they have gone under agreement
-one house that I thought was overpriced at $699K actually sold for $710K within a couple of weeks
-most houses are just sitting, with little to no price drops
3) we are now looking to rent in our target town for $1800/mo or less, which should get us a big two bedroom or small three bedroom apartment/condo/townhouse

Does anyone else have house hunting stories that they would like to share?

:)melonrightcoast
_________________
melonrightcoast ... are you?

[JCK]

We're not ready to make a move, but I've been starting to follow the market a bit more aggressively, just see where prices are heading, and how long desirable properties are sitting on the market.

My findings are similar to yours: that anywhere you'd actually want to live is still snapped up pretty quickly, and at not much discount as compared to 2005 prices.

[WestCoastXPlant]

Well, I'll play. We're watching the Swamscott/Marblehead area. Were watching Hingham but are thinking of staying North.

1. Marblehead has a fair number of houses that are sitting on the market below the price they were purchased for.
2. Price reductions are slow and puny (on the order of 5-10K)
3. Houses are generally not moving.

We are looking in the 500ish range though I have a very strong wish for a 400 price There's about 3 houses we've been watching for 60+ days -- all are about 20-30K above where I want them, none of them have sold. Price reductions are unlikely as the owners are already eating 50-100K in losses


We are considering buying in a nicer property in a less desirable town (not talking Chelsea, but maybe Salem or Beverly). It goes against conventional wisdom of "cheapest house on the nicest block" but I'm personally a believer in stagnant or falling prices for a long time, so I'm thinking that a house we really like might not be a bad thing if we'll be stuck in it for a long long time...And it won't hurt being able to save aggressively while owning

[JCK]

[WestCoastXPlant]

Renting is always an option. We currently rent at about 1700 which is certainly cheaper than any housepayment we'd be making. The only issue is that we have 3 kids and a huge dog(100+lbs) so finding a rental and moving is always a major PITA...But yes, we could rent forever -- the benefit being that we can always chase the best school district whatever that is

I have to say I am a bit worried about inflation(in a couple of years) though -- we're sitting on a good downpayment. I grew up in a country with rampant food/basic goods inflation so I always have that in the back of my mind. Housing didn't participate in the runup but you should have seen the price of a bus ticket ..Quantative easing doesn't fill me up with fuzzy feelings.

[JCK]

[nickbp]

I'm in no rush, myself. Single, out of college for two years. I've been occasionally skimming Redfin for condos in JP/North Dorchester or thereabouts, and I've noticed that the listings are still often priced at or above what they had sold for in 2005-2006. Which is great, because they actually look pretty affordable already, though they're still more than I feel comfortable paying right now.

I'm still saving a downpayment and plan to hold off until YOY price changes are 0% for several months. I'm going with the assumption that this is at least 2-3 years away. I'm fine with a longer wait, since that just gives me more opportunity to save up a full 20%.

If you're especially worried about inflation, a safe place to store your downpayment could be TIPS or I-Bonds, which are US Treasury bonds that automatically grow to match inflation (calculated via CPI). However, I think they're intended primarily for people who intend to keep them for 5+ years. And besides, I hope we won't need to worry too much about inflation in shorter timeframes than that.

I'm personally thinking of using I-Bonds to store my some of my downpayment as I continue saving, since they get a better rate than my 3% online savings account. I think I'll buy them at a rate of one $1000 I-Bond per month, until I reach the $10k/year I-Bond purchase limit. Then, once I feel like I'm about a year from getting serious about making a purchase, I can stop buying new I-Bonds (since they must be held for at least one year before being cashed out).

Note: I'm definitely not a financial advisor, and I only myself heard about these things last weekend. If you have additional tips for storing a downpayment, feel free to contribute!

[BelmontRenter]

Belmont is still our main target, and similarly, inventory is abysmal and as is the case with other immune towns, prices are not falling substantially.

It seems that some, at least those posting in this thread, have seen that yes in the "immune towns," (1) unemployment is not making a dent in the market and (2) homeowners have decided, perhaps in droves, to just wait-out the market even if they want to sell.

We may have to change our target town if we remain unwilling to pay in the $800,000 range for something we call "decent" (which is no mansion, believe me). Some of the towns a little further west have suffered much more dramatic price drops I think. People I know who own in Sudbury are complaining bitterly, and that was a pretty pricey town when I moved to the area in 2001.

[nickbp]

Speaking of those foreclosures, you might start seeing more of them over the next few months.

[balor123]

[balor123]

i-bonds do look relatively good but those fixed rates are really low, which exposes you to a lot of risk. I wish they'd let you exchange them for new issues without penalty. I suppose if you hold it for 1 year you do ok and by 2 years you're doing pretty good. Time diversification (dollar cost averaging) still a good idea though.

[GenXer]

Let us go back to basics. If your time horizon is very short, there are really only a handful of options. The basic criteria is safety and liquidity. TIPs are intermediate to long term, and I bonds are intermediate term (unless you want to pay the penalty). You do not have safety with TIPs (can lose value if sold before maturity) and you do not have liquidity with I bonds, as you have to hold for at least 1 year (less than 5 years gets you a penalty). Besides, right now the government is keeping interest rates (i.e. 'inflation') artificially low (we all know prices are higher for everything), so the interest rates on TIPs will be very low, and I-bonds rate is set by the government, which means that you have a reinvestment risk - your rate may decrease at the next rate setting date. There is also a purchasing limit on the I-bonds, so unless you have a lot of money (to make a lot of interest), are you really going to win by buying I-bonds vs. CDs?

Your two options are CDs and money markets. Money markets can fetch around 1-2%, and a 3-year CD can give you around 3%. You can shop around and get something incrementally higher, but on $10k, this will not play a huge role. In the long term, things can change quickly, inflation can spike, and so can yields on CDs. If you can get 1-2% in your money market, I think this is the best choice for most people as you get safety AND liquidity.

The problem is that the government is messing with the availability of money, so the banks DO NOT SEEM TO NEED OUR MONEY. They have the bailout money, so they are getting that at dirt cheap rates from the government.

[admin]

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[BelmontRenter]

[admin]