bostonbubble.com

[sherisim]

My husband and I are relocating to the Boston area to start new jobs with a combined income of ~200K/yr. Our new jobs don't start at the same time (me- Dec 09; him-Feb 10). We do not currently own a house. We'd like to buy a place in greater Boston but are running up against a brick wall, namely that we are hearing from lenders that we must have a month of pay stubs from the new jobs before we can get a loan.

This to me is just idiotic. We are supposed to pay moving expenses twice, once into a rental, and once into a house? Additionally, we will lose out on the 8K tax credit since there's no way we can move up the employment start dates. We don't make enough money now to get a loan (we are looking at properties ~450K with 20% down, so a ~360K mortgage) and our future employers are not going to pay 2X moving expenses. Any advice for us? Can this be gotten around? We both have firm contracts with our future employers and can provide notarized documentation, whatever. It's enough of an issue that we may just not buy. Explain to me again how these kind of rules are helping the housing market to recover?

[balor123]

Some of us don't want it to recover However, it's not up to me and you are buying well within your means so I'm not concerned with people like you getting loans to buy houses.

[mpr]

[GenXer]

Given that it is not easy to buy a house in this area that fits multiple requirements, it may be a good idea to rent a place for a year and take your time while you are buying. Moving again will cost you no more than a couple of hundred bucks. Worrying about 8k tax credit while the price movements of $8k are noise when it comes to house prices is not productive. This should not be your deciding or even contributing factor for buying a house here. You'll find out soon enough that it makes a big difference where you live (unless you don't mind your commute to take over an hour each way).

[mpr]

If you enable your e-mail communication I can send you the number
of the person who helped me out at Countrywide/BofA.

[balor123]

I would also be uneasy about buying a house in a new area. I would want to rent just to scope out the area first. Trading houses after a couple of years could be quite expensive. Also, wouldn't you rather wait until you have stable jobs before making a 30 year commitment to the area?

[admin]

[john p]

Look at it from the banks perspective, there are so many people upside down right now. According to Zillow, I was $100k upside down in March. Now with the unemployment situation, if we lost our jobs and couldn't make the payments the bank would be stuck holding the bag.

What is going on is a balancing act of regulations to try to stop the free fall of house prices while reeling in the loose practices. It is sort of working in places like Massachusetts, but not so much in Florida or California where most of the people don't really qualify for the opportunities.

I wonder if people will look back at all of this and critique the strategy like they did the Iraq War. Donald Rumsfeld wanted to conserve blood and treasure instead of doing a huge surge at the onset. People are critical of Rumsfeld now because the War took longer, but if we did put too many bodies in too quickly when it was really hot we might have sustained alot of casualties. In this instance, economists like Paul Krugman think that we needed a larger surge, and thinks what we're doing for the economy is like what Rumsfeld did in Iraq. In the long run, however, I think Iraq took much longer than we wanted, but we took out one of the larger military powers in the world (actually Iraq did have a military that we needed to respect) with 1/10 the U.S. Military casualties lost at Gettysburg.

Also similar to Iraq, we of course measure US caualties. Iraqi casualties range based on reports from 100k to over 1 million. This is like how the government is qualifying "jobs saved". If you're just concerned with one metric you kind of ignore other serious side effects. So in Iraq, we conserved US lives by firing missiles, which increased the innocent death count, which increased anti-American sentiment, which made the War last longer. The alternative would have been to have been more surgical and have ten times the US casualties and fewer innocent Iraqi deaths.

These are similar to the hard choices the government is making. Should the US bail out California? I just saw an interview with California Governor A. Schwartz. He said that his state needed to put a cap on spending to ..... get this.... 5% increase a year!!! I mean our towns have Proposition 2 1/2 which means we shouldn't be spending more than 2.5% a year more than the prior year. Inflation is typically 3%, so California is having a hard time getting resolution to go to 5%. The Governor said they had to stop government growth of 10-15%! I mean how unfair is it to responsible states to have to bail out California that acted like an irresponsible child?

Given that all this is being sorted out, what approach, I would agree with everyone above, you should rent and see what we're really looking at. The political aspect of not bailing out an irresponsible area is devestating. In the 70's New York City was totally corrupt and hemmoraging money. You had crooked cops, politicans, government waste, etc. Republican Gerald Ford chose not to use Federal Resources to bail out New York City and made them dig themselves out of their own self created mess. Well according to New Yorkers, Ford "turned his back on them" and they have been ultra left wing ever since. Obama's disposition is to not make people responsible for their actions, but to gain political favor by giving them a hand out. In this process, he could secure California, but might risk some of the "Blue Dog" regions of the country. Depending on the US Electoral Map complexion in 2012, these decisions will be made. Obama picked a Latina female for the Supreme Court to get favor with the largest growing segment of the population and he was in Virginia yesterday floating a test baloon with his health care because he needs Virginia and that will represent how much he can bite off... Basically, we can see where the bullet is going to go by looking at what he's aiming at and this Stimulus Money is going to go to areas where Democrats need to win. Actually, the best thing for Massachusetts is a weak Democratic Governor because Obama will have to give us more money to buy us off as the best thing our Governor can provide us is his relationship with Obama and the pork he can get for our State. For all the States and communities that aren't getting pork, they're getting porked. If you wait a year you can see how porked you might be getting....

[WestCoastXPlant]

Well, something in your post doesn't quite add up for me but it doesn't matter much (200K income I wouldn't worry about 8K refund, for example...and that's about 1% of your house value. Also, per lender guidelines, I think you'd only need about 100K income at present to qualify for 360K loan -- is your income more than doubling?!)

One thing you could consider is renting in a long term hotel -- we did the Marriott for a month. That gave us time to find a place to rent that we're fairly happy with. But it does cost ~3K a month, so 60days would probably cost you very close to the 8K refund anyway. And as people said, areas here vary a good amount in feel, community and commute time...so unless you're sure sure I'd check it out for a bit.

Lastly, moving expenses locally should be really small -- we hired a reputable company(insured, probably pricier than what you'd pick locally) to pack and move a 2BR place cross country -- that cost us 3.5K. I imagine for a local move it would be less than 1K...

[balor123]

Cities can vary significantly even by street. The long term hotel strategy is a good one but I suggest a longer time period - maybe 3 months. You could try 2 or 3 different ones to get to know different areas. The mover will likely store your stuff for you. You'll just need to deal with not being settled for a short time period. It's practically like a long vacation.

It's not so bad though. I started my first full time job without having an apartment living in a hotel for the first week. It's uncomfortable but you forget it.

$450k is not a lot of money for Boston by the way. If you want a nice place, then you should be looking in the $600k - $800k range. Chances are you've found a place that you think you'll like but in 1-2 years you'll regret it. I've also done a lot of moving around (6 times in 7 years now) for this reason.

Where are you moving from? Would help understand what your expectations are. I came from Texas. Big change for me.

[admin]

[Kaidran]

I thought the $8k credit was for couples <$150k and individuals <$75k. It does apply to me but I have no intention of buying yet, as was stated earlier $8k is noise in the Boston market.

If you absolutely need to buy a house see if your employer does any temporary accommodation. When I was relocated they provided 2 months in a furnished rental. During this time my stuff was left in storage. At the end of the 2 months you might be in a better position to get a mortgage with both your names, ie closer to that 60 days. If you need more time the rentals usually can be extended, though they are expensive. If you did this you would only need to unpack once.

IMHO you would still be better off renting. You have to plan to lose money buying a house now over the next few years at least.

[john p]

I don't know about the $8k being peanuts. I think this stimulus is more focused on those surrounding the median house price. If you say buy a property 3 times your salary, for those that make less than $150k, you're talking about house prices up to $450k.

I get that you're not going to typically get a additional bedroom for $8k unless you're right on the price point border, but the big difference is in the DOWN PAYMENT.

Say the Median House Price is $320k, $8K represents half of a 5% down payment.

The people in the starter homes are typically those that don't have a big emergency fund and as shit trickles down, often times are the first to be laid off so having an incentive for new buyers to be able to buy those homes for the poor people in finanical distress is a good thing provided that they aren't overextending as well.

[WestCoastXPlant]

[john p]

Oh, I agree, my post was meant to support your postion that the $8k wasn't meant to grease the skids at this person's price point, but to target and reconcile the median price point and median salary.

I wish I had read this before my post so I would have just attached it....

http://seekingalpha.com/article/152722-homebuyer-tax-break-propping-up-the-lower-end-of-housing