bostonbubble.com

[James]

What do you guys think the long term prognosois is for the South End - using your 5-10 yr looking glass.

I really like the area and have been looking seriously and consistently for over a year now. Athough properties like the Bryant went to auction, it seems at least to me that a lot of the nicer brownstone condos are not lingering long on the market. Also, the price/ft has not dropped too much - still in high 5's-700 range as outrageous as that is.

In gerneal the the mantra natiowide seems to be that 'its a great time to buy' but I'm finding it tough. I am frustrated by apartments that still sell quickly at or over asking price despite all the doom and gloom. Is the worst ahead for the South End or is it more resilient? Are there price cuts on the horizon? If only I had that crystal ball.

Anyway, interested in what the Boston area realtors have to say

James

[bdavis]

I've lived in the South End for over 20 years. I bought a condo here several years ago
because I decided I wanted to live here for a long time.
The non luxury end of the market has been fairly stable here in the SE, BB, abd BH neighborhoods
through this bubble.
But don't count on any real appreciation for the next few (or several) years.
Buy in the SE cuz you love the neighborhood and want to be here indefinitely.
Besides, I look at the traffic on the road at rush hour, and thank goodness I don't have to deal
with it. You pay a lot to live here, but the quality of life of city living is right for some people.

[GenXer]

Enjoy while you have city services you can afford. With impending budget disaster in MA, your property taxes will probably go up even as the prices go down. Anybody who's serious in making 5-10 year predictions must be on meth. And 2nd in line to the insane asylum would be a person who actually follows such predictions.

[bdavis]

I just said don't expect appreciation for the foreseeable future.
I'm not sure if that qualifies as a prediction.

Peace.

[john p]

What I don't get about the finance industry is that investing is ENTIRELY about making predictions. It is not a guarantee, it is an expectation. If you want someone to pay you money to help them with future earnings I am not sure how one gets away with out setting some sort of expectation. I mean if you're not making predictions or beholding to any level of expectation, your either a critic or a historian; what else is there?

The first definition of "invest"

http://dictionary.reference.com/browse/invest

to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.

I see the modus operandi of many in the finance industry is to belittle those that don't have a deep understanding of their industry and at the same time give themselves an incredibly large margin of error by saying things like "I don't have a crystal ball, I don't predict the future..." In my industry we don't get away with saying, I don't have a crystal ball I don't know if the building is going to leak or fall down or not. This M.O. is off putting to people who engage in managing their own money. I see the benefit of the M.O. as a filter to find the clients that can be easily manipulated and cower to them and at the same time someone who will be too afraid to have any sort of expectation; basically someone who you can rob and abuse. There is a big market by those that want to be told what to do and actually are attracted to someone who makes fun of them. They call them sheep.

Now I understand that the markets are dynamic and fickle, but if everyone can claim Force Majeure for their services and we aren't expected to maintain a certain batting average, we're just amatuers not professionals. I could step up to the plate at Fenway Park and have a batting average of zero. If you can't maintain a batting average you're out.

Theo Epstein the General Manager of the Red Sox is also dealing with wildcards all the time, or how about Bill Belichik who has another team trying to resist him; neither can say "I don't have a crystal ball, I have no way to defend this team or score points against them...". Guys on the Patriots get hurt as well as on other teams, the coach's job is to make adjustments and to make a ton of predictions. I don't see how anyone suceeds without making predictions other than just luck.

In fact, one aspect of the real estate market is in fact the constitution of buyers and sellers. If buyers don't do their homework, the realtors can put a little heat on them and they deform and melt. They are easy prey. What you're seeing now is people doing their homework and realizing that many of the "professionals" are full of shit and their abusive behavior is a mechanism for defense and offense. They're brilliant in that they make money when the market goes up or down, they want you to make a transaction because they get their fees. I think a lot of this "turbulence" is the financial market trying to constantly shake things up because the more turnover, the more fees.

[john p]

I'm not so much thinking about you Gen-Xer, I had a realtor belittle me and say I didn't know what I was doing and said that they didn't even want to represent me if I was going to make offers that were more than 6% off of asking. I ended up getting like 16 to 18% off of asking. If I was a wimp and let this person bully me, I would be totally upside down right now living in a place that wasn't nearly as nice. Instead I quantified the risk in my mind by PREDICTING the decline and 3 years later, my place appraised right around the price I bought at.

GenXer, people would be a fool to not listen to you, but by allowing someone to belittle them they lose command presence:

http://www.withthecommand.com/2004-May/PA-Richards-commandpresence.html

When a firefighter leads others into a fire they need others to know that they aren't overwhelmed.

I'm saying in today's market the individuals need their own command presence, otherwise the professionals will abuse them. I think in trying to help someone out, you have to let them find their own confidence because you're not going to be with them all the time.

[GenXer]

Sorry about that - you could tell I had a nasty high fever when I wrote that....

[GenXer]

James: I'd worry that the coming 'state bankruptcy' and loss of jobs will push blight into some parts of the city and crime closer to the nicer parts as well. But this amounts to a prediction.

Oh, and I think you may be on the wrong forum. No realtors here (at least I hope). And many of us are renting. Why would you buy when some shmuck can rent his place out to you for 1/2 of what his mortgage is? (or worse).

[john p]

GenXer: I think you're right like 99.5% of the time which is why I want you to be as attractive as possible so people follow your wisdom.

The other thing is, could you be more specific about where you think the taxman's bite will hit worse, the city or the suburbs? I think we're going to be hit with both federal and state taxes, but I'd be nervous about stuff like utility bills or condo fees going up in a city during a period of stagflation.

I think also that people need to understand how the private sector got slammed in 08/09 and how the public sector had a year or so of rainy day funds or stabilization funds that they could burn through so this is the year where they have to face the deep cuts or vote in the tax overrides. Futher, isn't it a Law that taxpayers have to replenish pension funds to certain levels depending on how many participants are in the funds, meaning because Pensions tanked, are taxpayers on the hook for maintaining those levels? Also, the cost of health care for retired government employees is going to be expensive as well.

Do you subscribe to this delayed reaction for the public sector? And if so, how do you think this will play out for renters or owners. I presume renters might get hit up with a little surcharge in their rent if the property taxes go up.

Lastly, what would you do as far as affordability goes (how would you tune these numbers in today's environment):

28% of your gross income on mortgage
3.5 times your salary limit for your house price
10% down payment
6-8 months worth of of expenses for cash reserves
5% house price in some liquid vehicle for unforseeables in home ownership


I am sorry for my overreaction as well, I just get upset when people listen to warm and fuzzy people when they should really be listening to those that see the world for as it really is...

[GenXer]

[bdavis]

Back in 1990 (at the tail end of the 80's real estate bubble and during a recession) the brand new building 75 Clarendon St.
in the SE was completed and marketed. Sales were anemic so the units went to auction. If memory serves me, 2 br units originally
priced at around $179K sold at auction for about $140K. I remember thinking how expensive these prices seemed at the time.
Real estate was flat for about seven or eight years after that. (Those same units probably start in the $500's now).

Anyway, we're probably in for a several year slump just like then.
I see no downside to waiting a while.