bostonbubble.com

[Boston ITer]

John, you may want to try the following for Mex, even the Florida transplants up here are liking it.

http://www.ixtapacantina.com/home.php

[balor123]

Thanks for the pointer. Looks like they have a Lexington location. I'll have to try it!

[john p]

I will for sure try that place; thank you for that.

[balor123]

Some articles on Texas and housing bubbles. Most of the interesting content is in the comments.

How to avoid a housing bubble, state regulation edition
[url=http://rortybomb.wordpress.com/2009/04/21/ban-mortgage-prepayment-penalties-at-the-federal-level-1-texas/]
Ban Mortgage Prepayment Penalties at the Federal Level, 1: Texas[/url]
Texas Doesn't Have the Magic Anti-Bubble Bullet
Consumer Union article on Home Equity Reform in Texas

[john p]

How much would you say that abundance of land plays into it?

I mean if you can find a lot within the 128 belt, it would most likely cost about $300k. Then, if you add in construction costs of say $135 per square foot, a 2,500 s.f. house would be $625k. Now lets take Texas, the land might cost $50k and the house might cost $100 per square foot because the labor is cheaper, that 2,500 s.f. house costs you $300k.

[balor123]

$300k for a 2500sf house in Texas? Yeah right. Try $150k!

But yes you are right land plays an enormous role in it, and not that the state is huge but rather on the planning and restrictions on the land. There's plenty of land in the greater Boston area. Most of it is just either unbuildable or has significant building restrictions.
Check out this Harvard Study.

In theory towns should compete and as one closes off the others should open up but Boston is choked off by the immune towns (Weston, Lincoln, Concord, Lexington). The towns further out don't have good access, in part due to the immune towns. This doesn't happen in Texas because the cities absorb the surrounding towns through extraterritorial jurisdiction.

To some extent, these restrictions make sense. Boston's infrastructure hasn't scaled well and growth comes at a great cost to the cities (sewer, traffic, crime, etc). Nonetheless, they have a huge impact on the cost of housing. Not only does the land cost more but because the land costs more the workers have to pay more to live here and they need to make more. The same goes for businesses, which are even worse off because the limit on land limits competition and causes prices to rise. Wellesley, for example, has exactly 1 supermarket. Not much incentive for them to keep prices low.

There is some history to Boston that also causes home prices to rise here. We've started a pyramid scheme in housing since the 1980s and no one wants to be at the bottom of the pyramid so there is little support for fixing the cost of living. Prices will likely always remain high here, at least if supply is the factor. You have so much invested in your house that you have to pipeline the process and no one can tolerate dips in prices due to the leverage that's needed. In Texas, there is no need for the pipeline so residents focus their attention on real estate taxes and they view rising home prices as increased taxes, decreasing the desire to raise home prices through supply restrictions. Perhaps one day Boston will break out of the pyramid scheme but it looks like we're going to need a Great Depression to do it.

[balor123]

Policies this make living expensive in MA. Hospitals have to bribe governments to provide service. Competition costs money. Guess where those $100k/year for 5 years will come from? The costs billed by the hospital of course, which are paid by the residents. The winners here are the hospitals and the cities but not the residents.

[john p]

Take the sample I showed you:

2,500 sf in Massachusetts - $300k for land, $130 sf for house = $625k.

2,500 sf in Texas- $200k say...

NOW, take TAXES!!!!!

the $625k house in Massachusetts might cost around $7,500 per year, while the house in Texas might cost what? $2,500?

I think I told you about someone I knew who sold a house in N.J. and lost $200k since 2005. They were paying $15,000 for real estate taxes in N.J. They are now moving to Maryland and they will be paying $5,000 in property taxes. My parents in Florida pay something like $2,000 in property taxes.

I ask you how is the cost of government so radically different between say Florida and New Jersey? I mean the schools aren't THAT much better.

Bottom line is, in areas where people are pumping in a lot of wealth, the government employees get to enjoy the wealth and benefits. Although they have to pay for the premiums to live in these communities, part of it is sort of like how Tiger Wood's caddy makes a hell of a lot more than a caddy who barely qualified for the pro circuit. It sort of makes me angry to think that the unions and government employees who have riden the wave that was generated by the private sector here and now gets to enjoy the cost of living premiums that will pad their guaranteed pensions while the private sector NOW has lost about 40 percent of their nest eggs and are in a much less stable environment.

[balor123]

Looking at it more you can get a $100k house in SA with 2500+sf 4+ bedrooms but it won't be in the nicest neighborhoods or it might have some serious issues (for Texas) like only have 1.5 - 2 baths rather than 2.5+ baths. Looks like you can find some nice 3br places in the $100k - $150k range but the 4+ bedroom places that are decent in good areas start at about $140k.

My Texan relatives claim that their real estate taxes are higher but I compared with Waltham and it was about the same. Many MA towns have exemptions but even so I think the total taxes are higher here because the cost of houses are 3-5x higher.

I haven't looked at the state budget but I suspect that the money goes several places. There's the difference in salaries due to cost of living, which derives from cost of land. Unions are strong here as well as lack of cheap immigrant workers (emphases on cheap), regulation in many fields to protect wages, etc. I suspect the most significant factor, however, is debt. Your MA ancestors borrowed heavily and you are paying for it now. It's bad enough that we have to pay back principal but those interest payments can take a big chunk out of the budget.

The cost of living, primarily determined by home prices, has been crippling this part of the country for 3 decades now. Our loss is their gain and it seems that as time goes on we're only making it worse.

[john p]

So I'd imagine that you're not considering living there because you can make a hell of alot more here?

If you can make "X" in Texas, what do you have to make here to balance things out? It sounds like almost 2.5 times in order to make it worth while...

[Boston ITer]

[balor123]

I'm not living there because my wife goes to school here right now. When she's done it's going to come down to where family is located. Sadly, not everyone has the ability to pick the places to live that are best income-wise and that's part of the reason that the whole city hasn't uprooted and moved to Texas. But as far as finances are concerned, yes Boston isn't even in the same ballpark as Boston and the relative population growth reflects this property.

As an engineer, moving to Texas would either not change my income or increase it. There are more opportunities for engineering in Austin than Boston (I'm really a hardware engineer) and I expect that the opportunities would yield better options. Your point is correct about the reduction in income but it doesn't equally affect affordability. A teacher in Texas makes about $40k for example while one in Boston makes $50k. The cost of housing is significantly more.

Boston, and the whole Northeast, is bleeding engineers faster than most other professions for this reason and businesses have been following the talent.

[balor123]

By the way, you can verify my statement about salaries by visiting Glassdoor.com. Type in "Software Engineer" in Austin and in Boston and you'll get a good sample of what people are making. Alternatively, you can go to the trends page on Indeed and see how the listings with salaries posted compare, though that method is far less accurate.

[Boston ITer]

[balor123]

need advice: Move to Austin, TX or stay in SO CAL?