bostonbubble.com

GenXer · Joined: 20 Feb 2009 Posts: 703

Also, foreclosures are being slowed down artificially. This will keep prices from falling for a while. But what I see happening eventually is that prices will not fall for many years, but at some point, interest rates will have to rise significantly. This will be the ultimate undoing of the housing market. Also, unemployment will keep rising, and there is only so much that the unemployment payouts will extend to. Everybody is hoping for an economic miracle, and so trying to push all debts down the road, which is the best way to continue this recession indefinitely by keeping the taxpayers on the hook for even more debt.

mpr · Joined: 06 Jun 2009 Posts: 344

admin · Posted: Mon Dec 06, 2010 4:17 pm GMT Post subject:

Renting in Mass · Posted: Mon Dec 06, 2010 4:48 pm GMT Post subject:

Increased leverage from other buyers (subsidized by the federal government) is my nemesis.

GenXer · Joined: 20 Feb 2009 Posts: 703

Unemployment support won't last forever...holding foreclosures back won't last forever, lower taxes won't last forever, and state deficits won't last forever. And of course, house prices will depend on how fast the rest unravels. Fast or slow, somewhere along the line somebody is going to pay for this, and it's not going to be the Chinese.

GenXer · Joined: 20 Feb 2009 Posts: 703

And people wonder why house prices can fall even more? Because of this:

http://www.cnbc.com/id/40517158

Any idea what happens to 'fair prices' when prices are manipulated? That's right, sometimes when the prices are not really correct, there are massive 'corrections' to be had to adjust to reality. Right now the prices are still PROPPED UP, and completely unaffordable for an average person living in MA. Of course, MA will not be the first, but when the CA and the rest have their corrections, MA will follow pretty shortly thereafter, as it is not immune from the rest of the economy.

mpr · Joined: 06 Jun 2009 Posts: 344

balor123 · Joined: 08 Mar 2008 Posts: 1204

Low interest rates hurt but large leverage hurts more. The borrowing limits were "temporarily" increased for expensive homes. For others, low interest rates meant that they could take on FHA loans instead, reducing their downpayment to only 3%. Concessions from the government and sellers can now be used to pay for the downpayment. And then there's people who bought during the bubble with low or no downpayment loans who continue to stay in their homes. I don't think the government will enact policies to significantly harm the market at this point but I don't think they are going to stand by while prices rise over a prolonged period of time while the budget is in focus and a significant portion of it is being forked over to GSEs. As I stated, I (and current futures) think that for the foreseeable future home prices will stagnate being eaten away by inflation slowly. Without taking a stance on whether they are desirable, one can accurately state that only catalysts (aka black swans) can cause a deviation from the expected path.

That being said, since I haven't purchased yet, I would like such a catalyst to appear, preferably within the next 2-3 years so I won't enter at the bottom of the pyramid Razz

admin · Posted: Tue Dec 07, 2010 9:04 pm GMT Post subject:

CL · Guest

GenXer mentioned about unemployment rate - I am not sure it applies to Boston (or at least the towns people in the board are interested in)

http://www.bls.gov/news.release/metro.t01.htm

Boston-Cambridge area unemployment rate has been declining, and even in 2009 it's high, not THAT high to begin with (mid 8%). Project Oct 2010 is 7%. Dallas unemployment rate is 8%, Houston is 8.2% by comparison.

I also think it is safe to assume in areas like Brookline, Newton, Lexington where education level is high (75% plus residents have bachelor degree, nearly half have Master or above), and employment is dominated by university/hospital/etc, you will find a lower unemployment rate and even less chance for sustained high employment.

CL · Guest

From Sperling's BestPlaces - unemployment rate (towns are selected purely because I am interested in those towns as of Jun10)

Newton - 5.6%
Brookline - 5.3%
Lexington - 6.0%
Winchester - 6.0%
Needham - 6.1%
Hingham - 5.8%

You get the picture. Unemployment hit specific areas hard and will depress property price (due to forced selling, foreclosure, etc), but not really in those towns.

GenXer · Joined: 20 Feb 2009 Posts: 703

Boston immune to unemployment? That would be interesting. Unemployment rate is a meaningless number - self-employed are not counted (that is, all business owners, many of whom had to close shop), and neither do those who stop receiving benefits. Why is anybody seriously using this number? Historically, MA has/had a lot of small businesses, and now many have gone under. Defense is about to get crushed, and so are hospitals. Anybody who knows anything about MA healthcare knows that this system is unsustainable as it currently is. Universities will also feel the pinch, but that is in the long term. State is bankrupt (i.e. running a huge debt), and there will come a time when municipal bonds will be unsustainable (i.e. interest would be so huge that no state could afford to issue those). Same goes for municipal/union employees - they are overpaid and their benefits are more than the state will be able to bear. I'm not saying all of this will bite us in the next 2 years, but none of this is good for our employment situation. In the past couple of months the state lost more high tech jobs than it created in a while (over 1000 in biotech/defense), and it is just a tip of the iceberg.