bostonbubble.com

[sans boston]

We all know it's a matter of time, but how long? I think it takes a long time that spans years, and many people will try to weather out this storm. There are also "safety nets" that keep things from going bust over-night.

Consider this, if unemployment in Boston were to skyrocket; how long would it take before people would start selling their houses in droves? The first safety net is collecting unemployment. In six months that dries out. They start to cash out their 401K and retirement savings. This gets them a couple more months; then they start to borrow money from their family. That buys them a few more months. Maybe they rent out a spare room or find some part-time gig: they'll scrape by for a little while longer. Maybe they make things work for a year or two, then they start missing payments. A few months pass by and the bank begins the foreclosure process.

None of this happens overnight, and the unemployment level in Boston is still extremely low. I'm betting that thing DO slow down, and all those people that were making a living building houses, selling mortgages and selling homes feel the first pinch. Around the middle of 2007, the unemployment level in Boston will start to creep up.

Then the clock starts to tick. We'll start to see things fall apart in 2009. That's a long time. We made the decision to leave Boston, and we can always come back later (as long as we can still get jobs)!

[sans boston]

How long do you think most people are willing to wait?

[Sarum80]

Personally I will start looking hard in the late summer of 2007 looking to buy sometime in the Fall.

[leaving boston]

Some very well educated people: and there are a lot of them in Boston, follow the belief that Real Estate is a safe investment and in the long-run it holds its value. I don't understand why this is such a dominant perception. Historical evidence points to the opposite: from 1987 to 1993, Boston real estate values collapsed, and a lot of people who bought at the peak were bankrupted.

My wife would argue, that since Boston has some of the best and brightest, that they are better prepared for economic swings: they save more, they can find jobs faster. The reason that Boston's economy is doing so well, is because we have a ton of pharmaceutical companies out there and this is the next Silicon Valley (or Molecular Alley).

Do you think the recession in 1987 was the shift in economies from manufacturing to high-tech and this is the new economy - forget the wait, this bubble is here to stay?
_________________
every day there's a bubble waiting to pop
every day there's a bubble waiting to form
all you have to do is find where it is

[john p]

If you have to buy in a particular town you have to deal with the microclimate as well as the macro. If you don't have to sell something, you're in the best possible position. Interest rates were climbing at the beginning of this years Spring selling season so it was a motivating factor for the last of the buyers that thought that the market was going to climb further, or at least the interest was going to make the affordability climb higher. Interest rates have dipped and stabilized a bit but the risk of selling to a buyer with a contingency to sell their own home got a lot riskier.

If you wait too long and the heard of buyers come back you may loose an opportunity. If you want to buy, I would lowball aggressively, and frequently. I have seen house prices drop significantly all over. Some towns are incredibly overpriced and way past their prime. Look at as many towns all around your target area as well as homes above and below your price range so you can gain confidence in recognizing a good deal. Remember, a desperate seller among several other desperate sellers could be willing to deal because there are no other buyers that you have to compete with. If you want to be in the game, low ball hard, otherwise wait it out. If you don't need to sell something, I think you can get an average of 6 months of a sellers current mortgage more than someone with a contingency. This will also depend on the sellers ablity to carry two mortgages.

Psychologically, don't get emotionally attached to a particular property, be a stone cold hunter and stay detached emotionally until the P&S is signed. Lastly, don't be a jerk, people may bend, but they are less likely to do it for a jerk.

[leaving boston]

The Wall Street Journal says economists are in a split whether we're at a bottom or somewhere in the middle.

I would agree with both: in some places, and in some conditions we're at the bottom, and some cases, we're going to get whacked even worse. It all depends on what you're buying and where. If you're looking for a condo in Boston, you might be at the edge of a huge chasm, before you get to the bottom. There's massive over-supply and growing inventories.

On the otherhand, if you're looking at single family homes in Arlington, it might be very different. The bottom my be like standing at the edge of a curb.

The statistics are misleading: it's not clear whether more people are buying single family homes, at higher prices and condo prices are crashing. This is the mystery of the law of averages, the average prices may show modest declines while there are market segments that are moving in opposite directions: one might rise, while the other side is crashing.

Do you think the housing market is driven by fear or greed. Buying for fear of rising prices (the bottom is here and tomorrow it will rise), or selling for fear of falling prices.

[Guest]

If you look YTD 2005 compared to YTD 2006 median single family home prices in Arlington you see $494,000 to $482,500, only a 2.33% decrease, according to this week's Banker & Tradesman (Warren Group) records. The Oct. 05 to Oct. 06 stats that show a 19.73% decrease are misleading because the median is calculated only from homes that sold in Oct. 05 versus homes that actually sold in Oct. 06.