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Boston & Urban Suburban Condo Market; in good shape!
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Tue Jun 19, 2007 2:13 pm GMT    Post subject: Reply with quote

Who are the real “superstars" here in Massachusetts?

Like Admin, I think using the year 2000, an anomaly year as a base anchor year will completely distort the norm. It's like measuring average rainfall and wind while sampling a hurricane.

I read this report, the "Superstar Cities". I think its method is ok to follow. It simply outlines a model formula, it runs a simulation to demonstrate how the black box works, and then it offers explanations and offers a few statistics to validate it.

What I would have liked to see is their formula and identifies each variable and instead of simulating a fantasy city, Slobovia, with 100,000 residents, I would like to see them take each variable in the formula and identify a real city and plug in real numbers and footnote the sources. Not a plug in for a data at the year 2000, and another one in the year 2005, or from some unreliable source. This is a "flying machine" design that never has to be tested. It looks like a Buck Rogers machine so it wow's those that don't fire up the engine. I want to see this gizmo do what it say's or otherwise it's a waste of ink. Not that I've been too conservative with print.... huh, huhhh huhhh.

I think what this report says is that if you make a good sub sandwich, you'll have a line of customers to buy them. I think it also states that you can even charge a premium if you’ve got a better tasting subs. What it recognizes is that when this "superstar" city runs out of land, the property value goes up. They write in a way that even though they are stating the obvious, you get the feeling that it takes a bit of time to ground their language to fundamental common sense and colloquial speech.

This report gets at the early growth and growth stages. What it fails to identify is the late growth and decline stages in the "product lifecycle". Look at all the "Gold Rush" towns of the Old West that died off. What would have been the output on their formulas?

Who this report is great for are the service industries and parasites. Think about Realtors. A realtor in Cincinnati shows houses and condos just like in Boston. The Cincinnati realtor get's half of the commission that a Boston Realtor gets same work. Because the Realtor in Boston is feeding off of a better "Host", it gets more for essentially the same service. The delusion that these folks get are like the ones of the overweight sports fan who paints his face and truly gets a feeling of empowerment when his sports team dominates. The fan connects his identity to the ones actually competing. Believe me, I personally am not above this, and I'd spend much less time on this site if I'd finally get some competition in my Fantasy Baseball League. So, again, I ask, who are the real "superstars"? Why haven't we adjusted our compensation to some industries to align with the buoyancy created by the true superstars?

I'll offer some "growth" concepts from my industry. We break down construction into construction types going from less restrictive (wood frame) to more restrictive (concrete frame). Each building system, whether it is a combination of steel trusses, steel frames, reinforced concrete, etc. all offer different performance criteria depending on the property of the materials and the configuration of the materials. If you're building a structure of say 5 stories, 50,000 square feet, you would choose a certain system. If the building was 50 stories you would have more variables to need to consider, i.e. base shear (which is like an earthquake laterally pulling like pulling a table cloth and knocking over a vase on the table), you need to consider drift, overturning, etc. What was wrong with the "Superstar Cities" report was that it didn't graduate variables and reconstruct the formulas as the city progressed other than recognizing that land costs will go up when the land runs out. What’s the upper limit is what we’re concerned with here in Boston, and finding that new frontier to explode into as well.

Attached is a formula for shift-share analysis. In order to grow faster than other areas you need to do three things, get other areas to give you money, take money from other areas, and to be efficient with your use of the money. In the "Superstar Cities" it doesn't talk about the players that put the actual points on the scoreboard. The question is what is going to put points on the scoreboard for Boston and who's going to give us money or who can we take money from and for how long?

Keep in mind how WalMart came at us, from the rural in. Taking your eye off of any front and claiming that you're a superstar is the one tell sign that you're not. Superstars stay hungry and competitive.

http://www.answers.com/topic/shift-share-analysis?cat=technology
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Condo



Joined: 28 Sep 2006
Posts: 50
Location: Boston

PostPosted: Tue Jun 19, 2007 3:00 pm GMT    Post subject: Reply with quote

This is interesting... globally, Boston not even in the top 50 (Thankfully!). A Cost of living survey, including housing. However this may loosely suggest, on a larger scale, "we" are not so out of whack .....

http://www.mercerhr.com/summary.jhtml;jsessionid=E0BPE5DLUBE3MCTGOUFCIIQKMZ0QUJLW?idContent=1095320
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admin
Site Admin


Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Tue Jun 19, 2007 4:39 pm GMT    Post subject: Reply with quote

Condo wrote:
This is interesting... globally, Boston not even in the top 50 (Thankfully!). A Cost of living survey, including housing. However this may loosely suggest, on a larger scale, "we" are not so out of whack .....

The housing that they include appears to be rental housing, not the cost to purchase in these cities. At least that is what was shown in the sample reports that I looked at on their site - I'm assuming that this ranking uses the same methodology since I didn't see specific details that would indicate otherwise. That has been the contention of this site all along, that renting in Boston is not a bad deal.

- admin
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Guest






PostPosted: Tue Jun 19, 2007 7:08 pm GMT    Post subject: Reply with quote

admin wrote:
Condo wrote:
This is interesting... globally, Boston not even in the top 50 (Thankfully!). A Cost of living survey, including housing. However this may loosely suggest, on a larger scale, "we" are not so out of whack .....

The housing that they include appears to be rental housing, not the cost to purchase in these cities. At least that is what was shown in the sample reports that I looked at on their site - I'm assuming that this ranking uses the same methodology since I didn't see specific details that would indicate otherwise. That has been the contention of this site all along, that renting in Boston is not a bad deal.

- admin


Kills me when I see "investment property" mentioned in listings, the stated rental income never comes close to covering the mortgage...
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Guest





PostPosted: Wed Jun 20, 2007 1:20 pm GMT    Post subject: Reply with quote

admin wrote:
That has been the contention of this site all along, that renting in Boston is not a bad deal.

- admin



Renting in Boston is a fabulous deal and I'm kind of shocked more people don't do it. I live in a 2 bedroom unit in the Back Bay, fully renovated, 800sqft, central air, in-unit laundry, gas cooking, fireplace and I pay $1900/mo. Now admittedly that's a lot of money to pay in rent for less than 1000 square feet, but a mortgage payment on a comparable unit would cost FAR more than what I'm paying, tax advantages included. I'm living better than a lot of my friends who are being crushed under $3500/mo mortgage payments + property taxes + HOA fees + insurance. I adore living here in Boston and I do plan to buy eventually, but for now I'm plowing all the money I'm saving by renting into a diversified portfolio of investments, which is generating far more than any increase in real estate prices could these days.

Is it "money down the drain"? Well, you gotta live somewhere, and if I can live where I do for a huge discount and make money on the difference, why buy?
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Jun 20, 2007 3:40 pm GMT    Post subject: Reply with quote

Just keep your finger on the pulse, things can change. I graduated college in 1992 and lived with a couple of girls (so I wasn't in a rush to change the situation). It had its good days and bad days, I digress... Anyway, I had the choice to either buy a condo or get an MBA. I chose the MBA because my salary would almost double and house prices stayed pretty constant the 5 or 6 years prior. I looked at it like, hey, I'll just do a 25 year mortgage instead of a 30 year mortgage and with the higher income, hell I'll do a 15 year note. I graduated my MBA right around the big stock market bubble and there were no big job openings that I had planned for. The best part was that now that I had the MBA debt, I was more bonded and couldn't pay as much for a mortgage. The market for my industry became turbulent so I decided to rent longer. Then house prices started to get out of hand and my cohort was getting all caught up in "better buy now before you get priced out". The MBA taught me two things: first, that I was a moron for not buying the condo when I could, and second that there were no fundamentals to support the prices.

Anyway everybody has their macro, meso, and micro financial plans. Don't put your head in the sand like I did, keep your finger on the pulse because if you don't you'll wake up to a completely different business cycle and you might have to wait it out like I did. I'm not saying to buy right now, I'm just saying even though it might not seem like a good time to buy, if your head is in the sand and you wait until your supermarket bag boy tells you, you might have missed the sweet spot.
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Condo



Joined: 28 Sep 2006
Posts: 50
Location: Boston

PostPosted: Wed Jun 27, 2007 2:54 pm GMT    Post subject: Reply with quote

Quote:
Your numbers are not even close. Data taken from the registry of deeds:

Jan 1 - June 8 for 2005/2007

I really want to get back to this, as I feel it is extremely important to identify any disconnect, and try to decipher why data is being reported differently. Please share your methodology in order to identify the discrepancy. I can also share the most up to date numbers. Thank you very much for your interest in this data, I want to do all possible to get it right... which I don't feel is the overall attitude in the press.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Aug 01, 2007 5:14 pm GMT    Post subject: Reply with quote

http://www.boston.com/realestate/news/articles/2007/07/26/amid_slump_tony_condos_in_city_shine/

http://condodomain.com/

I wonder what's going on now with the Downtown Condo trend? I'd imagine that condo's aren't quite as married to the seasonal cycles as single family homes.

I'm interested in the segments of buyers and sellers and what are increasing and decreasing.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Aug 01, 2007 7:02 pm GMT    Post subject: Reply with quote

http://business.bostonherald.com/businessNews/view.bg?articleid=1013440&srvc=biz

http://www.boston.com/realestate/luxuryliving/articles/2006/10/29/reaching_for_the_sky_1162089485/

"We think residential prices are going to explode with a vengeance," said Robert Epstein, chief executive of the Abbey Group, October 29, 2006
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Mike



Joined: 01 Nov 2006
Posts: 28

PostPosted: Thu Aug 02, 2007 3:07 pm GMT    Post subject: Reply with quote

john p wrote:
http://business.bostonherald.com/businessNews/view.bg?articleid=1013440&srvc=biz

http://www.boston.com/realestate/luxuryliving/articles/2006/10/29/reaching_for_the_sky_1162089485/

"We think residential prices are going to explode with a vengeance," said Robert Epstein, chief executive of the Abbey Group, October 29, 2006


I guess he was right. I'm thinking it's the same demographic as the buyers in NYC and all the other cities with finance jobs. It's all the i-banker/hedge fund yuppies who got huge wall street bonuses and decided to buy a posh pad in the city. The empty-nesters in the suburbs also see this and think they have to buy a condo now before prices skyrocket even more. Once the Dow nose-dives to 12,000 you'll see the downtown condo market cooling off.
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tt



Joined: 02 May 2007
Posts: 19

PostPosted: Fri Aug 03, 2007 8:43 pm GMT    Post subject: Reply with quote

Mike wrote:
john p wrote:
http://business.bostonherald.com/businessNews/view.bg?articleid=1013440&srvc=biz

http://www.boston.com/realestate/luxuryliving/articles/2006/10/29/reaching_for_the_sky_1162089485/

"We think residential prices are going to explode with a vengeance," said Robert Epstein, chief executive of the Abbey Group, October 29, 2006


I guess he was right. I'm thinking it's the same demographic as the buyers in NYC and all the other cities with finance jobs. It's all the i-banker/hedge fund yuppies who got huge wall street bonuses and decided to buy a posh pad in the city. The empty-nesters in the suburbs also see this and think they have to buy a condo now before prices skyrocket even more. Once the Dow nose-dives to 12,000 you'll see the downtown condo market cooling off.


They ain't getting the big bonuses this Xmas. Hedge funds are failing left and right, heck Bears Stearns maybe in trouble....
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Harry
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PostPosted: Sat Aug 11, 2007 6:00 am GMT    Post subject: Reply with quote

Condo is strangely silent. What's the matter, Condo? Cat got your tongue?
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Sat Aug 11, 2007 3:13 pm GMT    Post subject: Reply with quote

I don't think the guy was being dishonest; I think he has the Castle in the Clouds perspective, you know seeing the sunshine over the cloud cover. My guess is that the guy is really successful and his clients are as well (maybe buoyed by the credit bubble, who knows). David Learah or whatever his name is the past NAR guy was from Virginia, which is seeing some sustainable, fundamental growth with much less of a bubble concern than the rest of the country.

What I find very interesting about this asset class is that it is more complex than one perspective can explain, so I actually embrace other viewpoints provided that they are honest readings.

Condo was one of the only ones that reported a bump in the early year for the downtown market and he did cite his sources, so it's hard to frame him as being shady. He might have an agenda, but he didn't seem to manufacture data. Further, we did in fact find out that what he said was the case. It defined logic at the time and it may be short lived, but it was true, the specimin doesn't lie. The question is will the high end siphon the lower end up? or is their an air gap between the high end and the low end acting like a back low preventer to keep the high end from backsliding to the low end?

http://en.wikipedia.org/wiki/Siphon

http://en.wikipedia.org/wiki/Backflow_prevention_device

In this diagram, again, that air gap where you have the highest point in the pipe, the air gap keeps the high water flow backwards to the lower level. If the slope straightens out, it will slide backwards. I see it like if the cluster of sales drift in a manner which the scatter diagram straightens out, there might be a backslide. I see Condo’s perspective as one where the higher end will pump up/siphon the lower. In 1919 in the North End, we had a great molasses spill. They had a big tank of it on the top of a building and the tank broke and slowly spilled onto the neighborhood, see below. The “stickiness” of the property of the material is like the financial stability of the sellers, if they are desperate, they will flow downward more quickly, but the overall weight of the high end and the airspace between that and the median makes the high end a bit risky in my view. To the ultra rich, a million dollars might be like a thousand to me so it’s relative….

The viscosity of the material will determine the duration of the correction. http://images.google.com/ ...truncated...





I have a very good friend who made a lot of money in the mortgage business and I remember last summer going for a ride in his yaught and telling him that he ought to prepare himself to have the ability to reel back in his operation so he could keep the money he acquired and not to drink too much of the Kool Aid. Prior to that he was helping people refinance for a lower number, no harm, no foul. My friend never resorted to any immoral practices, so when I hear of people who do, it is like someone is taking away from my friend who is trying to play fair.

I honestly want to know his perspective. Again, most of his posts were reports of what happened and not too much on forecasts. He cited his source and we did find that the higher end did in fact see what he reported.

Editor's Note: This post was edited to abbreviate a URL which was widening the page due to the way that the forum software lays out posts. No other changes have been made, and the URL still points to the original destination - only its display has been shortened.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Sat Aug 11, 2007 7:03 pm GMT    Post subject: Reply with quote

You might not be hearing from him because the findings aren't aligning with his agenda. Who knows.
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Harry
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PostPosted: Sun Aug 12, 2007 5:09 am GMT    Post subject: Reply with quote

john p wrote:
You might not be hearing from him because the findings aren't aligning with his agenda. Who knows.


I said he was cherry picking and I was right. People like condo profited from this bubble, now they suffer their inevitable fall into the abyss.

I am not at all tolerant or forgiving of sleazy salesmen.
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