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"Immune Towns" - will they ever drop?
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jad
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PostPosted: Wed Feb 04, 2009 3:07 pm GMT    Post subject: Reply with quote

I "saved" three homes that came on the market in Newton last week. Two of the three are already under agreement.

MLS 70868941 (pending)
MLS 70869191 (pending)
MLS 70869034 (not pending)

With regards to who can pay $600,00-$800,000 for a home in Newton, I personally know at least two couples who are likely to buy in Newton in the next 6 months. Both are dual income families, where one spouse in an attorney. They have been renting and saving for several years and have incomes over $350,000. I personally don't think it's a smart move, but they have the money, savings and can likely survive even if one of the two looses their job. These two couples and thousands of others in Boston are the people with the means to buy in Newton, even at these levels ($600-$900k). Are a lot of lawyers, fund managers and consultants scared to buy? Yes, but there are still thousands who are not.
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admin
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PostPosted: Wed Feb 04, 2009 3:30 pm GMT    Post subject: Reply with quote

jad wrote:

The Warren group, which gets their data from Registry of Deeds, is much more accurate than Trulia.


Yes, The Warren Group gets their data from the Registry of Deeds, but they are not equivalent. Don't they filter it to remove foreclosures and some other things? I know they filter it like that for the stats we see in the news every month. I'm not sure if the same is true of their Town Stats app, but I am guessing it is because they sell separate foreclosure data. Trulia might actually be more accurate in that case. Is the Trulia data not from the Registry of Deeds? That really is a glaring discrepancy and accounting for foreclosures might explain it.

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jad
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PostPosted: Wed Feb 04, 2009 3:47 pm GMT    Post subject: Reply with quote

I have no idea where Trulia get their information, but I doubt the difference is due to foreclosures. According to masslandrecords.com there were only three foreclosures in Weston in all of 2008. In cities like Boston, Brockton and Revere you may see that type of difference because of foreclosures, but not in Weston.

Anyway, I believe the Warren Group actually includes foreclosures (whereas the MAR excludes them) so you would expect TWG to be lower than MAR.
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admin
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PostPosted: Wed Feb 04, 2009 3:50 pm GMT    Post subject: Reply with quote

jad wrote:

Anyway, I believe the Warren Group actually includes foreclosures (whereas the MAR excludes them) so you would expect TWG to be lower than MAR.


The Warren Group used to include foreclosures, but this is no longer the case. They stopped about a year ago (I think).

jad wrote:

With regards to who can pay $600,00-$800,000 for a home in Newton, I personally know at least two couples who are likely to buy in Newton in the next 6 months. Both are dual income families, where one spouse in an attorney. They have been renting and saving for several years and have incomes over $350,000. I personally don't think it's a smart move, but they have the money, savings and can likely survive even if one of the two looses their job. These two couples and thousands of others in Boston are the people with the means to buy in Newton, even at these levels ($600-$900k). Are a lot of lawyers, fund managers and consultants scared to buy? Yes, but there are still thousands who are not.


Check out the income distribution for Newton in 2007 about a quarter of a way down this page and also the most common occupations charts:

http://www.city-data.com/city/Newton-Massachusetts.html

Lawyers and physicians make up about 6% of the male population each (neither registers for the female population). Eyeballing the income distribution graph, households earning $200K+ made up around a quarter of the population. Can a minority of that size really prop up the prices for all the other houses there? They are almost certainly a shrinking minority too, given the current economic climate.

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Boston ITer
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PostPosted: Wed Feb 04, 2009 3:52 pm GMT    Post subject: Reply with quote

There's something really strange about the immune towns. Back in the day, 70s/80s, couples would move to these places because of the high schools being of national elite caliber: Lincoln-Sudbury, Lexington, Newton South/North, Brookline, etc, whereas a Boston city resident would have to compete in get into Boston Latin or for a NYer, the Bronx Science/Stuyvesant magnet schools.

Then, an actual teacher, from immune town X, told me something and that's that, the AP { Advanced Placement } classes teach themselves, one really doesn't have to prep the lectures for them. And that got me thinking, if the students are basically just reading the books and prepping for the national exams, then what's the value of spending a mint to live in those towns? Couldn't a parent in any town get their college prep child, an online tutor and do the same thing at half price? And that's when it dawned on me that a lot of new parents are living in the past. They think that there's an intrinsic value for their children to be surrounded by offsprings of doctors and lawyers. Well, if they can provide internships and subsequent jobs then I'd agree, however, I don't suspect things will work as smoothly as that, given the fact that many of the Boston area mainstay corps are hurting.
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john p



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PostPosted: Wed Feb 04, 2009 4:16 pm GMT    Post subject: Reply with quote

I think it is more than that, it's kind of a cultural thing.

I was a bit of an adreneline junkie as a kid and I was hanging out with the wrong kids. My father sent me to a Catholic prep h.s. I protested and said that there weren't any girls and I wasn't going to go, he proceeded to grab me by the ears and slam my head into the wall until I reconsidered. (Old school upbringing). I remember my second day of class and when the teacher asked me in front of the class why I didn't do my homework and I answered, "I didn't feel like it ", in my old town, I would have gotten a laugh from the rest of the class, in this class they all looked at me like I was a loser.

I remember going with my father to the Revolutionary War battle reinactment in Lexington. We were standing behind some local kids (seemed like 14-15 year olds) from Lexington and they were all wearing those college sweatshirts with like "Brown" on them. What I found was odd was that these kids were totally programmed to focus on the SAT's and college applications and were totally geared into it. When I was that age I was throwing keg parties in the woods and thinking about having fun. Although my theory is that "It is better to waste one's youth than to do nothing with it", I think that there is value in a community and sometimes it takes a village to raise a child. The flip side is that I think I got more independence and I learned about business by collecting dollars from people that signed up for a scavenger hunt, and I leared about negotiation by breaking up fights and making people shake hands.

The part of your point that resonates with me is that because information is so accessible now, there is a global village and you can dial into that so the premium of that "Immune Town" might lose just a tad. This conversation reminds me of the thread about the whole MIT courseware.

This is a very good thread, I wonder how many first time buyers are trying to get into these towns? I think that there are a lot of people programmed to compete to colleges with longstanding reputations, just the demand will provide the long term competitiveness. The same is true for the longstanding reputations of these towns. It's like the march of the penguins, they go to where they're programmed. Again, I think raising your kid to be a professional robot will put them ahead of the vast majority, but because information is so accessible, they need to be critical and creative and have some room to make decisions on their own and feel the gravity of their own failures. Moreover, like Admin, I think that these "Immune Towns" did inflate with the bubble and to say that a certain percentage of their value isn't filled with that hot air might be overstating the case.
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Boston ITer
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PostPosted: Wed Feb 04, 2009 5:59 pm GMT    Post subject: Reply with quote

Quote:
they go to where they're programmed. Again, I think raising your kid to be a professional robot will put them ahead of the vast majority, but because information is so accessible, they need to be critical and creative and have some room to make decisions on their own and feel the gravity of their own failures.


Programming is useful when the old paradigm was in effect. In other words, 25 years ago, that kid at "Immune" h.s. might have been ok being programmed to compete against the same crowd to get into let's say Cornell->to->Harvey Mudd, and if less than successful, perhaps attending an ordinary private/public college. And the reason for that was that any industrious person could get co-ops to a Putnam or Proctor & Gamble and find themselves with good work at the age of 22/23.

Today, being creative and assertive is really the only way to get ahead. Attending "Immune" h.s. and not being in the top 5% may still get one into a Carnegie-Mellon but it won't get one the near full scholarship which requires being near the top of the class. This now totally throws a monkey wrench into a family who'd thought that "Immune" h.s. was more than just a *breeding* ground of future Yuppies but more a placement/scholarship center since they'll end up borrowing six figure for college whereas having lived in upstate Maine, using the net for tutoring, could have gotten their kid a near full scholarship to Carnegie-Mellon.
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jad
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PostPosted: Wed Feb 04, 2009 6:13 pm GMT    Post subject: Reply with quote

JohnP: I agree with most everything you said. I would also add that most of these towns have a lot going for them in addition to schools. Most have great access to Boston and other major job centers, a nice housing stock, yards, nice town centers, etc.

In Weston for example, most places are on large lots, yet you are right at the intersection of 128 and the Mass Pike. They also have a commuter rail stop that gets you to the Back Bay in around 20 minutes. The housing stock is very good.

Newton has several nice village centers, you can walk to good restaurants, shopping and grocery. You can hop on the Pike or take the Green Line or one of the commuter rail stops.

Winchester is 8 miles from downtown on 93, has two commuter rail stops to North Station in less than 20 minutes, a few thousand acres of parkland with the middlesex fells, a nice downtown, etc.
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john p



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PostPosted: Wed Feb 04, 2009 9:03 pm GMT    Post subject: Reply with quote

Yes, the quality of life afforded by the towns you mentioned, the peace and quiet near the city is great.

For me though, I moved from Waltham to a little town on the south shore near Plymouth but on the commuter rail. Now from Waltham, I would jump on the Pike, sit in traffic and drive to the parking lot near the Moakley Courthouse (the "Mud Lot"), and then walk about 15 minutes to the office. My other option was to bus it and then walk about 12 minutes to work. Point is, because of traffic, I can get to my office quicker being in a Zone 7 Commuter Rail than someone who lives in some sections of Cambridge because they have a street light at every intersection. The wear and tear of stopping and going and people walking out in front of your car randomly or turning without a directional etc. was sort of a pain in the ass. I use my train time to catch up on reading, I have a bunch of friends that I've met and we go out for beers and shoot the breeze. My wife's mother even gave me a little thing to watch movies on the ride.

I'm just saying, if you like Weston you ought to check out Plympton or Halifax. I have seen certain "sleeper" towns turn into really upscale bedroom communities. I grew up in Lynnfield and that wasn't a really big deal but as the surburban sprawl it became exclusive because of its highway access and that there was a big marsh between the town and the highway, which insulated it from lots of strip malls and pass through commercial traffic. Hopkinton became a really nice bedroom community as did Carlslile, Sherborn, and now say Medfield. These were small farm type towns that had people move there because it was peaceful and quiet and people wanted to raise their kids there. I actually prefer my town's location to a Hopkinton because I can get to the ocean a lot faster. People who are "programmed" tend not to be the "early adapters" and because of it they lose in certain value propositions. You kind of have to be independent and creative to see potential. The flip side however, is that if you raise your kid in Weston, they'll be friendly with CEO's, fund managers, professional atheletes, etc. and with that comes opportunities. I think when they go bad is when they're filled with "Me too's" or people that want to keep up with the Jones's. I think that is where the "Yuppie" tag came from. To be perfectly honest, I spent the first half of the Superbowl in Wellesley and the second half in Weston so I'd be lying to say that there aren't many totally cool people anywhere you go.

Lastly, as far as value goes, it is kind of a personal thing. For me, to get back to neutral, I needed complete silence. I hear absolutely nothing at night where I live. Others, like the Blues Brothers need the sound of the train to lull them to sleep...

Oh, to the "It makes a great desert topping" poster, you made me wrack my brain for a while, but it was an old Saturday Night Live quote right?

Anyway, when we used to go to the dog park in West Newton and we told them that we were going to move down to the South Shore, they thought we were crazy because for them many of the things you mentioned were how they kept score as well. When we went to the dog park in the South Shore, the people couldn't take living in a West Newton because it was too much friction, visual noise, and stop and go and not enough free flow, farms and pretty natural scenery. I think value is based on what an individual thinks too. I mean you could get a steal on a house in Plympton and really have your heart in the South End, and hell, maybe it would have made you happier to live in a smaller place where you could go to the Garden of Eden and go to a pajama brunch on a sunday. I do tell you that I don't envy people in the city during a snow storm...
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PostPosted: Wed Feb 04, 2009 9:32 pm GMT    Post subject: Reply with quote

JohnP: great comments once again. I'm actually not considering Newton or Weston at all, I just provided those as examples because others have. I love the south shore, but the SE expressway makes my blood boil. I would move to the south shore in a second, buy my wife and I both work long hours at times so the commuter rail wouldn't work on many days and I just can't stand 93 south. Even on a Sunday afternoon it can be a parking lot.

Lynnfield is actually a town I've considered quite a bit, although I really wish it had rail access. Prices in Lynnfield actually appear to be dropping much more than most of the cities we discussed earlier in the thread (I actually do see homes selling for $100k less than 2-3 years ago). My time on 93 north of the city has generally be better than south of the city, but I'm sure it's still disaster at rush hour. Therefore, I'm leaning towards Winchester at the moment since it is much less hectic than Newton, has a lot of green space, but still has quick rail and highway access to downtown. I would love any additional thoughts you have on Lynnfield / Reading. How long would it take to get downtown from Lynnfield at 7:00 or 7:30 AM?
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john p



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PostPosted: Wed Feb 04, 2009 9:35 pm GMT    Post subject: Reply with quote

$350k in Halifax:

http://www.realtor.com/realestateandhomes-detail/Halifax_MA_02338_1103673607

$489k in Weston:

http://www.realtor.com/realestateandhomes-detail/96-Jericho-Road_Weston_MA_02493_1097123617

Now look to the right, this little house is like an in-law apartment and is attached to another house...

http://www.realtor.com/realestateandhomes-detail/95-Jericho-Road_Weston_MA_02493_1103571915
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admin
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PostPosted: Wed Feb 04, 2009 9:40 pm GMT    Post subject: Reply with quote

john p wrote:

Now look to the right, this little house is like an in-law apartment and is attached to another house...


My first thought was of the Hobbit's house in Lord of the Rings.

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jad
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PostPosted: Wed Feb 04, 2009 9:54 pm GMT    Post subject: Reply with quote

That last house in Weston is hilarious! However...

Halifax, MA to my office (John Hancock building): 38 miles - 57 min without traffic, probably close to 2 hours at rush hour. Or 45 minutes on train to South Station, then connect to red line, then connect to orange line...yikes!

Weston, MA: 15 miles, 23 minutes. Or 20 minutes via commuter rail to back bay station.
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john_ops
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PostPosted: Wed Feb 04, 2009 10:51 pm GMT    Post subject: immune towns, risk aversion, and parental $$$ Reply with quote

samz wrote:
The really bad news, IMHO, is that if prices were to drop precipitously in towns like Brookline, Lexington, etc., it would probably signal a major economic depression, which isn't good for anyone.


As someone who does live in Brookline, who is sitting on 3 years of expenses in liquid savings, who has a 30 year fixed, who has $300k of HH income (and saves a lot of it), who bought a condo for $750k, who put down 20%, and who has a pretty decent amount of job security, I sure as heck hope my neighbors are as risk averse as I am, and that they sit this one out as well as I plan to. Maybe being so risk averse I shouldn't have bought a few years back, but frankly I didn't want to live in the rental stock that I found available to me. That said, boy am I glad I didn't buy the $1M "starter house" that my RE agent wanted me to.

I think two interesting things going on:

1) "immune towns" near Boston seem to me to have an inordinate % of people whose parents essentially buy them their houses. I meet people all the time who live in ~$2M houses, and who work for non-profits. They're not covering their mortgage on their salary, but if they don't have a mortgage they can live nice fairly modest lives in moderate luxury. Assuming their parents or grandparents handed them a check for $1.5M. I know that this can't be everyone, but I think it's a measurable minority (and my RE agent corroborates that in her tx'ns in this price range, it's frequently young people without impressive jobs who pay in cash).

2) I agree with point above that RE turns over very very slowly in some of these towns, and hence lots of people have ginormous amounts of equity. It'd be nice to go to the registry office and check the # of deeds by age, but that strikes me as hard. Wouldn't it be easier to check (# txn's/year) / (# total units) over time? Can these time series be obtained? It'd be interesting to check across towns and over time.

See ya,
J
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PostPosted: Wed Feb 04, 2009 11:01 pm GMT    Post subject: Reply with quote

Quote:
"immune towns" near Boston seem to me to have an inordinate % of people whose parents essentially buy them their houses.


This, I've seen as well and in effect, is a significant reason why those towns are stickier than others.

My main contrary argument is for those new, younger couples who believe that by buying in Brookline, it gives their children a competitive advantage by attending Brookline high or if, across the border, Newton South/North.
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