bostonbubble.com

balor123 · Joined: 08 Mar 2008 Posts: 1204

I was just thinking today that my apartment complex was builtin ~2004, at a time when home prices dwarfed rents. I wonder why the company that built the complex would choose to rent the units rather than sell off the units as condos. Is it because the city has some say in the matter?

admin · Posted: Fri Jan 09, 2009 5:24 pm GMT Post subject:

Good question. My first guess would also have been that the city had something to do with it. They may have had to have plans approved by the city well before 2004 when the discrepancy wasn't so glaring. Maybe the investors were also cognizant of the bubble and looking to reduce the liquidity risk that would come once sales slowed and sentiment began to reverse.

- admin

showgunx · Joined: 14 Jul 2005 Posts: 60

Greed is the answer. It is like you are holding a overpriced stock that pay small divident. You are so greedy and keep thinking the price will goes up further in the future until forever. So you are holding and holding and keep telling yourself if you sell, you will never be able to buy back the same amount of stock with the selling price. And one day, the market crashed...

Rental Lease · Joined: 28 Jan 2009 Posts: 21

Tisk tisk... always assuming the worst in people.
People invest in real estate with all sorts of goals; sometimes they want a quick payout, or sometimes they want a monthly cash flow. Perhaps the developers were more interested in receiving a consistent monthly income from the the rental building than trying to churn a quick(er) profit.
Either way, they're certainly not selling any time soon.
_________________
Brian

bcme · Guest

I went to 6 open houses this weekend in Beacon Hill & North End and the difference between purchasing any of the units of renting a similiar apartment was thousands of dollars per month.

For example one unit went on the market for $850,000 because the two rental tennants, who were paying a total of $3,400 per month, both lost their jobs. The HOA fee was $729 per month of taxes were $8,205 per year. The total carrying cost would have been roughly $6,000 per month after a $100K+ downpayment. Why does the seller think anyone in the right mind would pay $6,000 per month for a depreciating asset when the unit was recently being rented for $3,400?

The fact that their old tennants lost their jobs in a poor economy and they still think someone is going to swoop in and over pay is just the icing on the cake of how delusional most sellers are when pricing their properties.

jad · Guest

bcme, can you post the MLS numbers for these open houses you went to? It will be interesting to track their status in the next few months.

Guest · Posted: Thu Feb 12, 2009 8:51 pm GMT Post subject:

BCME-- that is the perfect example of the market being disconnected with fundementals... I can see the value (albeit sentimental) of owning a home, with a yard, etc... but buying a condo in a boston apartment, that is the exact same as the one next to you? and pay a privilage of a a few $1000 per month to due so is just asanine... you can get a hell of a lot in boston for $4000k per month but try buying anything close (when you include ass. fee and taxes)...