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When will it burst in Boston
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jbw
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PostPosted: Sun May 27, 2007 8:32 pm GMT    Post subject: Reply with quote

As far as the market correction being slow. Housing market corrections are generally through inflation because people would rather hold on to their houses instead of sell for less than they thought their house was worth when they took out the equity loan. People have not internalized the time value of money, which is what leads to the false belief in the market always rising. In real terms, most years homes loose value, not gain, and then a few years of good gains occur and people forget all the real value loses since they did not occur in nominal terms.

Good news is that inflation should be on the rise given the nations federal and consumer debt. Running a deficit and dropping interest rates is the same as printing money, which should lead to inflation. The current housing situation will handcuff the Fed since they can't raise interest rates without taking out the housing market. As a result, the Fed is going to sit idly by as inflation rises. Thank you Alan Greenspan.
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PostPosted: Sun May 27, 2007 11:41 pm GMT    Post subject: Re: not really dropping in some MA towns lately Reply with quote

Anonymous wrote:
I've been watching a local market VERY closely since late last year, since I hope to buy soon (have to.... really need more room for the growing family!!)

Here is some local data... a town I'm watching vary carefully.
According to this there is not much drop going on in prices.
The inventory isn't building and DOM isn't increasing.

Disappointing to this bubble head Smile

================
All are medians

Hoses sold To 1799 sq ft
Sept –Oct 06 $278.37/sqft $344,000 saleprice 95% of assessment 11 houses
Nov-Dec 06 $251.26 $377,000 90% 6
Jan-Feb-Mar 07 $278.06 $421,800 93% 6
Apr-May 07 $277.42 $360,500 93% 4

1800-2599 sq ft
Sept –Oct 06 $230.11 $512,500 98% 8
Nov-Dec 06 $216.47 $471,250 96% 8
Jan-Feb 07 $231.05 $429,250 92% 8
Mar-Apr $214.89 $450,000 93% 10
May 07 $230.32 $560,000 96% 3

More than 2600 sqft
Sept –Oct 06 $218.09 $645,000 106% 7
Nov-Dec 06 $218.84 $688,000 93% 11
Jan-Feb 07 $229.42 $735,500 98% 7
Mar-Apr-May 07 $227.11 $642,000 105% 11


Acton is a tough place to figure. I have been researching towns at random finding a meltdown in most. I thought I would have a similar result with Acton, wrong. Another surprise was price paid, all of the above 600,000 dollar sales were at or slightly above assessment.

May stats for Acton:

-Total Sales : 20

-Above 600,000 : 6

- Zip inventory : 185 or 9.25 month supply at current rate


May Stats for Sharon:

-Total Sales : 10

-Above 600,000 : 6

- Zip inventory : 157 or 15.7 month supply at current rate


May Stats for Sherborn:

-Total Sales : 2

-Above 600,000 : 1

- Zip inventory : 87 or 43.5 month supply at current rate (it's picking up, there was only 1 sale in April)
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PostPosted: Mon May 28, 2007 1:37 am GMT    Post subject: Re: not really dropping in some MA towns lately Reply with quote

Anonymous wrote:


Acton is a tough place to figure. I have been researching towns at random finding a meltdown in most. I thought I would have a similar result with Acton, wrong. Another surprise was price paid, all of the above 600,000 dollar sales were at or slightly above assessment.


Yep. There was a handful of >$600k houses which sold for under assessment back in Feb... that was the last time that happened. The upper end in Acton is extremely sticky! It is really only the low end (<$420k <1700 sqft range) that is showing big signs of wear. The midrange ($600k<x<$420k) has almost no inventory and moves quickly as long as the owner is 'reasonable'. That indicates it is not a very bad market, in Acton Smile

One REA in Acton at an open house said she had a backlog of potential buyers (mostly from within Rt 128) who were looking to move up to Acton. She said (FWIW) many other agents have a similar trigger list and as soon as a midrange house comes to market those buyers come running.

Now, I *always* have a hard time believing RealtorsTM as I think they are one small rung away from used car dealers on the evolutionary scale, but what she said rings true. When I go to the first open house for a midrange property in Acton there's a caravan... and usually it is folks with their broker, not just alone, like they are really serious.

Anonymous wrote:

May stats for Acton:

-Total Sales : 20

-Above 600,000 : 6

- Zip inventory : 185 or 9.25 month supply at current rate


Where do you get your sales info? I only have 8 SFH sold in May and only 3 over $600k. I used to get info from Boston.com (Banker&Tradesman extracts) but that became unreliable over the last few months... I'd love to know of another source of data!
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon May 28, 2007 12:35 pm GMT    Post subject: Reply with quote

Are you looking at any other towns?
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PostPosted: Mon May 28, 2007 12:42 pm GMT    Post subject: Reply with quote

john p wrote:
Are you looking at any other towns?


If there is a town you would like me to breakdown let me know..

My methodology:

I use the Registry of Deeds at cambridgedeeds.com to determine sales . Select “Document Search” from the five search tabs at the top and select deed from the “Document Type” drop box. The results will show all deeds processed for the town and dates you select. The tedious part is eliminating the false sales (foreclosures, estate transfers, transfers to trusts) from the results. Look for dollar amounts and name changes to determine if it was an actual sale. Banks listed as grantee indicate foreclosure.

Here are the results for Sudbury , Month of May:

Total deeds returned from search; 29
Actual Sales; 14
10 over 600,000 dollars
Zip Realty inventory; 179 or 12.7 month supply
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BK- former Owner
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PostPosted: Mon May 28, 2007 1:56 pm GMT    Post subject: Guest - Housing Prices still bouyant at $600K Reply with quote

I'm not that surprised that the expensive homes - North of $500 K are still finding buyers who are happy to pay.

2006 was a Very Good year for Financial Services and Healthcare and many other Industries.

There is a general sense of economic euphoria with folks making $150K and more - inflation doesn't hurt as much when your making Three times the Median Income (as long as you don't have 4-5 children).

So, the errosion in the Real Estate market is happening at the lower levels $400K and below - where the buyers Salaries are more likely to be close to the Median Income.

Folks who can afford a $600K have lots of access to CASH- Stock market investments - wealthy inlaws - or a pile of cash they have been saving.

**Just my theory**
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon May 28, 2007 2:49 pm GMT    Post subject: Reply with quote

BK- my theory about the 500k to 650k homes is that when you line them all up they look like the typical comfortable sized house for the typical family. I think you will see homes in the 650k-800k range that aren't much different from the lower range. I think we may be seeing some of these overpriced homes backsliding into the 500k to 650k range. So the middle range home gets people coming in from both directions, people moving up and people downsizing. I honestly can't understand the differences along the line of the price strata between $500k to even $900k. I just can't justify it in my mind from a "what you get" perspective. I think this price range reflects the break down of buyers; sort of an array of who can afford this. Let me try again; words aren't my forte, seriously, no really seriously....

I think the array and price structure of available homes for sale (what you get) is incongruent with the array of affordability structure of current buyers (who can get them). I think just because someone can afford a home for $750k, if the house isn't that much greater than a home for $600k, why on earth should they consider it? Think of a "forced curve" on a test in High School. If everyone scores between 80 to 85; the 85 gets a 99 and the 80 gets a 60. What I'm saying is that the physical homes only have a 5 point difference, but the affordablity strata strings it out 39 points. All I'm saying is that be psyched that you got the 85, but don't pay 99 for it...

You guys are price hunters and I love it. I would love to hear what price points are soft and what towns they are soft in. Or more of where you see movement. The only critique I would add to your really great exercise is to actually take a look at the physical homes that are in the price ranges you are considering. Keep in mind that in around $600k, a local tax rate of 8 per thousand is cheaper by $20k or so than a town with a tax rate of 11 per thousand.

If Groton, Littleton, Westford, are out, how about Harvard, Medfield, Wayland, Sudbury? Don't take your eye off Concord, Weston, Lincoln, Dover; they do sometimes have deals, you have to move quick if they are real deals though... On the array of towns I still monitor I am astounded at the one or two homes that appear every 3 weeks or so that seem to be like $100k under the rest of the array. I guess some sellers just don't want to wait the 6 months to a year placing their home in the 2005 price structure and go to bed dreaming...

When you run your numbers and get your feel between 128/495 in between route 3 and a little south of route 20; crank a few degrees north and south to see what you get. Ashland, Hopkinton Medfield isn’t bad options at all. I'm a salty dog and looked between route 3 and 24. Between route 24 and route 95 may be great options down the line if/when the commuter rail makes its way down there. Sounds crazy but the suburbs of Fall River are beautiful. You're striking distance to Boston and Providence too.

In the end, you might find that the cost of a lot and the cost per square foot of today's construction costs will prove to be a fundamental base of value. The base I considered was 80% of 2005's house lot price with 85% of the cost per square foot to build new. Discount for the fatigue and there you go. I found that certain parts of the State still had cheaper house lots than the rest and because the cost of living was a bit better, construction costs per square foot were even a bit cheaper. Because most fart smellers are looking around Route 2, these other areas are wide open.

There are leaders and followers. Some time it is smart to follow brilliant minds. If you're waiting outside the club in line and it gets to be midnight, what you actually get is a night out standing in line. Take the lead and try out someplace else. The hot clubs in Boston change; so don't the towns. Sharon was one of the top town at one point. Hopkinton was a farm town before it became an exclusive suburb.

The most important thing about mining data is your mindset when you see it. Even if the data tells you something, are you able and open to follow it? If not, why bother with the exercise? Complete this sentence for yourself "Leaders follow _____"
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PostPosted: Mon May 28, 2007 3:45 pm GMT    Post subject: Re: Guest - Housing Prices still bouyant at $600K Reply with quote

BK- former Owner wrote:
Folks who can afford a $600K have lots of access to CASH- Stock market investments - wealthy inlaws - or a pile of cash they have been saving.

**Just my theory**


Or they really can't afford it...



Some bubble fun. Here's what to do, search Zip for homes with a sale date between 2003-2006. The easiest way to do this is look for a post 2000 build date. Next do a registry search using the property address, What you'll find is a deed plus two mortgage entries. Why two mortgages you may ask? Simple, 80/20 interest only ARM. Here's where it gets fun, pull the interest rates from the mortgage docs and calculate the initial monthly payment and compare it with the payment after reset. I'll do one for you...

Hopkinton property (one of my favorite bubble towns) :

wish price = 889,900
zestimate = 754,000
price paid in '04 = 699,900
assessed value = 728,800

Loan type and rate

80/15/5 no interest ARM
599,900 at 4.5 until 7/2009
69,860 at 7.0 (just a guess, for some reason the docs on second mortgages don't give rate)
taxes = 9,600

Initial monthly payment



2,250 on the 80

-464 on the 15

-800 on taxes
total monthly payment = 3,514

Two years from now

4750 on the 80
464 on the 15
800 in taxes
total monthly payment = 6,014


Umm I hope he gets a raise...
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon May 28, 2007 3:53 pm GMT    Post subject: Reply with quote

I love it.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon May 28, 2007 3:55 pm GMT    Post subject: Reply with quote

Second notes are typically tied to the prime rate.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon May 28, 2007 4:13 pm GMT    Post subject: Reply with quote

dumb bastard; he's in deep yogurt.
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PostPosted: Mon May 28, 2007 8:33 pm GMT    Post subject: Reply with quote

john p wrote:
I love it.


Real Estate blog gone missing? just the other day I was reading a local realtor's blog in which he was taken to task for his rosie outlook. Today, no blog, go figure.... Very Happy
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Tue May 29, 2007 2:48 pm GMT    Post subject: Reply with quote

I don't take pleasure in watching someone be upside down or in financial trouble. I'm just really psyched to see people like you using tools and to get behind and expose the "Wizard". We're Boston; we've been doing it for centuries.

You're a hunter. I wish the guys trying to catch B.L. were as smart as you are. Do you know how few people actually speak Arabic that is trying to catch him? They are like a blindfolded bulldog trying to catch a mosquito. Oh, and it costs a couple of billion dollars a month right? And we're in the wrong country too? So their stupidity and stubbornness are costing us regular Joes who elevate our performance to set world class standards here. We are in the highest productive, highest profitable chapter almost ever and our workers cost of living is backsliding. You talk about understating how bad things are, if American workers weren't so good our moronic government would have driven us to bankruptcy. As bad as it is for us working stiffs, the Military families are the ones who are really paying for the stupidity and stubbornness.
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Eman Resu
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PostPosted: Tue May 29, 2007 2:50 pm GMT    Post subject: Re: not really dropping in some MA towns lately Reply with quote

Anonymous wrote:
Acton is a tough place to figure. I have been researching towns at random finding a meltdown in most. I thought I would have a similar result with Acton, wrong.


Good schools and prices are lower than in other towns with comparable schools.
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Tue May 29, 2007 3:36 pm GMT    Post subject: Reply with quote

This is the solution my wife and I have been considering:

Live in a cheaper town.
Send son to a private school.
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