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It really IS a great time to buy

 
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devlin2
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PostPosted: Wed Oct 06, 2010 3:48 pm GMT    Post subject: It really IS a great time to buy Reply with quote

"But the reality is, in Massachusetts at least, we have hit bottom. Yes, some cities and neighborhoods will drift a little lower. But overall, prices have been rising, minutely, but rising, since the spring. And it’s unlikely that interest rates will get any lower.

So I’m here to tell you it’s a great time to buy. Let me put that in real estate agent speak: “Oh, absolutely, no doubt about it, it’s a great time to buy!”"



Read more: It really IS a great time to buy. - Boston Business Journal

http://boston.bizjournals.com/boston/blog/bottom_line/2010/10/always_a_great_time_to_buy.html?surround=lfn
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admin
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Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Wed Oct 06, 2010 4:17 pm GMT    Post subject: Re: It really IS a great time to buy Reply with quote

devlin2 wrote:
"But the reality is, in Massachusetts at least, we have hit bottom. Yes, some cities and neighborhoods will drift a little lower. But overall, prices have been rising, minutely, but rising, since the spring. And it’s unlikely that interest rates will get any lower.


Yeah, I saw that article earlier and was going to comment on it (on their site) but decided not to bother given the hassle of registration. Recent price rises are not the sign of a bottom, they are the sign of a (temporary) tax credit. Also, I consider anomalously low interest rates a strike against buying given that there is much higher than usual upside risk in rates, which would translate to downside risk in price. Low rates are a particularly bad deal if you have a larger than normal down payment since you take on that extra risk without getting the full benefit of lower monthly payments. Looking only at monthly payments, as counting low rates as a positive would imply, was also a big contributor to the bubble. The price to income ratio is still abnormally high - we are not in bargain territory yet, which isn't to say that we necessarily will be anytime soon, just that stating that now is a "great" time to buy ignores the most important fundamental: income.

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Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Wed Oct 06, 2010 5:49 pm GMT    Post subject: Reply with quote

Quote:
But the reality is, in Massachusetts at least, we have hit bottom.


Anybody who claims they can ring a bell at the bottom is either stupid or trying to sell you something.
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CL
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PostPosted: Thu Oct 07, 2010 1:45 pm GMT    Post subject: Reply with quote

I think price is primarily decided by demand and supply. On the supply side, home inventry can increase dramatically by 3 ways 1) if there is a lot of foreclosure/forced selling/short sale hitting the market, but those will be concentrated in towns that you probably don't want to buy anyway. 2) it can increase if there is a lot of new construction, which I don't see it happening. 3) it can increase because people wants to trade up or trade down or flip/invest/speculate, which I don't see it happening too now that investors are scared and homeowner got stucked with low/no/-ve equity. 4) a spike in household creation/marriage/divorce/etc creating supplies (ie empty nesters selling their existing homes). The rate actually drops as college grad coming back home and delaying marriage and even delaying divorce. So on this front, both demand and supply took a hit.

So for the affluent towns at least, I don't see a spike in inventory (or demand actually). Which means for motivated home buyers, it is not a good market to buy at all since the market (sales) is going to be very thin. As with the same as stock market, price becomes rather misleading/irrelevant if there is no volume.
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