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Middlesex County Inventory Hits Year-Long High, Bidding Wars
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PostPosted: Fri May 10, 2013 11:38 am GMT    Post subject: Middlesex County Inventory Hits Year-Long High, Bidding Wars Reply with quote

Use this forum thread to discuss the following link.

Description: Middlesex County Inventory Hits Year-Long High, Bidding Wars Don't Slow Down
URL: http://blog.redfin.com/local/boston/2012/05/middlesex_county_inventory_hits_year ...truncated...
Info/Broken?: http://www.bostonbubble.com/link_info.php?id=3986

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PostPosted: Fri May 10, 2013 5:08 pm GMT    Post subject: Reply with quote

From the above article:
Quote:

What's frustrating for the average home-buyer is that a lot of the buyers and investors you’ll find yourself up against are willing to offer tens of thousands of dollars above the asking price, often for all-cash, and remove inspection contingencies, which we wouldn’t normally recommend doing... I'm optimistic that over the next few months, the appetites of the less risk-averse buyers and investors will be satisfied, and there will be more opportunities for regular home-buyers to win out with more standard offers.


That's a bit incongruous with this advice (currently at http://www.redfin.com/city/29700/MA/Belmont ), also from a Redfin agent:

Quote:

Buyer presented offer 10's of thousands over asking price with only 50% financing, but kept both the home inspection contingency and the financing contingency in the offer. It was a first offer and buyers just could not get into the mind-set of other buyers that may have already lost a multiple bid several times. It is very difficult for buyers to get into this frame of mind the first time they make an offer but it is really necessary to try to get there if they want to win. I wish I had a magic mirror that could help them understand the first time out!

I can't help but think that waiving an inspection contingency is begging for trouble. I hope that the first agent (Matt) is right and the market clears out those buyers who are making it difficult to get some assurance that you're getting what's advertised.

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PostPosted: Sat May 11, 2013 1:30 am GMT    Post subject: Reply with quote

Oops - I just realized that article was from 2012. Sorry.

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PostPosted: Fri May 17, 2013 2:17 pm GMT    Post subject: Reply with quote

While the original article was old, the comment from the Redfin agent chiding his clients for not waiving financing and inspection contingencies was recent. It turns out this runs counter to Redfin's official advice, as it stands today at http://www.redfin.com/home-buying-guide/financing-contingency :

Quote:

...for those of us who depend on a mortgage to purchase a home, it's almost always a bad idea.

Though some buyers consider waiting [sic] their financing contingency in order to make their offer more attractive, this is an extremely risky decision...

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PostPosted: Mon May 20, 2013 10:23 pm GMT    Post subject: Cindy Stumpo - Real Estate Builder - says BUBBLE Reply with quote

Admin,
Did anyone else hear this great Bloomberg interview - Cindy Stumpo - a Real Estate insider - the market is over heated..
https://soundcloud.com/samuel-bridger/cindy-bloomberg

Thank you
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PostPosted: Tue May 21, 2013 2:37 pm GMT    Post subject: bubble it is Reply with quote

Brookline, newton and Chestnut hill? I bet half the residents who live there today can not afford the same place, if you ask them to buy it again in today's price. It is majorly about interest rate, small part with no further land to develop. Cindy is correct on this! Any major uptick of mortgage rate will trigger landslide of price from these places. But again, why jack up the rate, when our treasury bill is considered the safest investment in the world?
I don't think next year the bubble will burst yet...
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PostPosted: Wed May 22, 2013 5:29 pm GMT    Post subject: Reply with quote

It's not just about Treasuries. On top of that The Fed has been buying mortgage backed securities as part of QE, which pushes mortgage rates down even further than they would be with the also historically low Treasury yields. QE was supposed to be just a temporary stimulus to help get the broader economy out of recession. If they want to maintain that facade, The Fed will need to follow through on the implication that it needs to be temporary. So mortgage rates should rise at some point, even if Treasury yields remain flat. On the other hand, they could just ignore the pretense and make QE a permanent handout to the FIRE industries.

I do agree that it is mostly about interest rates right now, although I wonder at what point the great Baby Boomer sell off will begin to take effect and possibly come to dominate. Based on what I read previously, that may still be a few years away, so I think you might be right that we may not necessarily see a collapse next year like Ms. Stumpo suggested (we might, I'm just not banking on it).

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PostPosted: Wed May 22, 2013 10:36 pm GMT    Post subject: Costs of living in your homw Reply with quote

An elderly member of my family - who is financially in great shape - can't get over the cost of living in his own home - property taxes and repairs can average $40,000 in a bad year - don't forget trying to find an honest contractor.

Having a bad off mortgage is terrific - but, not keeping up with repairs can create major headaches - it always reminds me of the Car owner who gets angry about replacing worn out parts in their old-and-paid for car , as if when the car was new and they had payments of $300/month the car was a free ride.
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PostPosted: Fri May 24, 2013 1:43 pm GMT    Post subject: Re: Costs of living in your homw Reply with quote

Renter wrote:

Having a bad off mortgage is terrific - but, not keeping up with repairs can create major headaches - it always reminds me of the Car owner who gets angry about replacing worn out parts in their old-and-paid for car , as if when the car was new and they had payments of $300/month the car was a free ride.


Now imagine paying 20% over and above new car prices but getting the old worn out car that still needs serious, costly repairs. That's what the Boston area housing inventory is like right now.

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PostPosted: Fri May 24, 2013 3:20 pm GMT    Post subject: car vs house Reply with quote

admin,
Old broken car doesn't retain value, unless it is a rare one. 'RARE' is the key.
Boston housing, within the 10 miles distance of downtown, are kind of rare, due to lack of land for further development. Cindy already points it out in her radio interview. Unless the zoning law change, and allow many more sky high condo projects in boston, the price of a home in boston will always be more expensive than other regions.
DON"T look at price, always look at COST.
Can the rent from a property covers all costs require to maintain that piece of property? That should be the only decision making fator, anything else is BS. The goal of buying a house, beside getting a place to live, also should be retaining wealth. Keep it simple, and you will out smart most everyone else.
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PostPosted: Fri May 24, 2013 3:44 pm GMT    Post subject: Reply with quote

I don't know... Boston area housing might not be so rare once the Baby Boomers start exiting the market. The argument that some neighborhoods are permanently attractive and will therefore also remain expensive with immunity to decline also doesn't explain why prices are jumping 10 - 20% this season, when they should have been that high all along by that logic. (That's not your argument, and I know you've already explained the jump as a result of interest rates, it's just something that's frequently coupled with the rarity argument by others.)

Comparing the carrying cost of buying to rental cost is a good idea. Be sure to also include the cost of the differences between renting and buying because they are not equivalent. Buying entails more permanence, which is probably a financial negative that most people ignore. There's also an opportunity cost to consider.

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PostPosted: Fri May 24, 2013 3:48 pm GMT    Post subject: Reply with quote

PS - Price greatly affects cost if you need to sell before your mortgage is largely paid off. As the average owning time in the US is 7 years, that would seem to make price an important consideration even if you just want to consider carrying cost. I would guess that a lot of those selling after ~7 years didn't go in with the intention of needing to sell so quickly, but employment situations change and family needs change.

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PostPosted: Fri May 24, 2013 5:31 pm GMT    Post subject: To admin Reply with quote

Quote:
Boston area housing might not be so rare once the Baby Boomers start exiting the market


admin,
Are all the baby boomers eunuches? If not, where will their babies live when they grew up? Also from what I heard, there are massive illegal folks are here and here to stay, and eventually will become legal. You worry about lack of buyers in boston areas? I will rather believe buyer disappearing because interest rate goes up dramatically, or even global warming flooded downtown Boston, before I believe in BS about Baby boomer exit. Go check the average age of metro boston areas, see if there was any generation gap?


Quote:
Buying entails more permanence

Wrong! If all costs is covered by rent, you don't have to stuck with it. You can be in north pole, and this property still be a money printing machine that is working hard for you. Of course getting this kind of deal is very very hard now a day in Boston, which re-inforce the fact of reinflated housing bubble in many many boston metro areas.

Now the more I explain, the more will lost in translation.
Just keep it simple, filter the BS.
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PostPosted: Fri May 24, 2013 6:18 pm GMT    Post subject: Reply with quote

Quote:

Are all the baby boomers eunuches? If not, where will their babies live when they grew up? Also from what I heard, there are massive illegal folks are here and here to stay, and eventually will become legal. You worry about lack of buyers in boston areas? I will rather believe buyer disappearing because interest rate goes up dramatically, or even global warming flooded downtown Boston, before I believe in BS about Baby boomer exit. Go check the average age of metro boston areas, see if there was any generation gap?


It's not about a shortage of buyers, it's about a shortage of buyers at current prices. Of course there will be as many buyers as necessary if prices fall far enough. The point is, most owners did not buy at current prices (which is a reasonable expectation after adjusting for inflation), and the prospective buyers that you cited cannot afford to fill the gap at current prices. So if/when the current owners (Boomers) exit en masse, that stands a good chance of putting downward pressure on prices in real terms.

Quote:

Wrong! If all costs is covered by rent, you don't have to stuck with it. You can be in north pole, and this property still be a money printing machine that is working hard for you. Of course getting this kind of deal is very very hard now a day in Boston, which re-inforce the fact of reinflated housing bubble in many many boston metro areas.


Alright, that's one way to look at it, but then you need to include in your costs professional property management and insurance to cover the liability risk you're taking on. My very rough mental estimation has been that all of the houses that I have looked at for prospective purchases in the area would be strongly cash flow negative if rented out even before accounting for those essential costs. If I wanted to bank on that strategy, I would need to limit my search to entirely different neighborhoods (if they even exist right now), which would defeat the primary purpose of buying in the first place, which is to live somewhere that I want.

Quote:

Now the more I explain, the more will lost in translation.
Just keep it simple, filter the BS.


I'm actually keeping it simpler than what you're suggesting. I'm focusing on the primary purpose (having a place to live) and not expecting it to maintain value.

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PostPosted: Sat May 25, 2013 2:02 am GMT    Post subject: Reply with quote

Quote:
So if/when the current owners (Boomers) exit en masse


err, if there would be no new buyers to pay the right price, how could boomers exit en masse? If the price is not right, I rather believe all these boomers will stay put, or transfer their home to their kids. Or do reverse mortgage etc(it is going to years before these boomer die out). If they try to sell it for cheap, great, below market price will cause bidding war! There is a major flaw in this 'boomer exit crash home price' logic.


Quote:
I'm focusing on the primary purpose (having a place to live) and not expecting it to maintain value


If that's case, you can just rent. Why buy? Or you can buy at anytime, no need to wait for a right time or worry about price bubble. Even you buy in 2006, ten of fifteen years from then, the inflation will make a stupid purchase back then looks like the smartest investment ever.
If you want to get a home, of cause you can get it just because you want to live there. But if you could get it because the number make sense, then you will be in good shape financially in the long run. Your first house doesn't have to be your dream house, if it is a house that could generate positive cashflow, it could be a good step stone to your dream house eventually.
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