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Middlesex County Inventory Hits Year-Long High, Bidding Wars
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PostPosted: Sat May 25, 2013 2:35 am GMT    Post subject: Reply with quote

Quote:

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.

The "right" price for Boomers is what? They bought with a dramatically lower cost basis, in inflation adjusted terms and in terms of years of salary, so I doubt that they actually need today's prices. And selling for below current prices only instigates bidding wars in conjunction with low inventory (like now).

I also never said "crash." It could very well be a long, slow decline if their exit is due to dying off, as you point out. That's what makes the timing so hazy.

Quote:

If that's case, you can just rent. Why buy?

Permanence. I don't want to move my kid between school systems midstream. I also really hate moving.

Quote:

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.

No, not really. A lot of those who bought 10 years ago (2003) were still in the hole, last I checked, even before you account for taxes, maintenance, insurance, transaction costs, etc. And again, average owning time is 7 years, so banking on staying there 10 - 15 years is aggressively optimistic. I know there were much better investments in 2003 and are now as well.

Quote:

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.

That's not Boston, unfortunately. At least not today.

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showgunx



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PostPosted: Sat May 25, 2013 10:48 am GMT    Post subject: Reply with quote

Quote:
The "right" price for Boomers is what? I also never said "crash."


The right price is just market price. Sorry, yes you never said 'crash', you said boomers exit could make boston housing inventory 'unrare'. Which I stated it would never be the primary reason for it.


Quote:
Permanence. I don't want to move my kid between school systems midstream. I also really hate moving.


In this case I can only speak for myself. I rent for 7 years in Boston before I got my first house. And I stay in 1 rental for 5 years. So if average home ownership is about 7 years, the number is not too much off for me. All I am saying is permanence can also be achieved by rental.


Quote:
No, not really. A lot of those who bought 10 years ago (2003) were still in the hole,

A lot? In boston area? I found that hard to believe if you were refering to price difference between 2003 and 2013. Whoever brought 10 years ago in boston area, and still in the hole today, must be those who ATM their home equities for fun money back in 2006. They have no one to blame but themselves for the hole.

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That's not Boston, unfortunately. At least not today.



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PostPosted: Sat May 25, 2013 12:31 pm GMT    Post subject: Heloc - cost of living keeps rising Reply with quote

Showgunz,

You have to have empathy for those who are underwater - they are desperately trying to survive. Incomes have been flat to negative for 10 plus years for many and everything else keeps rising.

How will Boston Area Educational institutions be affected by rising interests rates - which will happen some time... although, it may be longer than anyone can imagine or some event in the world could cause it to happen sooner.

Many underwater have borrowed Money to send children to College......I often argue that one of Boston areas major industries - Education. Is experiencing an unimaginable influx of cash from the Government subsidies and low interest rates - will this trend change???

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PostPosted: Sat May 25, 2013 1:40 pm GMT    Post subject: Reply with quote

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In this case I can only speak for myself. I rent for 7 years in Boston before I got my first house. And I stay in 1 rental for 5 years. So if average home ownership is about 7 years, the number is not too much off for me. All I am saying is permanence can also be achieved by rental.

I didn't mean to imply that I consider 7 years permanent or that it is my goal. I would like to stay somewhere for far longer than that without the whims and circumstances of my landlord being an additional risk that would prevent that. 7 years would fall far short of that goal, I just accept that as the reality of typical owners and a contingency to plan for and not be surprised at.

Quote:

A lot? In boston area? I found that hard to believe if you were refering to price difference between 2003 and 2013. Whoever brought 10 years ago in boston area, and still in the hole today...

Absolutely - in fact, the majority! Look at the MAR median price or the S&P/Case-Shiller index for Boston, and adjust for inflation. There are charts here on this site that do that. I haven't updated them in awhile, so they don't go to 2013, but they're pretty close and you can just subtract 10 years from the most recent date, which should apply just as well to your assertion that 10 years will correct everything. The sale prices for the most recent months on those charts are below the prices 10 years earlier. So most buyers were in the hole 10 years later even before property taxes, before maintenance, before insurance, before interest, before transaction costs, and before the professional management fees you would need if you were to relocate to North Pole and rent it out. And those are major expenses.

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showgunx



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PostPosted: Sat May 25, 2013 6:43 pm GMT    Post subject: Reply with quote

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Absolutely - in fact, the majority!


Admin, check it out. Folks who brought in 2003 is off the hook price wise. If they had good enough credit that qualify for refinance for today's rate, they are wining over people hold off buying until today by miles!

http://www.zillow.com/local-info/MA-Boston-home-value/r_44269/





Quote:
You have to have empathy for those who are underwater - they are desperately trying to survive. Many underwater have borrowed Money to send children to College

People who take out money from equity for college expense, is actually excursing a better option by paying less interest on the debt. I think they are better off. Renter, check the interest rate on student loan, it is very high already, it is not anything like mortgage rate at all. I do have empathy for folks who work hard but fell into financial hardship due to misfortunate events. But for those who took out equity during 2005-2006 on a new BMW just because they think they can, and now asking for help just because their mortgage underwater due to over extraction of equity, I wish they all go to hell.
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PostPosted: Sat May 25, 2013 7:37 pm GMT    Post subject: Reply with quote

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Admin, check it out. Folks who brought in 2003 is off the hook price wise.

There is so much volatility in that 10 year chart that it doesn't seem at all safe to say they are off the hook. Zillow's estimates only very recently swung back to a nominal gain, and you yourself said (correctly, in my opinion) that this very same recent uptick in prices is due to unusually low interest rates, and as such I wouldn't count on it being permanent. But even more importantly, this completely ignores inflation. I doubt that they are "off the hook" price wise once you account for that. Something which does not keep up with inflation is not a good investment, let alone "the smartest investment ever," and this is before you even start deducting the myriad, major costs. The fixation on 2003 is moot, too - there are plenty of other 10 year stretches where the real price alone fell even before considering expenses, so that should be proof enough to invalidate the assertion that 10 years is enough to always make it safe because plenty of counterexamples have actually already happened.

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