bostonbubble.com

[wherezmyhome]

Ok, so it looks like a lot of us are still in the same boat, considering whether to buy in this market. I am so glad to find like-minded folks on this forum.

We are also looking right now...as we have been for many many years....and see that SFRs that are move-in-ready have bidding wars and almost certainly sell above asking price. And most SFRs are priced at the absolute top of our 525k affordability. and these are 30-50 years old.

And then there are brand new THs that are a lil more affordable around 440k. The difference between the principal will let us pay HOA for many years. but our concerns include having no yard, and how the resale value would be. I am noticing other THs in our town in the 200s are still selling in that range and have not fallen drastically. not sure how that would play out in 10 yrs. Also we have little kids who could use a backyard for play things.

We are close to pulling the trigger on the THs....want to hear what other BBers think.

[wherezmyhome]

I went back to find out more about the THs today and they told me the base prices went up by 20k. What the &^@#*!

[admin]

[Renter- former owner]

Getting involved in a Town Home and an HOA is coming to complicate your lives forever. Its choosing to have another bureaucracy rule your life.

At least with a single family you can choose not to spend money on repairs when times get tough - or you can decide to modify the outside of your home. If we start to experience inflation you will see your HOA fees go up 'early and often'. I've rented Townhomes - well cared for ones. But, there are always issues with snow removal crews or how landscaping gets done and the dreaded one time assessment for the really big things the HOA didn't anticipate.

Perhaps the alternative is find a single family home with a very small yard.

I think its a very dangerous time to buy - everyone is telling me that Real Estate is the best investment over the Long term. Well, consider that the last time interest rates were this low 'Leave it to Beaver" was on TV in Prime time.

Here is some reading on what one expert sees going on in the Real Estate market - I know Boston is particularly special....but its worth a read..

http://Mhanson.com/archives/1269

[wherezmyhome]

I like to think along simpler lines. Interest rates going up are one point of failure, fed taking away mortgage guarantees are another. What else? If the interest rates go up, the savings rates would go up too compensating for affordability. Fed taking away guarantees suddenly would be a problem, although traditionally policies are enacted so as to distribute the impacts over time and not all at once. The recovery is still in early stages so Feds might not remove the guarantees in the short term.

I agree that there might be a depreciation in value, but then time is passing quickly and the lifestyle we plan for is not happening if we don't buy. 2-bdr rentals are fine in terms of money but I do anticipate the need for more space as the kids grow up. 3-bdr rentals are very very high if they do exist. At that price it seems like owning would be better. There are some very conservative thinkers on this forum who suggest that a 2-bdr apt/th is good enough. I don't think that applies to everyone.

I agree that with inflation the HOA might change. So also would SFR maintenance costs, right? It is all tied to cost of labor.

After a lot of thought I think I am ready to buy. But just not able to find the right property. Sigh..

[admin]

[Renter - former own]

Real Estate choices today are very personal.

My primary concern is lack of guaranteed employment and income.

If you buy and you are forced to move or take a job far from the home you purchased - You may find your self with an impossible commute/long costly commute.

2- We live in a world where everyone thinks the Fed is in control of interest rates. The are in control of interest rates until they are no longer in control. Its very possible and probable that it will take longer than I can imagine for interest rates to rise. But, if an external event in financial markets causes a interest rate rise - I cannot afford to bet my families future on that.

HOA fees - you are not incontrol of how repairs/expenses are managed, If you own the single family you can keep repair the old roof and put off a major roof job until your are flush.
http://www.denverpost.com/opinion/ci_21475328/dark-side-hoas

[admin]

[mpr]

To the OP. I wouldn't get a TH if you've already identified it as inadequate for your needs. You'll only end up moving in a few years with associated transaction costs.

With a new TH or SFH you're taking on extra cost/risk because you're paying extra for brand new, and that premium will disappear as the home ages. Everyone likes new, and you should expect to pay for it.

I don't know what you mean by 'move in condition'. But you have to recognize that if you want something which already has all the improvements you (and therefore everyone else) wants you'll have to pay a premium.

My advice would be to be on the look out for a place where all the things you cant change (location, backyard etc) are suitable and which doesn't have any serious structural issues. However be prepared to compromise on cosmetic issues. You can improve these over time if you have the desire and money. Ideally you want a place where you can add value by making inexpensive improvements: paintings, new carpets/floors, a little landscaping.

[GDMA]

We bought a townhouse 3 years ago after going through the same thought process as you. Within 5-15min driving distance to nice state parks as well as modern conveniences like supermarkets, banks etc. It's pretty good.

You're rolling the dice with HOA, but we lucked out with a nice one. It's true that my monthly dues are on the high side (almost $450 for snow removal, landscaping, trash removal, master insurance) but there're sizable deposits in the account (or so I've been told!) so future repairs would probably all be covered with no major surprise assessment. The trash removal service comes once a week, but unlike the town pickups they are really nice, would make the rounds twice a day and not hassle you for not putting the right stuff in recycle bin, snow removal seems almost instant, always cleared when it snows, and whatever. The THs are separated by garages, so you can't hear neighbours' noise. All in all it's pretty good living.

However, despite all the positives, we're still thinking of moving in a few years to a SFH for more sf and a big yard for the dog. We'll probably still hire snow removers/landscapers, so I don't expect monthly fees to decrease. ie, I think there really isn't much cost savings if HOA dues is what you dread. The factors like yard to play/build a pool in, more SF (TH usually smaller) would be the deciding factors.

Where are you looking btw?

[Former Renter]

I have never heard of a Condo Association that didn't claim to a Fund big enough.

Consider - look at the appreciation of roofing materials over the last 7 years - you generally don't discover the Fund is under funded until the bill comes due for the new roofs.

[wherzmyhome]

I agree that we could put off mowing that lawn or changing that roof if we own an SFR. But one does have to keep paying that mortgage which is a coupe hundred dollars more every month compared to TH. The point I was trying to make is the price of THs are significantly lesser than SFRs which would let you save more money provided income remains the same. When times get tough one has to keep paying the HOAs but then one has more savings from a smaller mortgage in all the years that they had a job/income. Anyway, we gave up on the THs as well because with little kids we do want a backyard big enough for kiddie stuff. And the THs we saw just raised their prices by 15k. Go figure.

The mad rush for houses does boggle the mind though. There are no houses in the 400s AGAIN. The 500s fly off the shelf before the MLS pops up in the inbox. And the 300s look big enough for a man and a dog, no offense. So there...we keep going back to square one. Metrowest is where we are looking....

[dude1040EZ]

The current housing market reminds me of the pre 2007 slogan for buyers:

Drive until you can afford!

I am more angry on the current housing market situation in Boston, compare to 2006- 2007, since this time, the rent is going up crazy as well, on top of 20% home price increase in a year period. This is highway robbery to the poor, who has no sufficient fund to buy, and being forced to pay more to maintain basic living standard.

We need rent control back in Boston! We need zone code change that allows 50 stories high condos to be built in affordable areas!!

[Renter- former Mortgage h]

We need normalized interest rates - not artificial induced interest rates that haven't been seen since the 1950s.

This won't end well for people who are loading up on assets - when the price of homes is based on Interest rates from the 1950s.

Regards.