bostonbubble.com

[admin]

This house in Winchester came across my radar today and I did a double take:

http://www.redfin.com/MA/Winchester/217-Forest-St-01890/home/11440335

I was going to share it here because it was announced as an $800K or 40% price drop, from $2M to $1.2M. Kind of shocking.

But... looking a little further, the seller and/or agent just appear to be playing games. They massively increased the asking price right before the drop, to make it look like a steep cut. The actual discount is just 7%.

Do people actually fall for this, or is this just the premise that any publicity is good publicity?

- admin

[Former Owner]

Looks like a developer bought and is flipping it.

Beantown Property Group is on the Mortgage debt http://www.beantownpropertygroup.com/
Here is a recent story and their plan to sell 217 Forest for $1 Million - I suspect the move in interest rates has them a wee bit scared.
http://www.bostonglobe.com/metro/regionals/north/2013/01/27/house-flippers-take-upscale-winchester/OnZxoHM5k0D7mDjT9uiQnO/story.html

Beantown properties looks to have $500,000 - $560,000 - Mortgage on this property. The primary mortgage is for $500K and one for $30K and another for $34K

It was bought by the developer 04/27/2012 for $220,000-

This is what wide open lending standard does - it encourages Builder to make outlandish bets.

In 1998 this home sold for $200,000 - the Mortgage rate at the time was 7%

When the most recent buyer paid $220 - a 30 yr Mortgage was 3.88%.

Just what any young family needs a lot of Mortgage Debt.

[admin]

[admin]

PS - It also sounds like they blew the timing. The article said they intended to sell it this spring, but it wasn't actually listed until fall. Perhaps that's not that bad of a delay normally, but the timing was extremely unlucky for them given the unprecedented surge in mortgage rates that occurred between their original target and now.

- admin

[Former Arlingtonian]

Timing is everything.

The closest price home/recent sale was 191 Forest - sold for $719,000 on 9/9/2013 - the buyers took out a $575,200 Mortgage -

Regards

[admin]

PPS - It seems that the Globe article has tipped their hand:

[Former Arlingtonian]

Admin,

You illustrate how irrationally all the market players are in the current Boston Home Buying frenzy.

Why would a buyer care if a home was 'on market for weeks'. Every house is unique, needs to suit to needs of a handful of potential buyers, and it generally takes weeks or months to sell in a normal market.

I know from a past experience that I don't want to be buying when everyone is buying or when the players (buyers) think that a home is damaged after being on market for two weeks.

Every home has flaws including location, if its old it will have lead paint, or the basement is wet (basements either get wet sometimes or you live in a boat).

Houses are flawed and there is no perfection when buying one (unless money is no object).

[admin]

Realtors have actually exasperated that problem by setting offer "deadlines" on many listings this year, usually a day or two after the first open house. It does stand to reason that if the seller's deadline passes and the house is still on the market, then there was something wrong, because why would they set a deadline that is shorter than their own needs? The deadlines fed into the frenzy this spring, but now I'm anecdotally noticing a lot of deadlines lapse, thankfully - it's comical, and I hope other buyers are paying attention.

And while you're right that it wouldn't make sense to write off a house after the first weekend normally, the inventory was so low and competition so insane this spring that it was an OK first order approximation then. Even hideous, dilapidated dumps were selling instantly.

- admin

[1040EZ]

This place was sold in Apr 2012 for only $220,000. It is a flip. Be-aware the renovator tear down all the supporting walls, replaced with beans to make the house open-concept. If they didn't do it right, it could be a structural disaster waiting to happen! Good luck to whoever buying this.

[admin]

I just found another article from November 2012 on 217 Forest St.:

http://winchester.patch.com/groups/real-estate/p/winchester-participates-in-real-estate-boot-camp

Lots of interesting stuff there, like this:

[Former Arlingtonian]

The Real Estate world in many locals feels like a mania, panic, or at least a frenzy. The flipper seminar was a priceless find and demonstrates the state of mind of players in todays market. Doesn't anyone recall 2007-2009?

I hope my next real estate purchase will be when everyone is saying don't buy real estate because its too dangerous!

Regards

[optimus]

A lot of people would say that it is different this time. There is so much direct and indirect government support for the housing market that it cannot collapse like it did in 2007/2008.

[admin]

[Former Arlingtonian]

Optimus.

There probably won't be a crash like 2006-2008 unless there is an event in the world that forces the Federal Funds Rate up.

We have been lucky because the rest of world has been a train wreck financially. The result has been lots of folks parking wealth in dollars and dollar denominated assets. This allowed the Federal Reserve to drive Mortgage rates down to 3%. 3% level for a 30 year Mortgage ios only possible during a complete financial crisis.

But, the world is betting on that we are recovering.

I wish I could bet on housing right now, but my family can afford to risk that we may need to move for work. Lots of young couples/families buying down understand the level of risk in the world.

[admin]

217 Forest just dropped to $1.14M, still well above their target.

- admin