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Will the Boomers ever sell in Greater Boston?
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admin
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Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Tue Oct 07, 2014 8:03 pm GMT    Post subject: Reply with quote

Richthofen wrote:

Well I can definitely not afford to buy a SFH in Newton.


Neither can most people who live there. Prices are set on the margin, which makes anemic inventory especially problematic.

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PostPosted: Tue Oct 07, 2014 8:29 pm GMT    Post subject: Reply with quote

Quote:
Neither can most people who live there.


That's the golden handcuffs effect I have been seeing in Brookline, Newton, Wellsley area for the past 5 years. Now even in Brighton/Allston, due to harvard expansion and Boston landing constructions.
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Tue Oct 07, 2014 8:54 pm GMT    Post subject: My response was in jest Reply with quote

I wrote my response to Bostonian was in jest. I wanted to say that I suspected Bostonian is drinking during the day or joking about the idea that houses will remain unaffordable.

How would Massachusetts be affected if EMC was sold, see http://www.bizjournals.com/sanjose/news/2014/09/22/emc-merger-talks-with-dell-hp-reported-oracle.html

Yes, there are lots of dual income families making $160-$350K and there are many who aren't. The U-6 unemployment rate in Greater Boston was 12.2 % as of August 2014 (consider that the BLS survey methods are very crude and the true unemployment number is much higher).

Inventory for housing has been super tight and lending is loose resulting prices hitting all time highs. Perhaps we are passing through peak housing right now or at least that is what Mark Hanson believes: http://mhanson.com/archives/1674

The big market drivers for Boston area tech startups, big tech, real estate, and Education. These economic gorilla's have been driven by the cheap financing.

See what Mark Andressen things may happen to lot of startups...vaporize: http://money.cnn.com/2014/09/25/investing/marc-andreessen-startup-warning/

At some point there will be a stock market event that resets things and perhaps we are beginning to experience it.

In Boston area the tech sector is on fire and it reminds me so much of 1999-2001. Frankly it seemed like the 1990s boom would never end and the opportunity to work for startups turned into free money for me twice.

But, as a younger man I could not see around the economic corner and I didn't understand that Alan Greenspan haas much to do with my financial success than my boyish good looks and high iq.

Every economic boom that is driven by the Federal Reserve there has been a new generation of twenty-thirty somethings, who find themselves making great money, and they build a life around the big pay checks because they are sure the good times will never end. Building that life has always meant buying your dream house and we lived with falling interest rates for thirty plus years. What happens when you buy your dream house for the highest price ever paid while mortgage rates are bouncing off the lowest level of forty years?
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balor123



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PostPosted: Wed Oct 08, 2014 5:23 am GMT    Post subject: Reply with quote

Hard to know what my wife and I would make living there now. I would guess maybe $200k - $250k, which I'd consider to be successful, no? At 3x income that puts us at $600k - $750k. You get some nice lots in that price range but the homes themselves are still trash. You need to be at around $1mil - $1.1mil for a decent townhome now or $1.2mil+ for a SFH tear down.

When we last looked in 2009 (and up to 2012), you could easily find Arlington tear downs in the $200k - $300k range. A nice big new home could be had for $600k - $700k, which even at then income wouldn't have been too bad. Now those are over a million and unaffordable. I still see stuff in the low $400s in Arlington but Newton seems to bottom out in the $500s. Unfortunately, these homes are generally not good candidates for tear downs and not interesting enough to remodel.

I can see spending good money to live in Brookline. It's urban AND family friendly with amazing schools, with a top hospital and good Jewish community to boot. Where else in the US can you find that? It's also priced accordingly however. Outside of those urban areas, I don't understand the pricing at all. I mean Arlington and Newton are nice but they're way overpriced for what they are: inner suburbs. You can find those in lots of big cities at better prices. I guess people get latched into the area living in Cambridge or Brookline and then that's simply more affordable to them.
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Wed Oct 08, 2014 1:08 pm GMT    Post subject: Effective Fed Funds rate = Dont Buy Reply with quote

Balor,
Boston prices have every thing to do with the Federal Reserve...and one day this will end.....I hope I'm still around...because sometimes in feels like this craziness will go on foreva!

[img]http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=MTM [/img]
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PostPosted: Wed Oct 08, 2014 1:50 pm GMT    Post subject: Reply with quote

Arlington makes the least sense to me. It's bumping up against Newton/Belmont prices, with worse schools, worse lots, and worse access to Boston. If you have $1M to spend in Arlington, may as well spend it in Newton/Belmont.
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balor123



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PostPosted: Fri Oct 10, 2014 5:02 am GMT    Post subject: Reply with quote

According to Great Schools, the high school is a 7. Not perfect but that's pretty good still. Access is a question of where you want to go. It's better for Cambridge. I agree that all around Newton is better though. I don't know what you mean about lots. They're smaller but that's neither good nor bad, just a question of taste. Arlington has a few lakes, which is fantastic if you can get a view. I'd say Arlington homes tend to be smaller and dumpier than Newton. That's what makes it a good target for tear downs. Newton would cost $200k more. A bigger factor is that Newton tear downs are far less common than Arlington, at only a few a year and many of those in less prime locations than Arlington. Personally, I'd love to be around Trader Joes / Whole Foods in North Newton. Near a town center and route 9 would also be good.
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PostPosted: Mon Nov 03, 2014 5:05 pm GMT    Post subject: Reply with quote

Ended up buying a SFH in East Milton for just over $330k. 3 bed 2 bath. Roof and gas heating are relatively new. 3x household income for now, will be under under 2x in two years and 0.75x in five years.
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PostPosted: Sun Jan 03, 2016 4:33 am GMT    Post subject: Reply with quote

Update on my $330k SFH in Milton that I purchased last year. Paid about $9k for ice dam damages last winter (got a brand new roof and new ceilings, insurance paid for all the interior damages), fixed some minor plumbing issues ($500) and refinished the floors ($1k), placed new hardwood flooring on some of the rooms that had carpeting ($4k), repainted all the interiors and cabinets ($1k). My mortgage including taxes is about $1800, adjusting for expenses incurred in first year that brings it up to about $3000/mo, but I'm in a 3 bedroom 2 bath house, now mostly updated to my taste and comforts, driveway for 3 cars, with easy access to Boston and the South Shore burbs. I expect maintenance costs to go way down this year.

Looking at my neighbors' recent sales, I'd wager the house has appreciated close to $100k. It's hard to find any acceptable SFH in a good school district within 20 min of downtown Boston for under $400k. I don't regret the decision to bite the bullet at all. A year ago I thought we were in a bubble, but somehow this bubble keeps getting bigger. With $15 minimum wage hitting all the liberal cities in America, it's only going to get worse.
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PostPosted: Sat Feb 13, 2016 1:42 pm GMT    Post subject: Reply with quote

Quote:
With $15 minimum wage hitting all the liberal cities in America, it's only going to get worse.


This will be a deadly blow to those sideline seaters with large amount of cash, hoping for a deep dive of home price in the near future will give them window of opportunity to win in the housing game.
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PostPosted: Sat Feb 13, 2016 6:14 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
With $15 minimum wage hitting all the liberal cities in America, it's only going to get worse.


This will be a deadly blow to those sideline seaters with large amount of cash, hoping for a deep dive of home price in the near future will give them window of opportunity to win in the housing game.


People making $15/hour aren't going to prop up million dollar house prices. That's not even remotely in the same mathematical ballpark.
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PostPosted: Tue Feb 16, 2016 3:42 am GMT    Post subject: Reply with quote

Quote:

People making $15/hour aren't going to prop up million dollar house prices. That's not even remotely in the same mathematical ballpark.


You just have no idea, do you?
When the poorest dude is making 15 bucks per hour here, that's 50% increase from current 10 dollar minimum wage. Rent will goes up. It will set new price floor to shit holes and crap shacks in the housing market. If a crap shack sell for 30% higher due to minimum wage inflation, you think the half decent SFH price will stay the same? Water will lift all boats, and you will see A LOT MORE million dollar houses by then.
With that said, if the mortgage rate goes up much higher, then home price might not goes up that much, but monthly payment will definitely goes up.
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admin
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PostPosted: Tue Feb 16, 2016 2:19 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Water will lift all boats


Not equally. There are plenty of studies on rising income inequality that demonstrate that. And specifically with regard to minimum wage, the long term effects of large increases are unknown. Permanent job loss is one possibility as technology can be used to replace a growing number of low skilled positions.

Quote:

With that said, if the mortgage rate goes up much higher, then home price might not goes up that much, but monthly payment will definitely goes up.


I thought it was cash buyers who you were trying to goad off the sideline. Monthly payments don't go up when you pay in cash. They also go up less when you have a large amount of cash and your down payment is larger than normal. Regardless, "hoping for a deep dive of home price" is not the only or even primary reason to be a "sideline seater" - more inventory is reason enough, as there's just much less for sale than normal. It's also not about waiting for lower prices to "win the game" so much as knowing that lower prices later are a significant risk to buying now because 1) you can't time when you will need to sell and 2) prices now are reliant on both abnormally low inventory and historically low interest rates (and if a $15 minimum wage did trigger inflation, that will probably spell the end of low rates).

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