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Low inventory for 2017
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Real Estate Guy
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PostPosted: Tue Jun 27, 2017 6:40 pm GMT    Post subject: Reply with quote

It may not be, but I remember back in 2006 into 2007 the real estate market was dead. No body wanted to talk about it and inventory started backing up. The later stock crash of 2008/2009 came after, mostly as a result of the market value declines in the MBS's from the failing house prices. Then banks busted, stock market crisis followed.......
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PostPosted: Tue Jun 27, 2017 7:23 pm GMT    Post subject: Reply with quote

Quote:
This isn't the start of the crash yet. There's always a recession or a major stock market correction before the real estate crash.


That could be the look on the surface. I think this time around interest rate will play a big roll. As we all get used to ultra low interest rate for so long, we depend on cheap credits to get cars, houses, and everything else for almost 10 years now. And close to zero CD rate with inflation drives people into spending mode. With the current home price level, I would say if the mortgage rate go anywhere close to 5% will deeply suppress the buying demand.
Also another thing is rental return. Rent in the inner city areas of boston has been going a bit crazy in the last 3 or 4 years, with 5%+ rental rate increase annually.
And I am not surprise to see those 2bed condos asking for more then 2.5k per month, or 3bed condos asking 3k per month will deal with some head wind this fall in Boston area. If the rental demand dip due to a lot of rental inventories, then it will be the last punch to crack the market.
Consider this as the spinal downward cycle. Interest rate up, inventory up as seller not consider getting higher price, and new homes keep coming to the market, empty housing sitting without being rent, more inventories dump into the market as return rate of investment shrinking.
Please just keep building those condos and townhouses. The more those are built, the faster the crash will come. But again, the black swan will be FED lowering interest rate in sight of economic downturn. This game could be played as long as no other currency to challenge U.S. dollar as the international reserve currency.
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PostPosted: Tue Jun 27, 2017 7:57 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
This isn't the start of the crash yet. There's always a recession or a major stock market correction before the real estate crash.


That could be the look on the surface. I think this time around interest rate will play a big roll. As we all get used to ultra low interest rate for so long, we depend on cheap credits to get cars, houses, and everything else for almost 10 years now. And close to zero CD rate with inflation drives people into spending mode. With the current home price level, I would say if the mortgage rate go anywhere close to 5% will deeply suppress the buying demand.
Also another thing is rental return. Rent in the inner city areas of boston has been going a bit crazy in the last 3 or 4 years, with 5%+ rental rate increase annually.
And I am not surprise to see those 2bed condos asking for more then 2.5k per month, or 3bed condos asking 3k per month will deal with some head wind this fall in Boston area. If the rental demand dip due to a lot of rental inventories, then it will be the last punch to crack the market.
Consider this as the spinal downward cycle. Interest rate up, inventory up as seller not consider getting higher price, and new homes keep coming to the market, empty housing sitting without being rent, more inventories dump into the market as return rate of investment shrinking.
Please just keep building those condos and townhouses. The more those are built, the faster the crash will come. But again, the black swan will be FED lowering interest rate in sight of economic downturn. This game could be played as long as no other currency to challenge U.S. dollar as the international reserve currency.


Interesting that mortgage rates are drifting lower since the spike in December. As for inventory, in the city much of the inventory that has been added has been apartments rather than condos. (Alewife area added well over 1000 apartment units for example...)

I wonder if folks are becoming landlords instead of investing in overpriced domestic stocks and bonds.
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PostPosted: Wed Jun 28, 2017 11:16 am GMT    Post subject: Reply with quote

Quote:
I wonder if folks are becoming landlords instead of investing in overpriced domestic stocks and bonds.


It is very possible that landlords are actually dumping units out on the market this summer, to do some profit taking currently. I saw increase situation of folks quitting Boston and moving down south or away due to unaffordable rent and home price. That creates some vacancies and inventories. In the last few years home price and rent are jumping up quickly, so investors buy into homes for better return of investment, as well as for hedging inflation. But with current home price level, rent can no longer cover the cost of monthly payment and other expenses in general, on top of dealing with all sort of craps being a landlord. To refinance with lower rate in near future seems impossible. While the CD rate is slowly improving, housing as the best option to preserve capital is less of a certain. So the best way out is to sell the property and take all the capital gain of the last few years.
This kind of mentality if gain some more traction, and with so many new housing developments still on their way into the market, should off set this 'low inventory' phenomena we have seems for a while.
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PostPosted: Wed Jun 28, 2017 12:23 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Anonymous wrote:
Quote:
This isn't the start of the crash yet. There's always a recession or a major stock market correction before the real estate crash.


That could be the look on the surface. I think this time around interest rate will play a big roll. As we all get used to ultra low interest rate for so long, we depend on cheap credits to get cars, houses, and everything else for almost 10 years now. And close to zero CD rate with inflation drives people into spending mode. With the current home price level, I would say if the mortgage rate go anywhere close to 5% will deeply suppress the buying demand.
Also another thing is rental return. Rent in the inner city areas of boston has been going a bit crazy in the last 3 or 4 years, with 5%+ rental rate increase annually.
And I am not surprise to see those 2bed condos asking for more then 2.5k per month, or 3bed condos asking 3k per month will deal with some head wind this fall in Boston area. If the rental demand dip due to a lot of rental inventories, then it will be the last punch to crack the market.
Consider this as the spinal downward cycle. Interest rate up, inventory up as seller not consider getting higher price, and new homes keep coming to the market, empty housing sitting without being rent, more inventories dump into the market as return rate of investment shrinking.
Please just keep building those condos and townhouses. The more those are built, the faster the crash will come. But again, the black swan will be FED lowering interest rate in sight of economic downturn. This game could be played as long as no other currency to challenge U.S. dollar as the international reserve currency.


Interesting that mortgage rates are drifting lower since the spike in December. As for inventory, in the city much of the inventory that has been added has been apartments rather than condos. (Alewife area added well over 1000 apartment units for example...)

I wonder if folks are becoming landlords instead of investing in overpriced domestic stocks and bonds.


Mortgage rates are only part of the housing cost equation. 25% of your mortgage payment is made up of property taxes, insurance and always go up.

The prices of multifamily houses are so high, there's no way for the average Joe to make money buying multifamily houses to rent out as landlords.

Instead REITs are using the cheap interest rates to build luxury apt complexes knowing full well that they can still make money with 50% occupancy. The real estate market is saturated on the high end and yet has not enough supply on the low end. This means prices will start to fall on high end houses and continue increase on low end houses. It's all about supply versus demand. It's great for people looking at 2 million dollar houses in Wellesley, but not so much for someone looking to buy for under 600k in Watertown.

The state of housing is like rorschach test. People who want to buy are convinced prices will drop so they will be able to buy. People who are homeowners are convinced prices will go up. The truth is somewhere in the middle and definitely not on the postings on this discussion forum.
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Real Estate Guy
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PostPosted: Wed Jun 28, 2017 12:56 pm GMT    Post subject: Reply with quote

Quote:

The state of housing is like rorschach test. People who want to buy are convinced prices will drop so they will be able to buy. People who are homeowners are convinced prices will go up. The truth is somewhere in the middle and definitely not on the postings on this discussion forum.


Interesting observation. I sadly agree that this division between the lower end house prices, and the top end is very accurate. It is a result of 10 years of low rates and market meddling. Because free markets are not at work anymore, demand is higher at the low end. Salaries and inflation are out of whack with the current market. We are seeing this already. High priced homes aren't selling so well. Low end is hot as a pistol. The only thing that can cool off the low end is interest rates or higher unemployment. I believe many Americans are under employed, and when rates go up things will correct at the bottom. However if the Fed re- enters the market again by yet again reducing rates to historic lows and prints more money, the low end would recover first. I can only hope the Fed does not do this again and let's the market crash like it should have in 2009. It is then, and only then, that the principals of free markets can be restored and true economic growth to grow. As long as our economy is built on bullshit and Fed Bank meddling, it will never be like it was, or like the principals our country was founded on.[/quote]
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PostPosted: Wed Jun 28, 2017 2:51 pm GMT    Post subject: Reply with quote

Quote:
Mortgage rates are only part of the housing cost equation. 25% of your mortgage payment is made up of property taxes, insurance and always go up.

The prices of multifamily houses are so high, there's no way for the average Joe to make money buying multifamily houses to rent out as landlords.



That is mostly correct. Here my 2 cents.

Tax and mortgage interest could be tax deducted in about 20 to 30%, based on your tax bracket, while your mortgage amount will not change with 30 year fixed. And annual tax hike rate of the town will be relative small if you stay put. In the long run(7 year plus) payment increase of owning will be far less than rent increase.

Agreed buy and lend for average Joe now a day mostly not making any sense. One making sense situation of purchasing multifamily now is living in 1 unit as owner, and lend other units out, given the fact of buying 2 families or triple decker still cheaper than buying 2 or 3 condos separately, on monthly payment (include tax and insurance and maintenance). If the price is right, it will end up better than renting for the owner. If that multifamily located in towns with good public school system, and you have kids, then you will win out further by not paying private school, while collecting rent to off set your mortgage payment, while expense out things on tenant units, in addition to tax benefit of home owner. The downside is higher mortgage rate, higher insurance rate, and you are living with your tenant right next to you, and lost privacy and have to deal with all kind of landlord duties. This will not fit for everyone, but financially make most sense.
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PostPosted: Sun Jul 02, 2017 4:51 pm GMT    Post subject: Reply with quote

"Instead REITs are using the cheap interest rates to build luxury apt complexes knowing full well that they can still make money with 50% occupancy."

Well, that sucks. There is tons of inventory in the "luxury" apartment complexes all over Boston and greater Boston but if landlords can still make money with only half of them filled, it seems to follow that the glut will not bring rents and/or prices down.

I for one cannot wait for this whole thing to come crashing down. But will "they" (the powers that be) allow it to happen again (2008)?
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RealEstateCafe



Joined: 11 Dec 2007
Posts: 234
Location: Cambridge, MA

PostPosted: Thu Jul 06, 2017 7:36 pm GMT    Post subject: Reply with quote

Coming late to this thread but have watched boom / bust cycles since Reagan juiced housing market with supply side economics & real estate syndication overbuilt like today's luxury condos.

Have also watched #GamesREagentsPlay for 25 years, but have never seen as expose as powerful as the CBC Hidden Camera in the link below.

Anyone want to view in small group MeetUp, or meet privately? If @ImpactHubBOS agrees, will meet at 50 Milk St Monday July 10, 6pm?

http://bit.ly/SumLuvREply
_________________
Bill Wendel
The Real Estate Cafe
Serving a menu of money-saving services since 1995
97a Garden St.
Cambridge, MA 02138
617-661-4046
realestatecafe@gmail.com
http://realestatecafe.com/blog
http://twitter.com/RealEstateCafe
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RealEstateCafe



Joined: 11 Dec 2007
Posts: 234
Location: Cambridge, MA

PostPosted: Thu Jul 06, 2017 7:39 pm GMT    Post subject: Reply with quote

Revised link:

Record home prices: What role are #FakeBuyerAgents & #BiddingWars playing?

http://bit.ly/DefBuyrsExpose
_________________
Bill Wendel
The Real Estate Cafe
Serving a menu of money-saving services since 1995
97a Garden St.
Cambridge, MA 02138
617-661-4046
realestatecafe@gmail.com
http://realestatecafe.com/blog
http://twitter.com/RealEstateCafe
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PostPosted: Fri Jul 07, 2017 4:45 pm GMT    Post subject: Reply with quote

Quote:
I can only hope the Fed does not do this again and let's the market crash like it should have in 2009. It is then, and only then, that the principals of free markets can be restored and true economic growth to grow. As long as our economy is built on bullshit and Fed Bank meddling, it will never be like it was, or like the principals our country was founded on.


Even if the Fed stops meddling, MA meddling will continue. On August 2, 2012, Governor Deval Patrick signed “An Act Preventing Unlawful and Unnecessary Foreclosures.” Now it takes 3-4 years to foreclose on a home in MA with the banks forced to do mortgage modifications first before foreclosing. This slows down the foreclosure process and puts a floor on how low prices can go. We will never see the same kinds of discounts in foreclosure sales like in the past downturns unless you have bank insider connections to buy foreclosures directly from the banks.
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Real Estate Guy
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PostPosted: Sat Jul 08, 2017 7:59 pm GMT    Post subject: Reply with quote

Quote:
if the Fed stops meddling, MA meddling will continue. On August 2, 2012, Governor Deval Patrick signed “An Act Preventing Unlawful and Unnecessary Foreclosures.” Now it takes 3-4 years to foreclose on a home in MA with the banks forced to do mortgage modifications first before foreclosing. This slows down the foreclosure process and puts a floor on how low prices can go. We will never see the same kinds of discounts in foreclosure sales like in the past downturns unless you have bank insider connections to buy foreclosures directly from the banks.

Yes this is another example of government interference ruining free markets. Any time government meddles, it is wrong because governments don't have a clue about true economics, or free market principles. By definition, free market equals NO INTERVENTION because it should be free. What a crock of shit America is selling. What many brave people died for, today's over educated morons have destroyed by overstepping the constitution and manipulating markets. Might as well call it what it is-SOCIALISM. However, in specific response to your statement about MA meddling, I agree. If the Fed Bank doesn't follow with more manipulation though, prices will still drop/crash because even without foreclosures, the market itself will correct via its current inventory of normal buyers and sellers that have to exchange.
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PostPosted: Tue Jul 11, 2017 7:55 pm GMT    Post subject: Reply with quote

Real Estate Guy wrote:
To the person who feels excitement in buying a property in Milton in 2014 and now has "100k" in equity: Congratulations, you should sell.


I have no desire to sell. There's no way in hell I can rent my house in Milton for the $1800 I pay monthly that includes my interest, insurance and property taxes. I bought my house for $330k at rock bottom interests rates. I can't even get a 3-bedroom apartment in the crap parts of Dorchester for $1800, and I have kids to think about.

I don't think prices will go below my purchase price, and even if it did, I doubt rent would be lower than $1800 for a 3 bedroom, making it pointless for me to sell. If it ever came to a point where rent crashed below $1800 and my house is now worth sub-$300k, we would all be collectively fucked, you included because unemployment would be in the double digits.
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MR
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PostPosted: Tue Jul 11, 2017 8:12 pm GMT    Post subject: Reply with quote

I want to make a point that there is a real human desire to have other people confirm your biases despite facts on the ground stating otherwise. I was in this position in 2013-2014. I too believed and hoped the market was going to cool off then. I gave practically the same justification that RealEstateGuy and others on here gave. I wasted a year and missed out on some great deals. Finally, my wife was pregnant again and we knew we had to move from our shitty Dorchester apt. Saw a fixer-upper in Milton and we pulled the trigger despite heavy reservations on my part.

The market kept going up. Now that I purchased, I have biases wanting the market keep rocketing up. It's funny how the brain is so addicted to confirmation bias. But honestly, I don't care any more. I have locked-in low interests and a monthly payment I could easily afford for life. My kids are in a very good school district that is also surprisingly diverse. The house has been worth it just on the sheer fact that it eliminated the giant regret and stress of Zillow-hunting I would have had over the past several years if I had still been renting.

Bottom line: buy when you need to buy and if you can afford the monthly payment. Waiting for the bottom is a fool's errand.
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RealEstateCafe



Joined: 11 Dec 2007
Posts: 234
Location: Cambridge, MA

PostPosted: Tue Jul 11, 2017 8:54 pm GMT    Post subject: Reply with quote

Are you arguing that market cyclicals are biases?

FLASHBACK 3Q2016:

Six months after warning homebuyers on BostonBubble of a changing housing market, October stats and recent headlines reveal that real estate sales and prices are falling in Massachusetts

http://bit.ly/MassREDipOct2016

http://bit.ly/RESlumpLinks

As interest rates rise, will 1Q2017 see a repeat of 1Q2016? If you’re inclined to buy, here’s the case for bargain hunting this time of year:

http://bit.ly/WinterREBargains

FLASHBACK 1Q2016

Yesterday, Boston Globe ran a story on Peak Rents, today another indication that 2016 is turning point:

51 towns & Metro #Boston suburbs have begun 2016 on home price losing streak

http://bit.ly/MetroBosREDown
_________________
Bill Wendel
The Real Estate Cafe
Serving a menu of money-saving services since 1995
97a Garden St.
Cambridge, MA 02138
617-661-4046
realestatecafe@gmail.com
http://realestatecafe.com/blog
http://twitter.com/RealEstateCafe
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