bostonbubble.com

[Real Estate Guy]

To Milton Buyer: I am happy for you that you've locked a rate and payment you can afford. I am, and have always been of the mind set that if you find something in real estate you like, can afford, and plan to stay long term then go for it. The problem with the Millennial thinking like this however is that your generation doesn't buy to create wealth, they by out of desperation to "cap their payment". In this country we had a thriving middle class. Where did most of that wealth come from? You guessed it: Real estate equity. People used to buy 2 families as investment where one side paid the mortgage and the other was income. Millennials today buy at such prices that both units don't pay the mortgage. The rational is like yours in that it "lowers their payment". For this is what the Fed Bank has done to your generation. I am not faulting you. I'm just pointing out that in all likelihood, you will never see much equity in your home. Your home, one of your biggest asset purchases, is as you explained, a "good rent deal". If this market doesn't correct then prices will stay inflated, you will still have minimal equity and gain nearly 0% on savings. If you invest in other assets while everything is a bubble, you will loose. So, although your rental payment may be good for you, it's the overall lack of reward of any equity that is so devastating here. This market is unsustainable. You bought just before the echo bubble, which is the last push before correction. Your house will be worth less than you paid after the correction, and in 10 years you'll be lucky if it's worth what you paid for it. Stagnate equity. On the bright side, you like your payment. In regards to opinions being a mind set I can't say I agree. I would usually be on board with wanting prices to "keep rocketing higher", but when prices are not based on tru economic growth, but only propped up by Fed stimulus caution is needed. In the late 90's real estate grew on internet, great GDP of 4/5% and all while rates were 7%-8%. This market you bought in is not rooted in that solid foundation. It's rooted in quantitative fed stimulus and easy money. It took 10 years of 0% money and Fed Bank bond buy backs of 4.5 trillion. What is created on stimulus, can not be considered "solid". It is a house built without a foundation.

[Real Estate Guy]

http://dailyreckoning.com/the-echo-bubble-in-housing-is-about-to-pop/

[Guest]

[Guest]

[Real Estate Guy]

Fake News? Who are you Donald Trump Jr?. Any economist that can't see this is an echo bubble caused by a last minute push to buy and lock rates is clueless or has no real world experience(like Yellen). These academics are a cancer. I suppose it will take time for some people to get it. Some financial pain as well. If it's such a good time to buy, hopefully your putting plenty of money into the housing market. Let me know how that works out for ya.

[TrainGuy]

[RealEstateCafe]

One in three buyer's now is NOT an end user, See reference to external demand on link in this Tweet to Boston mayorial candidate Tito Jackson:

https://twitter.com/realestatecafe/status/884583744400707585

Hurry, don't delay: FREE Rich Dad / Poor Dad get rich quick investing at the top of the real estate cycle seminar swinging through Nashua, NH. No joke.
_________________
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

[MR]

I had an econ professor in college who loved to say it's not a matter of being right, it's a matter of being right with the right timing. He was very wise.

Yes we may be in a bubble, but if you (and others like the link you provided) were stating it was a bubble in 2015, and it's now 2017 and the bubble remains, then you've missed out on 2 years of a rising real estate and stock market.

It's like the "China is about to collapse" prognosticators who have been calling for its housing bubble collapse since the 2008 Beijing Olympics (remember all those Ghost Cities stories?). Well it's now almost a decade later and real estate in China is now double to triple 2008 prices. That Chinese farmer who rationally thought in a pattern just like you and decided to hold off buying in 2008 is now probably thinking of committing suicide.

Ultimately none of us are that good to always get the timing right. You buy when you need it and can afford it.

[MR]

[RealEstateCafe]

Regrettably local real estate coverage lacks historical context and listing agents certainly aren't going to volunteer the impact of continued near record low interest rates. Here's what happen the last time mortgage rates began to rise:

FLASHBACK: October 2013

Seems some heavy hitters are seeing signs again of a “significant change in direction in August” causing the chief economist for the National Association of Realtors, to say:

“…fear of rising rates hurried people into making a decision (in June),”
“It was the last hurrah for the next 12 to 18 months.”

Today, readers of Boston.com’s real estate blog are exchanging arguments about whether recent homebuyers will regret the prices they paid during the past two quarters. Out of frustration, one asked, “Is there ever been a good time to buy?” Here are some flashbacks from the past decade to help individual homebuyers answer that question.

http://bit.ly/LastREhurrah
_________________
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

[Real Estate Guy]

Fair enough. It's all about opinions, and yes, timing. That article from 2015 is one of many about this echo bubble. There is no way to determine when she blows. There is no rule that says it's 2 years, or 4 years or more. That's up to your intuition I suppose. As I said before, buying a property for the long haul without necessity for equity is all up to that buyer. Safe enough with no or little upside. I commend you for "rolling with the punches". I do not have that luxury. I'm a developer that buys to build or retain. I have a portfolio from the past and am happy with it. I am not happy moving forward however because after 10 years of stimulus, and not an estimated 3-5 years of unwinding it spells trouble. The Fed Bank has made risk taking a ridiculous endeavor. The odds of correction are high. He who invests to build/develop, or to merely invest in real estate faces serious consequences if this goes the way it looks. The Fed Bank robbed us of gaining interest on savings, created bubbles, forces buyers like you to buy high with cheap debt? Why? Why all the agony to us? To bail out the big banks, that's why. Regardless of who we are, or what our endeavor in real estate is, we all have lost due to these policies. I write here for the buyers, unlike yourself, that are contemplating buying as "a first home", or with the intention of moving, or those that might loose there job and are forced to sell at a major loss during the correction. What about them, or the people the pull some equity out furring this echo bubble. Not every buyer buys with the conviction that the can stay put, or that they can always afford their payments. Many people have dual income considered in their loan. One spouse gets sick, or looses their job then what. If the market isn't down 20%-40%, I suppose their fine. I had a lot of friends that got cooked in 2009+. I see the same concerns in housing now, and if nothing else, hopefully this thread will at least get people to do some more research before making their decisions.
Cheers.

[RealEstateCafe]

Bravo Real Estate Guy. Yes, we privatize gains and socialize losses. A decade ago, taxpayers guaranteed one in three mortgages, now it's 90%. If we have to pick up the tab, IMHO taxpayers should insist that buyer agents represent OUR financial interest in transactions even if uninformed buyers want to proceed without one.

Regardless, agree with your advice -- Millennials and others should do research. Visiting this link will help you understand why some call the last boom / bust cycle the "lost decade" in housing:

http://bit.ly/20Drop2007
_________________
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

[Real Estate Guy]

Great information @RealEstateCafe. The history of the last decade is telling in and of itself.

[RealEstateCafe]

Thanks Real Estate Guy. I'm still hoping wisdom comes with age.

One of the tell-tale signs of overheated markets in the past have been well-intended but sometimes misguided innovations:

1. Downpayment assistance from sellers so you can afford their overpriced house;

2. Shared equity so investors can use OPM -- other people's money, to keep the party going; and

3. Buying in groups. If individuals are priced out, why not buy together.

Request for feedback:

Is anyone in BostonBubble looking at alternative housing to meet their needs?

If you're priced out of the market, might "coliving" be a way to create your own affordable Housing. You can comment below or record a one minute reply to this mini-idea starter:

http://bit.ly/DIYAffrdREply
_________________
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

[Guest]