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Am I stupid for not buying a house now???
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Guest






PostPosted: Thu Feb 15, 2018 2:57 pm GMT    Post subject: Reply with quote

Quote:
Oh, this time the great pumpkin will be real too. Powell actually voted for QE. He will do the same when the next time comes.


https://www.cnbc.com/2018/02/07/fed-chairman-powell-could-have-a-few-surprises-in-store-for-the-market.html


This is the problem today. People that don't have a clue what their talking about, talk too much, and buy over priced assets. Hmmmm, maybe they own pumpkin patched too?
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Guest






PostPosted: Thu Feb 15, 2018 6:41 pm GMT    Post subject: Reply with quote

Quote:
The difference in monthly payments between a 4% mortgage and a 7% one is massive - I had no idea until I actually calculated it yesterday


Bostonilpad, when to buy a house is very personal decision to make. One thing for sure is even at the bottom of the housing market, you still most likely feel like shit when you buy your house, because you most likely will in one hand worry about your job, and in the other hand dealing with all the ridicules from people surrounding you.

A good time to buy is when you feel like you can afford the place with fixed rate. A best time to buy is when everyone surrounding you are not buying. The worst time to buy is when everyone surrounding you are try to buy, yet most of them can not afford buying one.

Stop scare yourself with 7% mortgage rate, because you will never experience this in your life time. let me explain to you why.
When you think of 7% interest rate, you are thinking about 7% rate with TODAY's home price. If you buy today, most likely you should get a FIXED interest rate, to justify the high price with the relatively low mortgage rate. If you try to get today's price with adjustable rate, because you can not afford the price, then it is a BAD buying decision.
if the mortgage rate get up to 7%, the home price most likely will have a substantial drop, unless the average income grow way higher.

Every dumb ass knows jacking up the rate will crash all markets now, including equity, real estate, commodity. I said all markets means pretty much everything. So why and how dare the FED to raise interest rate to make mortgage rate at 7%?!

Keep things simple, don't over analyze the situation. Do what is right for you and your family in the next 5 years. If that includes buying a house meet your expectation and affordability, so be it.
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Guest






PostPosted: Thu Feb 15, 2018 6:57 pm GMT    Post subject: Reply with quote

Quote:
Every dumb ass knows jacking up the rate will crash all markets now, including equity, real estate, commodity. I said all markets means pretty much everything. So why and how dare the FED to raise interest rate to make mortgage rate at 7%?!


This is not true. Interest rates on mortgages are closely tied to the 10 Year Treasury Yield. That can rise or fall regardless of what the Fed does with Fund Rate. For example, the 10 Year(and thus mortgage rates) have gone up nearly 50 basis points in the last 2 months. The Fed hasn't raised rates durring this time period. Factors such as our High Debt will increase these yields, and are. The other factor is inflation.Yields will rise with inflation, and I got news for ya, it's coming big time. Years of money printing and buy buying by the Fed is starting an inflation mountain. And if this isn't enough to convince you rates will rise significantly, remember the Fed is also allowing 50 billion per month roll off their balance sheet. This flooded supply to the Treasury markets will also push up rates. Bam, Trifector! Happy house shopping.
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Guest






PostPosted: Thu Feb 15, 2018 7:57 pm GMT    Post subject: Reply with quote

Quote:
This is not true. Interest rates on mortgages are closely tied to the 10 Year Treasury Yield. That can rise or fall regardless of what the Fed does with Fund Rate. For example, the 10 Year(and thus mortgage rates) have gone up nearly 50 basis points in the last 2 months. The Fed hasn't raised rates durring this time period.


Are you sure about what you said above? Didn't yellen said there will be rate hike on March before she left the FED? Isn't it the expectation of future rate hike from FED direct the Yield?
I hope you are right about this rate hike. But I still don't see how and why the FED would allow the rate get up to a point to support average 7% mortgage rate, especially when the government debt is keep growing. Why would anymore want to crash the economy? What good will it bring to the economy with the large rate hike? Try to worry about inflation rate? Since when the FED put inflation over economic stability?
Please, the inflation has been super bad since they start QE, but it contains largely in area of housing, education and healthcare sections, so the FED and government officials are keep telling you the B.S. of inflation rate is low. If you think future inflation is going to be so bad, and ignore the fact that current inflation is already super bad, then good luck getting the right answer with your wrong formula to begin with.
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Guest






PostPosted: Fri Feb 16, 2018 1:48 am GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
Every dumb ass knows jacking up the rate will crash all markets now, including equity, real estate, commodity. I said all markets means pretty much everything. So why and how dare the FED to raise interest rate to make mortgage rate at 7%?!


This is not true. Interest rates on mortgages are closely tied to the 10 Year Treasury Yield. That can rise or fall regardless of what the Fed does with Fund Rate. For example, the 10 Year(and thus mortgage rates) have gone up nearly 50 basis points in the last 2 months. The Fed hasn't raised rates durring this time period. Factors such as our High Debt will increase these yields, and are. The other factor is inflation.Yields will rise with inflation, and I got news for ya, it's coming big time. Years of money printing and buy buying by the Fed is starting an inflation mountain. And if this isn't enough to convince you rates will rise significantly, remember the Fed is also allowing 50 billion per month roll off their balance sheet. This flooded supply to the Treasury markets will also push up rates. Bam, Trifector! Happy house shopping.


I doubt we will get sustained high inflation because most people are making little money compared to the 70s and 80s. Go to most states and everyone there makes like 30-40k/year. It's only in some cities that we see high salaries like in Boston.

Anyway, it would be good if mortgage rates rise to 7% because it will trigger a big recession. When the Fed drops short term rates to near zero again, you can refinance at a lower rate.

You will be in for a shock when you pay market rent in Newton or anywhere else. 900 usually gets you a room in an average apartment. Nicer 1 bd apts go for at least 2.5k. The kick in the teeth is that high mortgage rates make rents go higher because fewer people are buying.
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Bostonlilypad
Guest





PostPosted: Fri Feb 16, 2018 2:11 am GMT    Post subject: Reply with quote

Anonymous wrote:
Anonymous wrote:
Quote:
Every dumb ass knows jacking up the rate will crash all markets now, including equity, real estate, commodity. I said all markets means pretty much everything. So why and how dare the FED to raise interest rate to make mortgage rate at 7%?!


This is not true. Interest rates on mortgages are closely tied to the 10 Year Treasury Yield. That can rise or fall regardless of what the Fed does with Fund Rate. For example, the 10 Year(and thus mortgage rates) have gone up nearly 50 basis points in the last 2 months. The Fed hasn't raised rates durring this time period. Factors such as our High Debt will increase these yields, and are. The other factor is inflation.Yields will rise with inflation, and I got news for ya, it's coming big time. Years of money printing and buy buying by the Fed is starting an inflation mountain. And if this isn't enough to convince you rates will rise significantly, remember the Fed is also allowing 50 billion per month roll off their balance sheet. This flooded supply to the Treasury markets will also push up rates. Bam, Trifector! Happy house shopping.


I doubt we will get sustained high inflation because most people are making little money compared to the 70s and 80s. Go to most states and everyone there makes like 30-40k/year. It's only in some cities that we see high salaries like in Boston.

Anyway, it would be good if mortgage rates rise to 7% because it will trigger a big recession. When the Fed drops short term rates to near zero again, you can refinance at a lower rate.

You will be in for a shock when you pay market rent in Newton or anywhere else. 900 usually gets you a room in an average apartment. Nicer 1 bd apts go for at least 2.5k. The kick in the teeth is that high mortgage rates make rents go higher because fewer people are buying.


Thanks everyone, I like how this topic has kicked off some cool conversations about the economy. Guest, trust me I’m well aware of the market rate, which is why I’ve stayed put. Don’t get me wrong though my apartment is a shit hole for the most part, but it’s a place to live so I can save.

I think if it gets to the point with even higher rent with higher mortgage rates and no price drop, I will simply leave Boston. It just won’t be worth it at that point to me, I don’t make 130k a year here, I could make something similar and have a higher standard of living else where, but my families here so.

I’ve read so many articles about how, even though you think higher interest rates cause lower home prices, they actually don’t. Whether that’s true or not who knows, but if it is then I probably will never own here unless we see a deep recession, hopefully I’ll still have a job if that happen, ha!
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Guest






PostPosted: Tue Feb 20, 2018 7:55 pm GMT    Post subject: Reply with quote

So, the person that posted their experiences during the last recession was spot on - it really depends on where you buy.

In most "good" neighborhoods, you're not going to see housing values crash 20% or more, like that one idiot anon keeps saying. The reason is that those people have emergency funds, and don't need to sell. Why would they take a bath on a house if they don't have to?

In less affluent neighborhoods, it's a mixed bag. I knew more than one person who was underwater and couldn't sell even if they wanted to. But you might not want some of those houses.

I was trying to buy a house in 09-10, looking near 95 (Waltham, Watertown, Arlington, etc.) and I kept waiting for housing prices to go down... but they didn't. The only discount houses were houses that people didn't maintain. The nice houses just stayed off the market.

In short, the housing bears probably aren't right, but it's unlikely prices will keep going up like they have been. You gotta buy when it works for your situation. I wanted my kids to have their own house, so I chose to buy then, regardless of the market.
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Elrond



Joined: 27 Feb 2013
Posts: 48
Location: Boston, MA

PostPosted: Tue Feb 20, 2018 9:06 pm GMT    Post subject: Reply with quote

Anonymous wrote:
So, the person that posted their experiences during the last recession was spot on - it really depends on where you buy.

In most "good" neighborhoods, you're not going to see housing values crash 20% or more, like that one idiot anon keeps saying. The reason is that those people have emergency funds, and don't need to sell. Why would they take a bath on a house if they don't have to?

In less affluent neighborhoods, it's a mixed bag. I knew more than one person who was underwater and couldn't sell even if they wanted to. But you might not want some of those houses.

I was trying to buy a house in 09-10, looking near 95 (Waltham, Watertown, Arlington, etc.) and I kept waiting for housing prices to go down... but they didn't. The only discount houses were houses that people didn't maintain. The nice houses just stayed off the market.

In short, the housing bears probably aren't right, but it's unlikely prices will keep going up like they have been. You gotta buy when it works for your situation. I wanted my kids to have their own house, so I chose to buy then, regardless of the market.


In the last recession, there were 1000s of distressed properties in Boston. So many homeowners foreclosed on and no part of the city was immune.

Anyone remember group auctions by Accelerated Marketing Partners? They sold hundreds of condos in the MA area, including the South End, JP, Kenmore, Back Bay, etc at fire sale prices because their developers couldn't sell the units. Even very large developments were affected. The W Boston for example filed for bankruptcy.

While it's true that many people will have emergency funds, certainly not everyone will. Lots of people buy too much home and can get squeezed due to some kind of hardship.
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Guest






PostPosted: Wed Feb 21, 2018 3:50 am GMT    Post subject: Reply with quote

Elrond wrote:
Anonymous wrote:
So, the person that posted their experiences during the last recession was spot on - it really depends on where you buy.

In most "good" neighborhoods, you're not going to see housing values crash 20% or more, like that one idiot anon keeps saying. The reason is that those people have emergency funds, and don't need to sell. Why would they take a bath on a house if they don't have to?

In less affluent neighborhoods, it's a mixed bag. I knew more than one person who was underwater and couldn't sell even if they wanted to. But you might not want some of those houses.

I was trying to buy a house in 09-10, looking near 95 (Waltham, Watertown, Arlington, etc.) and I kept waiting for housing prices to go down... but they didn't. The only discount houses were houses that people didn't maintain. The nice houses just stayed off the market.

In short, the housing bears probably aren't right, but it's unlikely prices will keep going up like they have been. You gotta buy when it works for your situation. I wanted my kids to have their own house, so I chose to buy then, regardless of the market.


In the last recession, there were 1000s of distressed properties in Boston. So many homeowners foreclosed on and no part of the city was immune.

Anyone remember group auctions by Accelerated Marketing Partners? They sold hundreds of condos in the MA area, including the South End, JP, Kenmore, Back Bay, etc at fire sale prices because their developers couldn't sell the units. Even very large developments were affected. The W Boston for example filed for bankruptcy.

While it's true that many people will have emergency funds, certainly not everyone will. Lots of people buy too much home and can get squeezed due to some kind of hardship.


Most of the thousands of distressed fire sale properties in the Boston area were in Roxbury, Mattapan and Dorchester. There definitely were some nice discounted condos. I remember Ritz Carlton condos for 20% off from the peak prices. Condos lose more of their value because there are so many of them. You will get better deals further away from Boston. I remember some Nouvelle Natick condos for 25-30% off peak prices. Houses in Wellesley and Newton lost maybe 10%. I think the average discount from peak in 2006 to bottom in 2012 was 16%. I'm sure we will see similar discounts the next time around.
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Guest






PostPosted: Wed Feb 21, 2018 5:21 pm GMT    Post subject: Reply with quote

I remember some of those crazy prices. Back in the summer of 2012 I attended an auction at 25 Wiswall Rd in Newton. Bank opened bidding at something like 800k and only one person stepped up and bid over the bank. Very few interested parties were there.

That house is worth at least double that now, probably more. There are always deals to be had, that was probably one of the best buys I'd ever seen.
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Guest






PostPosted: Wed Feb 21, 2018 8:09 pm GMT    Post subject: Reply with quote

It's amazing to me how each time this cycles the real estate bulls are out in full force, like now. What these bulls forget is the only reason real estate is stable and has risen is because of ultra low rates for a decade and QE. So now that's slowly ending. I do not believe this will cause a crash, but surely a correction at first. Then, at some point when we have our next recession and unemployment rises back to say 10%, prices will plummet. Our country is now tapped. There will be no QE 4, especially under Powell. He'd lower rates but that won't have the same impact QE1-QE3 had-not even close. So real-estate will slowly come down(probably 10%) over next couple years(but this is worse than it sounds because it's not increasing in the face of inflation). Then after a couple years of being a really bad investment due to this, it will correct another 10%+ when recession hits. For those who want to buy, good luck. Long term maybe you'll be OK. Otherwise, it's just simply a shirty investment over the next 5-8 years. Personally, I'd rent. Easy for me to say because I own, but I wouldn't buy in this market. Not a chance
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Guest
Guest





PostPosted: Fri Feb 23, 2018 2:40 am GMT    Post subject: Reply with quote

I've lived here in the South End for many years. During the great recession, there were no bargains here in central Boston the way you think. One Back Bay,
The W, The Bryant all had sluggish sales and units went to auction. But I'd hardly call any of the sale prices a bargain, and neither would you. These were all new construction properties and they sold for $800 - $900 sf on average. Actually, today they would sell for in excess of $1300 sf. But 8 years ago, that was very steep.
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Elrond



Joined: 27 Feb 2013
Posts: 48
Location: Boston, MA

PostPosted: Fri Feb 23, 2018 4:13 am GMT    Post subject: Reply with quote

Guest wrote:
I've lived here in the South End for many years. During the great recession, there were no bargains here in central Boston the way you think. One Back Bay,
The W, The Bryant all had sluggish sales and units went to auction. But I'd hardly call any of the sale prices a bargain, and neither would you. These were all new construction properties and they sold for $800 - $900 sf on average. Actually, today they would sell for in excess of $1300 sf. But 8 years ago, that was very steep.


Your memory is hugely inaccurate on the $800-$900 price tag.

The 1850 Lofts sold for an average of $447/sf.

The Bryant units sold for an average of $676/sf, and those units were really nice, private elevator access, terraces, etc:
http://bostonrealestateobserver.com/wp-content/uploads/2009/10/bryant-back-bay-auction-results.pdf

Absolute fucking steal...
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Guest





PostPosted: Fri Feb 23, 2018 4:26 am GMT    Post subject: Reply with quote

You're right. My memory failed me. But my essential point still stands that these units at $1.3 - $1.5 M were hardly a bargain for 2000 sf.
Those were very pricey back then. They seem pricey now. And try to find one for under about $2.3 M now.
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Guest





PostPosted: Fri Feb 23, 2018 4:30 am GMT    Post subject: Reply with quote

And I went to see the 1850 Lofts at open house back then. They are in a totally different league all together. You were buying basically unfinishes square footage in a crappy location. I'm surprised they got $477 sf during the recession.
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