bostonbubble.com

[john p]

You love it.

[john p]

Seriously, why do people move to one area in mass? Economics like the Mexicans and Brazilians, persecution like the Italians, a Potato Famine brought the Irish. What about people coming here because home for them is a backwards or even dangerous place?

You're the type that gets frustrated by a blog thread; you might be a breath of fresh air for someone that has had to live in corrupt countries where you get shaken down by local police or can't do business because the justice system sucks and there is no case law etc.

The truth is that some of the people from these "emerging markets" might want to live here. Think about it, a US company buys and brands a local Chinese company. After some time, the US folks build relationships with their Chinese counterparts. The Chinese guy comes to the US for a training session and the operations manager thinks for a second and realizes that they can pay this guy peanuts compared to the primadonna guy and he'll work like a bastard for the little he's paid. The first guy comes, he brings his friend, and the next thing you know Quincy is Chinatown South. It's America, the more things change the more they stay the same.

How this applies to the housing market is the buyers to sellers ratio. If the economy is growing faster in India what is the draw here? Maybe it's that people are backwards there, there is awful poverty or corruption, who knows; that's why I asked. If you want to get an edge on the market you need to be more open to information. People that are categorical and closed minded usually don't make out as well because they won't put themselves out on the edge.

[Guest]

Sure the income earned by the tech employees is maybe 30-50% of that of US IT employees, but what is the use of all that money when you have to live in such horrible conditions?

And who knows, all those shantytown people see these relatively far richer IT employees, and a revolution could be afoot soon. Don't invest in those India funds. Whenever there is a huge disparity, these things end in revolutions.

[admin]

[krishnarama]

I think it is true . living like a king in your home. But rarely can you get out and spend sometime outside. You can have mercedez,but where are the roads. Yah they are building now,but they won't be enough. It is also not secure in big cities. there are always some bombs exploding. there are also no parks,no clean lakes. Traffic is horrible. Pollution,oh please. Let us not get there. What about the smell and hygiene. I used to joke around here with my friends when I first came to states that two things I see more often are trash bins and restrooms with tab water. They are virtually taken for granted here. But over there in INDIA,oh boy they are privileges. It is extremely uncomfortable for women once they go outside. Because there are no restrooms. Forget about water. Whenever I come back from India, I would go to kitchen ,turn the tab ,fill up the glass and drink the water and pause and think myself ,"Man that was easy". Not that the income disparities are not visible here in states. They are actually widening between haves and have nots because of the printing presses run by FED. Those who have access to those freshly printed $s get benefit ,but others pay prices by inflation. But they are much more visible there and very uncomfortable to live with even for those who have the wealth and the sense. If you don't have the respect for others but have wealth,that is probably a good place. Also male female ratio already titled towards males. There are more males than females. I got married seven years ago. I got lucky. Now if you are guy,good luck getting married. It used be that guys select girls even it is arranged marriage. Now it is girls turn. There are lots of 30+ guys unmarried. What do they do now. They stare at all the girls (wherever they find them) from top to bottom . It is really uncomfortable and disgusting. I have seen it when I went out with my wife last year in South India. That is one reason why my doesn't want to go back there. No if you they pay me in INDIA as much they pay in Boston , I wouldn't even think about it. For some, money is everything.For others money is just as iimportant as clean environment with better infrastructure with
museums/night life/out door activities/education/diversified stable economy/and much more open society. I can't Bill Maher in India although I can still watch his show in HBO in India. But there is a big difference.

[krishnarama]

I should say that "Even if they pay me in INDIA as much they pay in Boston , I wouldn't even consider going back".Damn, those Malbec wines really make me dizzy.

[hackamada_the]

> please note that this is january...triple that number come
> spring/early summer when the expired listings etc come
> back on the mkt...maybe quadruple or more it since this
> is asking price (which doesn't mean that much) and as sales
> prices slide-higher priced homes slip into this price category...

That is probably true. But the query gives me almost the same results from October 2007... May be Spring and Summer are better. Actualy I have one extended query which includes Worcester and Leominster but with more restrictions. It returns 175 homes now. It used to return 191 in October. And it was only 164 on 1/1/2007

> My suggestion about the potential for decrease in values by
> 20-30% is because of the Credit Crisis

It is quite possible. But if rent prices do not go down then I think the home prices (actual sold prices) will not decrease more than 20%. The list prices might decrease by 30%. If the home prices decrease more, then people who is renting will start buying imho.

According to the numbers provided by admin, if I want to buy a home in 2008, I should do this right now. I mean right now, in Januarry, because they should go up starting February. And seasonal variations even bigger than year-to-year. But I do not have a home I really want to buy so I'll probably hope that you are right and wait. We'll see next year who is right and I hope you are

Guys, is there any good long term statistics on MLS inventory around? I have collected some statistics myself beginning from October but do not have anything long term?

Does anybody have any kind of immigration statistics? How many people applied/approved for Green Card, LC etc?

[hackamada_the]

I forgot to say thanks to krishnarama. This is the great answer and I wanted to say similar things about Russia but could not find such good words. Actually environment in Russia (at least in Moscow) is much better than what krishnarama saying about India but there are still many similar arguments. Money is not everything. If you want to be really happy you probably want to live surrounded by happy people.

[JCK]

[john p]

The one thing that will hurt some native folks is that you find in some nations, they actually pay for certain kids education. These kids say thanks for the free college and then come to the US. The kids here that have to pay the expensive US college tuitions get screwed. It's like an education loophole, the kids that pay the tuitions here keep the education infrastruture strong which helps the region.

Thanks for all the input, it puts things out of my perspective in better order.

[admin]

[john p]

Admin:

A couple of points to weigh in. I think that right after Bill Weld ended rent control in Massachusetts you got a surge in rental prices, and that whipped right into home prices. To say that rents have remained flat during the housing bubble is accurate to a reasonable degree, but I say that they bubbled before the housing bubble. I was paying $395 for a one bedroom in Melrose back in.....jeez.......1997 or so. That apartment is geting like $750 or $800 today. It stayed flat from about 2003 to now. What was a house selling for $395k in 1997 asking today? I think the skyrocketting rents in the late 90's created an impetus for people to buy. Further, from an investment cash flow perspective people were converting triple deckersand selling condos to yuppies and taking the profits to move out to the leafy suburbs. All the big developments you see now were conceived based on the explosion of cash flows in the late 90's. Hell, in late 2000 when the stocks tanked, people were hearing about how much money people were making with 2-families and you fanned the flames with babyboomers investing in condos. I knew a couple renting a tiny, awful place in the North End for a ton of money; they ended up buying a $300k, three level place in South Boston back in...jeez...I helped him move....can't remember, say 2002. Anyway, he just sold South Boston this past Spring for $400k or so and bought in a leafy suburb. He's in his late 30's and our generation was right after the tail end of boomers, so there was too much competition for houses, so many had to settle with condos. It's funny, in the late 90's I saw house prices relatively flat and I had to decide between buying a condo or getting an MBA. I said, if house prices are flat, I might as well increase my cash flow and get the MBA, and then take a 25 year mortgage. I get out of the MBA when the stock market crashed and because I was carrying the heavy load of student loans during turbulent economic times, I couldn't get into a condo during the bubble. I think my generation felt that if something was within reach, you'd better grab it while you can (late 30's). Sure there were boomers retiring in mass in 2011, but we'd be in our 40's by then and many thought it was best to get the 30 year meter started...

Second, I don't see people making less and less money in terms of salary. I do see people's take home being eaten up by bills and property tax, but I do see people getting cost of living increases (not really keeping up). So, what I see are lots of two earner couples with student loans making decent salaries with not so much saved and available for a down payment. I think right now, 5% plus money for closing costs, moving costs, modest decorating, and a 8 month emergency fund is possible for most prepared first time buyers. I think that the housing stock available also adds a wild card of home repairs that could go up to $50k. I think that if credit is available for this profile, you won't see a plunge. If lenders want that 20% down regardless of income, we'll see a significantly lower amount of buyers.

I do think you can make a great deal this winter. Uncertainty is what keeps people on the sidelines, and who sells during uncertain times but motivated sellers (who most likely can make a deal on another transaction as well). It's not always the numbers, it's the properties of the materials. You might have hard nose sellers or motivated sellers. One motivated seller is worth ten hard nose sellers when you're doing your math, so if you have lots of motivated sellers out there now, that's not a bad thing.

I would advise that you should look at where you think things would drop to, and then look at the interest rate where it would align with that price drop,and then look at your job stability and financial position if there was a crash. I am surprised that the government is not letting the subprime folks take their medicine and is bailing them out. I wonder if government intervention, like they are talking now with the whole stimulus talk, isn't going to inject more into the economy. Anyway, pick a target to where you think the bottom is, and then just low ball to what that point is.

What we do know is the ceiling. The FED and the realtors pushed us to our limits. The FED pushed up interest rates in 2006 and the realtors tried to hold up the 2005 prices. It topped out. Now that the peak is defined, we know the upper limit (with exhuberance). Now lose the exhuberance, the investor segment of buyers, those being pushed into buying due to skyrocketting rents, and back off parents of college students buying condos for Buffy and Jody. Now keep in mind that kids coming out of school today are making like 2.5 times what they did 15 years ago because of the recession in the early 90's.... I'd just be careful that you benchmark everthing from the bottom of the 90's and weigh too much on rents given the fact that the property of that material (rent) went through a complete transformation through rent control, and that bubble went through the system into the housing prices.

At the end of next year, we'll know who the President will be, we'll know what Iraq's going to do, we'll see if the dollar settles down or now. People are holding their cards close to the vest right now, and that in of itself will settle things down and create stability. In a year's time we'll have fewer motivated sellers in my view, people will have a better grasp of things.

[spork]

[quote="john p"]
I am surprised that the government is not letting the subprime folks take their medicine and is bailing them out. I wonder if government intervention, like they are talking now with the whole stimulus talk, isn't going to inject more into the economy.
quote]

I was initially irate about this bailout(infringement on free mkts, whats the point of risk then? etc) ...but as I thought about it more, I have come to the conclusion that it is necessary. I have come to the conclusion it is not for the subprime folks (i am referring to homeowners/investors), all though it is sold as it is (beautiful spin-help these poor folks out-they are your neighbors). It is solely for the banks and lendors so as to avoid total finacial collapse. It is lightening the blow a tad for them. It is financially cheaper to do this than the other option-forclosure. They want things to go bad...but not too bad becasue there is a possiblity for a run on the banks...look at the risk even on on smart money now...bonds etc. ..this is going to be a deep recession since it is coupled with a hosuing mkt defalting bubble...it is going to be quite a ride in 08. look out below!

[john p]

So what you're saying is that they will do unorthodox things that defy common sense to stop the hemmoraging, but will fail?

This is the question for the day. Mark your calendar; the FED said yesterday that we need a stimulus; Bush is on board because he still has visions of his face on Mt. Rushmore and doesn't want to be known as the worst US President in History.

Where on earth will the the money come from to pay for the tax cuts? Is that going to be added on to the deficit?

It's funny, Jim Kramer said that what we needed was to raise taxes...

Wouldn't it be great if we could get Pay-Go in this election? Isn't it funny how people take 1.5 years off of their duties to run for a 4 year term office. Who is doing their job? Barack Obama is like a chairman of a Committe that deals with European Affairs; don't you think he ought to be there coming up with strategies to deal with the global housing/credit bubble and the US Dollar, Euro issues? Why on earth does a freshman senator get that type of power to hold a chairmanship on a committee, let alone blow off work and run for President?

[admin]