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Guest
Guest
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 Posted: Wed Jan 16, 2008 11:20 pm GMT Post subject: Advice for housing |
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| I will probably be be relocating to Cambridge starting this fall. I want to live in a 1 bedroom place that is relatively close. It seems that renting in neighboring cities will cost me at least $1200-1300 per month. I figured with the ability to only place a maximum $10,000 down payment, I might research 1 bedroom condos in the area as opposed to spending all the money on rent. This made me research the area and find this website. Do most think that it would be a bad idea to buy now because prices will go down a lot further? Would waiting till the end of this year make any difference? Should I not worry about even buying and just stick to renting throughout my time here. I will probably be here for 5 years, but no guarantees after that. |
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Guest
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| Posted: Thu Jan 17, 2008 12:17 am GMT Post subject: Re: Advice for housing |
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| Guest wrote: | | I will probably be here for 5 years, but no guarantees after that. |
RENT !!!
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Thu Jan 17, 2008 12:56 am GMT Post subject: Re: Advice for housing |
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| Guest wrote: | | I might research 1 bedroom condos in the area as opposed to spending all the money on rent. This made me research the area and find this website. Do most think that it would be a bad idea to buy now because prices will go down a lot further? |
Declining prices aside, renting doesn't necessarily throw away more money than buying because you have plenty of sunk costs when buying too. Even if prices were rising, renting could still cost less overall. I expanded on this concept in some detail at http://www.bostonbubble.com/forums/viewtopic.php?t=29 You should run the numbers for your own situation.
As for where prices will be in five years, S&P/Case-Shiller futures are pointing down, both nominally and adjusted for inflation. Of course, the index is for single family homes, not condos, so it isn't 100% applicable to your situation, but it's better than nothing. It's a vague and unreliable predictor overall, but any other forecasts will probably be even worse (especially those from the NAR and the like).
I'd say decide how much you're willing to pay above renting in order to own, run the numbers for your situation, and see if the price difference is acceptable.
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Guest
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| Posted: Thu Jan 17, 2008 4:26 am GMT Post subject: Re: Advice for housing |
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| admin wrote: |
I'd say decide how much you're willing to pay above renting in order to own, run the numbers for your situation, and see if the price difference is acceptable.
- admin |
I have looked at the numbers somewhat and I think I would be able to absorb the payments during the time because I receive steady payments for living as a graduate student. The problem is if the price would drop drastically and I would have no way of absorbing the losses at the end. |
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Thu Jan 17, 2008 4:37 am GMT Post subject: Re: Advice for housing |
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| Anonymous wrote: |
I have looked at the numbers somewhat and I think I would be able to absorb the payments during the time because I receive steady payments for living as a graduate student. The problem is if the price would drop drastically and I would have no way of absorbing the losses at the end. |
Yeah, that's what I was referring to - the total in the end, rather than the monthly payments. Could you absorb the loss implied by the S&P/Case-Shiller futures? Also, did you account for condo fees, taxes, maintenance, and other non-mortgage related expenses when you ran the monthly numbers?
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Guest
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| Posted: Thu Jan 17, 2008 4:40 am GMT Post subject: Re: Advice for housing |
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| I did look at the other expenses in terms of condo fees, taxes, etc. The problem would be if the housing market continues to fall for 5 straight years. That is the cost I couldn't afford. I guess I was hoping that it would bottom out sooner than that. |
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Thu Jan 17, 2008 2:31 pm GMT Post subject: Re: Advice for housing |
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| Anonymous wrote: | | I did look at the other expenses in terms of condo fees, taxes, etc. The problem would be if the housing market continues to fall for 5 straight years. That is the cost I couldn't afford. I guess I was hoping that it would bottom out sooner than that. |
As of yesterday, the S&P/Case-Shiller futures for Boston priced in declines through 2010 Q3, followed by a very slight up-tick in 2011 Q3 and 2012 Q3. That would still be down substantially from today. The slight up-tick would also most likely be a decline in real terms (assuming inflation doesn't suddenly disappear).
You can get the latest numbers at:
http://futuresource.quote.com/quotes/quotes.jsp?s=BOS&t=Future
Like I said before, the futures aren't necessarily a reliable predictor, I just prefer them to "expert" forecasts because real money is tied directly to their accuracy. The price path that they chart looks plausible enough to me, and I would take the risk seriously enough to put off buying if the implied declines would cause financial hardship (personally, I'd incorporate a margin of safety into the path as well, in case it underestimates declines).
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Anon
Guest
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| Posted: Fri Mar 14, 2008 10:11 pm GMT Post subject: |
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I'm in a similar boat as Guest. I'll be in Cambridge for the next 5 years with a $2200/month stipend. I'm looking at sharing a 3+ bedroom, I like to have roommates around. I've been playing around with the rent/buy calculators and it seems to come out to around break-even for the 5 year period. This is assuming that there is no change in the price of the house. If prices continue to decline, I'm out $ if I buy. But if they go up...
I think I already know the answer to my question, rent, but I just need it affirmed by faceless strangers of the internet. |
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brutus
Guest
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| Posted: Tue Apr 29, 2008 5:38 pm GMT Post subject: |
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Live with the herd, die with the herd.
The smart money buys on the bad news and sells on the good news. One question: is the news good or bad?
The real estate experts are almost always wrong.
the Case-schiller index is no different. Prices in Boston are not in the same boat as prices and trends in California or Florida. The economy here is much stronger, especially in Cambridge and other desirable areas. |
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Tue Apr 29, 2008 5:52 pm GMT Post subject: |
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| brutus wrote: |
The smart money buys on the bad news and sells on the good news. One question: is the news good or bad?
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A necessary condition is not necessarily also a sufficient one.
| brutus wrote: |
The real estate experts are almost always wrong.
the Case-schiller index is no different. Prices in Boston are not in the same boat as prices and trends in California or Florida. The economy here is much stronger, especially in Cambridge and other desirable areas. |
Futures on the S&P/Case-Shiller index are very different from "expert" predictions. There is real money riding on the accuracy of the futures contracts and there is therefore a direct incentive for accuracy (unlike many experts who have an incentive for optimism). If you are saying that you know better where prices are heading, then you could make a lot of money with the futures contracts.
Also, the index that I referred to was specifically for Boston. There is no conflation with the other areas you mentioned.
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