bostonbubble.com

[admin]

As of Monday, May 12th, the inventory of homes for sale in the Boston Metro area has finally exceeded the inventory from the same time 1 year earlier. Low and declining inventory has been a prominent attribute of Boston, and many other markets, since 2012. Anemic inventory combined with anomalously low interest rates has created a terrible environment for buyers with scant options to select from and the need to outbid the other prospective buyers who are most ambivalent and/or oblivious to risk. Of these two pillars, the QE fueled mortgage rates{*} which sparked the frenzy disappeared in the second half of last year and only suffocated inventory remains. A year-over-year increase may signal the beginning of the end for this final pillar.

That said, the year-over-year increase in inventory was a paltry 0.5%. So Boston inventory went from being the worst ever to negligibly above the worst ever. Still, this was a first threshold that needed to be crossed before buyers could regain the ability to buy without being driven over roughshod.

{*} Note that while the super low mortgage rates of 2012 have been undone, current rates are still extremely low by historical comparison. The above was not a suggestion that the risk of a mortgage rate rise has been realized as there is still a substantial upside to mortgage rates. It was merely an observation that the start of the frenzy coincided perfectly with a major drop in rates and that the rates have now returned to roughly where they were pre-frenzy.

- admin

[Richthofen]

Interest rate increases don't matter when you're paying cash, which so many are.

Picture this: Of the inventory for sale out there, only half of it is actually available to real buyers, who plan to live in the homes. With such a large portion of cash buyers out there (investors or foreign nationals), the houses typically bought by first time homebuyers, such as fixer-uppers or smaller houses are already scooped up by the cash buyers. So the remaining stock for young couples to buy are houses too toast to renovate (not that it matters since inspections are being waved again) or too expensive relative to the amount of work they need or the size they are.

I'd say what makes it to MLS these days, the stuff not backroom-dealed before making it to the market, is the leftovers, the suckers bets. Everything under $500k inside the 128 belt is likely a candidate for a gut renovation. Everything over $500k is a 'tasteful remodel that won't last!' on the market for ~100 days.

[admin]

[admin]

[Guest]

> but there may be smaller investors doing similar things.

I agree with this because I know quite a few people who own multiple houses/condos that they rent out.

[balor123]

[mpr]

I wouldn't read to much into this. Spring was late which probably caused people to delay listing somewhat, and you're now getting a rush of listings in the last few weeks. If inventory is still only at last years levels after the release of that pent up supply it isn't actually a great sign for buyers.

[admin]

[Former Arlingtonian]

Everyone I know is convinced that the Housing bubble POP 1.0 was a once in a life time event. The bounce back in values seems to have convince most folks the R?E increases in value as a function of time passing.

Friends who own a second home as a rental don't connect the impact of interest rates with the value of real estate. A neighbor who recenty moved held on to their townhome because of the low interest rate he has on the home and is now renting it out.

I would agree it is great to have some one else pay off your mortgage on your rental.

But, some day this neighbor will have the home paid off, he will still be on the hook for property taxes, HOA fees, special assessments, and the income he receives from a rental will be taxed at his highest income tax bracket. It might be a lot easier to look into buying a REIT mutual fund, but in todays world it is considered cool to be a landlord.

[JCK]

[JCK]

This market, by the way, is awful right now if you're trying to buy. Everything that's not horridly overpriced (based on current market) is underagreement within days.

[admin]