bostonbubble.com

[Guest]

Hi Everyone,
Because I have been rented for so long (since 1992 when I was a student), and my landlord is not very good. I plan to buy a house probably this year or before next spring. However, is it a good time to buy?

Although the interest rate is still low, I checked ziprealty.com and found most houses in Randolph, Willingtom, Tewsbury are still very expensive. Especially if I count property tax and utility cost.

For example, this house (89 FERNANDEZ CIR, Randolph, MA 02368), size: 1454/ 12,197 Sq Ft. is listed $345K. Is it expensive? I checked the household income of this city. It's not that much. How could most new buyers afford living there?


Any thought?

Cheers,

CJ

[Phil O. Math]

CJ, if your landlord sucks then find another place to rent. Now is not a good time to buy. The fundamentals of real estate prices are the ratios of average price to average income and average price to average rent. These 2 ratios have maintained a relatively stable mean for over a hundred years, until now. Even with the declines over the past year, the price of real estate is still very high compared to average rents and average incomes. A reversion to the mean is inevitable and this will mean continued price declines.

But don't take my word for it - keep reading and keep researching.

[brutus]

When prices are down, buy. When prices are up, sell.

Don't listen to the real estate "scientists" though. They are just part of the herd mentality that persists in real estate whether prices are rising or falling.
Live with the herd, die in the stampede.

A house is a place to live. It's only an investment if you are an expert (you're not) or if you hold it for 7-10 years. I've been through a lot of real estate cycles and the pattern is always the same: prices fall and everyone says "Don't buy!" Prices rise and everyone yells "buy now! Quick!"

The bottom is here. By the time prices start to go up, it will be too late to get a good deal. You'll have to slug it out for every decent piece of property with 10 other buyers that waited until the Boston Globe said it was Ok to buy.

Leave the herd. I know one investor who has bought five homes in the last month. They pray for times like these. You sow the seeds of profit the money when the markets are DOWN. When the market goes up you reap.
I know. I've been doing it since 1980

[admin]

[balor123]

Brutus' argument is that because the slope of the house price curve is negative, then it must be a good time to buy. Indeed, historically value investing is often more profitable than growth investing. However, a negative slope on the price curve does not imply a value. It is useful to refer to another recent bubble to understand: the tech bubble.
Prices declined in 2000 but that didn't make investing in NASDAQ stocks a good idea in 2000. From this graph, you can see that the best time to invest was about 2003. Clearly, then, value is defined by another measure. In the case of stocks it might be P/E ratios. In the case of real estate, price to income ratio is a good metric. By this metric, it is still a terrible time to buy. Qualitatively, even amongst the bulls, I haven't found one argument as to why housing prices would increase ignoring the downward pressure. In short, determining value based on price changes alone is akin to momentum investing, not value investing.[/img]

[Guest]

.
The National Association of Realtors
believe the bottom is in
and now is a great time to buy



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