bostonbubble.com

[BS]

Now there is so few homes for sale it seems that the right sellers can ask truly out of touch prices ( and often are getting them). I wonder at what point will the need to sell, increasing supply, help reduce price. Or is there and inflection point at which the market will no longer support these prices... Or with an increase in interest rates will this finally put a cap on "buying power"

As for buying power, does anyone else see it as a risk? If interest rates are 3% and i can afford at $750k home does that reduce my buying power to around 540k at 6% (still a historically low rate) ... If that takes place, and no significant economic advancements, i have to assume i would be "underwater"

238 Austin St, Newton, MA 02465
For Sale: $779,000
Lot:7,840 sqft
Year Built:1927
Last Sold:Nov 2008 for $555,000

No Updates and 224k appreciation in 5 years

http://www.zillow.com/homedetails/238-Austin-St-Newton-MA-02465/56306635_zpid/

993 Walnut St, Newton, MA 02461
For Sale: $699,000

Bathrooms:2 baths
Single Family:2,050 sq ft
Lot:6,516 sqft
Year Built:1951
Last Sold:Mar 2004 for $470,000

[admin]

[Arlingtonian]

The biggest risk RIGHT now is everyone is convinced the NOW is the time to buy and you are competiting against everyone.

MHanson thesis is that there will be a House Buying Demand short fall as a result of the flurry of activity. Its likely you'll at least get a better price than buying while Everyone is saying NOW is the time to buy.

Lets make a stock analogy....the time to buy Apple was when in was trading in the $50-$90 range and no one was talking about it......it highly unlikely to be a good bet when everyone is waiting for the next innovation.

TSLA- everyone is talking about it now that its increased in value by 300-400% ..........

Gold no one wants it now and they didn't want to buy it at $350 or $800 because it was a bubble.

Train your self to ignore the crowd and right at this moment everyone is into real estate. I suspect the R/E fever will calm in the coming months and you'll get a more reasonable price (you won't get a steal necessarily or maybe you will).

Regards.

[BS]

Ignore the crowd:

Arlington i like your sentiment and analogies however as I see it this market has be irrational for a very long time with a 2 year period of subtle sobriety.

I have 40% down money, but i still do not think i will buy... Maybe i will be a long time renter. I just cannot get behind the irrationality that seems to be supported by heavily "lobbied" organizations including the Fed, Realtors and financial institutions.

With these entities creating a artificial demand and supply and demand not being aligned with historic standards.. . I cannot fathom a way we do not see this imploding without external macro eco factors not changing greatly

[Arlingtonian]

Make sure your down payment has some exposure to something that does well with inflation - Gold....expect volatility and only sell on highs.....
Gold can be purchased through your std brokerage as GLD or PHYS or others.

Or Drive to Canada - open a Canadian Bank account....this will protect your money/savings from the US Federal Reserve. This is legal ...you just declare you have a foreign bank account on your Taxes.

Do a combination of the above...

watch http://www.youtube.com/watch?v=80NjUJPlH9Q

[Dismayed]

[admin]

Hey "BS", 238 Austin just dropped to $749K. I know your original point still stands, I just noticed it dropped because it was actually one of the places I looked at this spring and I've been keeping an eye on it. I actually liked it, but my wife wasn't as keen on it.

- admin

[Arlingtonian]

Dismayed,

Multiple Asset classes - is there an asset class that hasn't risen in the lat year??? Emerging Markets perhaps is a asset class worth considering because it would get you out of US Dollars. But , hard to do safely.

Japan does not equal USA

I wish you well.

Kind Regards.

[hopeful61]

Arlingtonian:

I have a lot of cash sitting in various accounts, enough to pay cash for a property yet I've been told it's better to have a mortgage (with the low rates). This savings is reportedly FDIC insured. After reading your last post about opening an account in Canada, and other things I've been reading lately, I am feeling fearful about having so much cash lying around. I haven't bought yet because of craziness in the current market and I don't want to make a mistake since I am also planning retirement and I'm self -employed.

What are your thoughts? Is my cash safe? What would you do with it?

Thanks.

[Former Arlingtonian]

"
I have a lot of cash sitting in various accounts, enough to pay cash for a property yet I've been told it's better to have a mortgage (with the low rates). This savings is reportedly FDIC insured. After reading your last post about opening an account in Canada, and other things I've been reading lately, I am feeling fearful about having so much cash lying around. I haven't bought yet because of craziness in the current market and I don't want to make a mistake since I am also planning retirement and I'm self -employed.

What are your thoughts? Is my cash safe? What would you do with it?

Thanks."

Its very challenging environment to protect your cash in the midst of this craziness. I am not a financial advisor and certainly can't give advice.

Your Money is safe in a Bank- you just don't want to use just one Bank because Banks do close here in the United States and its just a worry you don't need. http://www.fdic.gov/bank/individual/failed/banklist.html

Some folks like to own some gold or gold related investments. The problem with Inflation hedges is they can swing in value - and it will scare the day lights out of you. I'm happy I own them but you never get the timing right. If you own a hedge like a gold investment you need to be willing to wait for US Dollar weakness to sell (never want to sell during a period of US Dollar strength like we are currently experiencing).

Opening a Canadian Bank Account is perfectly legal - they can issue an ATM card are then you'll have currency diversification (but, remember diversification can move in positive or negative directions)

So, step one start educating your self. -- Fred Hickey's High Tech Strategist letter is $140+ per year (I'm not affiliated with him - just a humble subscriber). Mr Hickey is an expert and I'm hoping to have his kind of keen insight someday.

Regards

[admin]

[showgunxx]

I think this place is 'priced right'. It is kind of next to the highway though(but on the 'rich side' of highway), so owner will have to get used to the highway white noise.
Even for the lower price, with interest rate in around 4.4% for 30 years, you need close to $3000(mortgage plus tax) each month to own it. Add that on top with utilities and maintenance, it might get close to $3500 per month. Too bad it requires that kind of money, to own a low to mid price level home like this one in newton.
Unless your household income is in 120,000+ range, Just skip for now.

[admin]

It is very next to the highway and commuter rail. I could definitely hear the white noise from the highway when I visited, as well as the commuter rail. However, it is raised up enough that I thought the highway noise would be tolerable and would probably be drowned out by a fan. I'd wonder more about all the exhaust fumes, personally.

- admin

[admin]

PS - I also agree with your $120K+ income comment and needing that much (or a giant down payment) to consider buying what passes for a low to mid priced home there. What's ironic is that $120K is well above the household median for Newton. Check out the "household income distribution" graph about a quarter of the way down this page:

http://www.city-data.com/city/Newton-Massachusetts.html

It makes me suspect that the Baby Boomers are propping up prices by not selling (among other factors). If that's the case, then the situation could work in reverse over the next few decades as they move on. The timing is too broad to help those who want to buy soon but also close enough to screw them over because it presents a serious risk of being a headwind when they eventually want or need to sell.

- admin

[balor123]

The 3x income rule of thumb is completely out the door, right? I thought part of that rule was insulating yourself against large changes in housing prices, which used to happen fairly often. It seems to me a $600k property purchased on a $120k income is quite a stretch at 5x! If that kind of leverage is considered safe, then perhaps we didn't need to leave MA. Seems like we could have purchased some very nice properties after all?