bostonbubble.com

optimus · Joined: 23 May 2008 Posts: 39

I thought that prices would start cooling down when I saw that interest rates were rising. After looking at a few recent sales, I am not seeing a hint of any down coming. Looks like I will be priced out forever.

admin · Posted: Sun Sep 29, 2013 8:01 pm GMT Post subject:

Recent sales reflect purchase and pricing decisions made before the surge in mortgage rates. I wouldn't expect to see any affect on closing prices until later - around the end of the year at the earliest for the Case-Shiller numbers. It could very easily take longer too, if the excess demand takes time to burn off. (And it might never materialize if mortgage rates retrench.)

Rather than looking at just prices, I would suggest looking at inventory. It would be natural to see inventory rise as a prelude to prices declining. Inventory has indeed been rising, bucking the typical seasonal trend. Inventory is still climbing and is actually quite close to setting a new high for the year, which is rather unusual:

http://www.deptofnumbers.com/asking-prices/massachusetts/boston/

- admin

optimus · Joined: 23 May 2008 Posts: 39

I see what you mean about the inventory - it went up a bit but its still less then half from the peak in June 2007. And the population is higher now.

The question now is why aren't people selling????

admin · Posted: Sun Sep 29, 2013 8:38 pm GMT Post subject:

Good question. I wish I knew. One problem is that current owners who have locked in a super low mortgage rate by refinancing now have strong disincentive to sell as they would lose that rate. I think there are also still plenty of people effectively underwater who can't sell. Foreclosures have also been essentially halted due to new regulations, so that's another previous source of supply that's gone. On the other hand, these factors should also reduce demand from repeat buyers, so we probably need less inventory than before to achieve equilibrium.

- admin

optimus · Joined: 23 May 2008 Posts: 39

admin · Posted: Sat Oct 26, 2013 8:48 pm GMT Post subject:

Arlingtonian · Guest

Quote:

The government has done what they can to stabilize the housing market. I think it is time they get out of the way and let the market work.

I don't see the government getting out of the way because people can seem to connect the harm that gets done. For example, people in Greater Boston who are "Homeowners with a Mortgage" are thrilled that the value of their home is up double digits this year. People are thrilled when the see a new retail development in town - even if the development will be partially paid for with Tax Credits to a big Bank.

In general the voter believe that a free lunch is possible - and haven't connected the destructive inflation that government intervention creates.

I bought a quart of paint, the last time I bought this same quart 3 years ago it was thirty percent cheaper. Many household items are rising in cost quickly and it is choking the budget of Americans.

But, people feel great because at the moment their 401K statement looks great and the value of their home is rising. Can you imagine if people were this happy about the cost of milk or gasoline going up.

House inflation is bad for the future of our country and makes our chilldren's future much more uncertain. Most families could once afford to have one parent at home for a childs formative years and now that is impossible. We trade a stay at home parent for higher prices homes and now we staff schools with more psychologists to help confused children.

Money and inflation affect so many aspects of our lives and ultimately limit the options people have to live their lives.