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MA native and I will not be buying in metro Boston
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PostPosted: Sun May 20, 2007 6:32 pm GMT    Post subject: MA native and I will not be buying in metro Boston Reply with quote

for much of my career.

I work in the information technology-to-financial related services. I've finally reached my prime earning potential in my early 30s but the RE prices are scaled for those who'd bought their first home in the early-to-mid 90s and are now moving into their second home with a chunk of equity from a prior sale. This is commonly known as "the starting decent home for half million" syndrome. Sorry folks, but this is not happening.

Even though I can technically afford a place, I cannot (and will not) take the risk of a short sale when my job moves to the south or midwest. My friend, out in Omaha NE, sold his Boston area condo in '03, and paid cash (meaning cashier's check) for his 3 bedroom/2 bath in Omaha for $130K. He only pays meager property taxes and a bit on maintenance. The rest of the time, he eats out and drives around in nice vehicles since even with a 20% pay cut, he can afford the good life. BTW, he flys to Chicago (and Toronto) every few weeks for culture and distraction since money is no longer an issue for him. Sorry people but the Roxy, Fenway, Banknorth/Fleet Ctr, Davis, and the Square aren't worth being poor for much of one's professional career. It's not fair to expect every couple to be able to send their kids to a private elementary->to->high schools, pay ridiculous property and state taxes for no services and poor roads, and to come up empty in one's forties. This region is a travesty for the non-Brahmins (including those retired from prior boom-bust cycles, not just the decendents of Emerson, Kennedy, and Kerry) and the one's on the govt teet.
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TheSadTruth
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PostPosted: Mon May 21, 2007 12:51 pm GMT    Post subject: Reply with quote

I think the veracity of this rant is the reason why no one's responded. The truth is a bitter pill for the many.

I suspect that on the inside, many Mass residents know that this state's a ponzi scheme as far as maintaining a middle class standard of living for the new professional.
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Heloc
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PostPosted: Mon May 21, 2007 1:25 pm GMT    Post subject: Buying a House Reply with quote

Forget about buying a house, go rent one of these band new Condos that aren't selling.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon May 21, 2007 4:50 pm GMT    Post subject: Reply with quote

I think you guys are right as far as being on the right side of the paradigm. I think the question is how far the pendulum will travel.

I think the bubble grew because people overstated the case or over projected their potential earnings.

Underlying the bubble (the fundamental basis to grant the logic to the bubble) were lower interest rates. Between 1997 to 2004 rates went from like 8.something percent to 4.something percent. That does create a bubble. Salaries did shoot up during this period too. If you want to talk about pre 2000 house prices you have to consider the corresponding interest rates too. Because this drop was unprecedented people didn't know what to plan for. With that type of uncertainty, being priced out was a real concern. Because we had a housing shortage, not only did prices go up, but the selection of what each price point was changing for the worse.

Now that the correction is underway, think about whether prices will drop significantly or will they stay flat on maybe a small downward price trend for some period? I think that desperate sellers will steeply discount so deals are out there, but on the whole, prices will remain flat until spring of 2008 when it will tick upward very slightly but overall we remain flat for two more years. I think this is the nature of the correction; house prices take a nap while the salaries catch up. I think the home price increase will be modest until you start to see the baby boomers retire in droves. The trouble is that the economy is not favorable for them to retire early or even on their regular schedule for that matter. You might see baby boomers working longer than planned which means that big Diaspora of boomers going south might be prolonged. Long story short, I don't see a plunge, I see stagflation for some time. When you do your long term financial plan, if you rent for another 10 years, and you save, great. IF YOU SAVE. If you go to go out and buy a Monster Truck and spend all your dough you're better off buying a house and starting to make traction on the interest/principal.

Whenever you read a blog, think about if someone is just throwing out red meat to make you feel good, or if it challenges you to think deeper and get a better understanding.

Market corrections can either be a plunge, stagnant price, or a quick escalation of the topography surrounding the asset. It is such a mixed bag out there economically; it is hard to get your finger on the pulse. One clear tell sign is that the price of domestic stuff is staying even and the price of some global products i.e. gas is up, and electronics down. There will be some winners and some losers which mean economists who say anything will be right part of the time. Being smart today means finding your own combination and gearing it up with a reality that plays out for you.
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john p



Joined: 10 Mar 2006
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PostPosted: Mon May 21, 2007 5:36 pm GMT    Post subject: Reply with quote

By the way, "veracity" is a great word. I'm going to take it out for a test drive tonight at dinner with the wife...
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PostPosted: Mon May 21, 2007 9:03 pm GMT    Post subject: Reply with quote

The difference between today and let's say '89-'92 is that companies are genuinely leaving Massachusetts in droves.

If you speak to anyone at Fidelity, they can tell you that they might not have a job in town, within the next three to five years. And for Gillette, it's even worse. Reebok is leaving town and I don't believe you'll hear any kind stories from Putnam either. During the prior recession of the nineties, it was mainly places like DEC, J. Hancock, and Raytheon who were experiencing the bulk of the cutbacks. Today, outside of perhaps Genzyme and Akamai, most places are vulnerable. So the buy and hold strategy for RE, to ride out a post-bubble stagflationary environment works if one's a pharmacist or a govt employee. A regular employee needs to be mobile these days.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon May 21, 2007 9:56 pm GMT    Post subject: Reply with quote

You see, I'm not dialed into this information because I'm not in these industries. I think the smart play if you're in this industry is sort of how you gamed it out; rent and save until the dust settles...

You're right about the mobility thing. Part of that means being liquid and having an emergency fund to be able to roll with the punches.

The one thing that some of these companies need to understand is that if they do go to a place with a low cost of living, they have a limited population to draw talent from. If they find out that Billy-Joe-Jimbob is as dumb as a box of snakes who are they going to replace him with? In Boston, they can replace one guy for another decent candidate for many positions so the whole machine can keep running. Companies need to understand that by being stable they actually become more profitable. In my industry, the top companies get tons of resumes every month. It gives these companies an attitude that many people are waiting to get their shot. If these companies go to say a cheaper cost of living area, say in Springfield, MA will they have the hundreds of resumes coming in each month? Think about why Arlington is so good at hockey each year. It is because Medford is good; Watertown is good, and all the surrounding areas. The talent rises because the competition in the area is awesome and if makes the kids better. That is what Boston has going for it, and regrettably I think some of these companies will learn the hard way what they might be walking away with.

The talent pool is worth money. It is an absolute shame that industries like the construction industry/ Big Dig and the political/government hacks that have made taxes go up take away the quality and value that all the working people have created for our State. The taxes and cost to do business here because of the incompetent is so bad. Just listen to the absolute nonsense that the Boston City Counselors jabber about. Some of these guys are so far off the reservation is is unbelievable.
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PostPosted: Mon May 21, 2007 10:20 pm GMT    Post subject: Reply with quote

Quote:
The talent pool is worth money. It is an absolute shame that industries like the construction industry/ Big Dig and the political/government hacks that have made taxes go up take away the quality and value that all the working people have created for our State. The taxes and cost to do business here because of the incompetent is so bad.



I grew up with the idea of Boston as the nation's intellectual capital and the problem is that mainstream companies no longer see our city as a value added proposition outside of those select Kendall Sq biotech firms. What's happened is that Austin and Raleigh are where knowledge jobs are headed and the less challenging backoffice work to places like Omaha, Buffalo, and Columbus. And of course, the barebones backoffice support work to the Philippines and India.

So in a sense, outside of boutique MIT-only companies, the local VCs are looking to outsource (and not just to SE Asia but anywhere) faster than one can grow a new Boston Scientific behemoth for the next generation. What that does is create a pool of highly specialized PhDs hanging around the Whitehead recruiters but then relegate the more generalized BS/MS holders to look for work in other cities once their local gigs run out.

I wish that this trend would reverse itself but I don't see much on the horizon though I do know some people who have stable work at State St, Akamai, and the biotechs but most of the others are usually meeting future clients and recruiters while on the road. My last business trip to the mid-Atlantic got me a lot of attention from recruiters there since they were having a lot of reqs opening up in areas outside of Mass. My entire working clique from the past decade has whittled by 50% since the '02 recession with half scattering across the country from NY/NJ, DC, Richmond, Raleigh/Durham, Atlanta, Houston/Austin, Columbus, Omaha, Seattle, Indianapolis, and Portland. On the bright side of things, at least I have places to stay whenever I travel.
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Mon May 21, 2007 11:02 pm GMT    Post subject: Reply with quote

JohnP mentions that the talent pool does take money ... but the kinds of jobs that are moving aren't irreplacable in other parts of the country.

When Genuity got bought by Level3, I was relocated out to Colorado. Considering I was young and mobile and it seemed like everyone else was laying off in IT, I went west for a year. A few other people I knew moved also.

One thing I learned about the Colorado IT market: it sucks. Essentially, there was nowhere else for me to go when I moved out there so when my year was up, I moved back to MA where at least I had some family and friends.

When I moved back, it took me 10 months to find a job doing anything close to what I was doing in IT, and have managed to land in corporate / financial for the time being. That alone was grueling and humbling. (Recruiters are by and large useless creatures, FWIW.)

To say that Biotech can't go the same way in the next 10 years is a mistake. Then what's next in line after the latest batch of knowledge leaves the state?
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PostPosted: Mon May 21, 2007 11:32 pm GMT    Post subject: Reply with quote

Quote:
When I moved back, it took me 10 months to find a job doing anything close to what I was doing in IT, and have managed to land in corporate / financial for the time being. That alone was grueling and humbling. (Recruiters are by and large useless creatures, FWIW.)


Actually, what you're saying, ~10 mos, was quite common for much of the '02 to '05 time frame with a little let up during the mid '05-'06 time frame. That's why half my colleagues left the region. And as for recruiters, I can't stand them. If anything, they're in-fighting for the remaining crumbs in town which is why I was surprised when I started travelling and seeing ones on the road who were actually doing something.


Quote:
To say that Biotech can't go the same way in the next 10 years is a mistake. Then what's next in line after the latest batch of knowledge leaves the state?


Biotech isn't really taking off anymore because the emphasis is on R' and less on Dev and Production. The current VC paradigm is to swipe MIT/Whitehead for the intellectual property and then to set-up mega facilities in the midwest, south, or abroad (as in tiger nations like Singapore) for the finished products. In fact, much of the recent build out has been in Kendall Sq, essentially an addendum to the MIT campus. This is in stark contrast to let's say the early-to-mid 90s when places like Wyeth, Biogen, etc were building facilities all over the metro region and hiring in droves. I believe there were already a slew of layoffs in mainstays such as Serono once the model of doing business de-evolved during the '00s. Recently, even Boston Scientific (the number one stent/biodevices company), has been looking into outsourcing its Natick area work. All and all, it's going to be MIT/Whitehead, the Medical school labs of (HMS/Tuft/BU), and a few financial type of boutiques to help set-up industrial labs worldwide for them. That's where biotech is headed in Mass.
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BK-former owner
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PostPosted: Tue May 22, 2007 1:37 pm GMT    Post subject: State of Massachusetts job market and Pension Reply with quote

The voters in Massachusetts get exactly what we deserve. How many companies have left/gone out of business in the last 5 years that provided defined pension benefits for their employees? Polaroid, JHancock, Gillette, and more..
Why isn't dismantling the State Employee and Teacher defined Pension plans the major issue in every election? Until this happens the costs of running the state will continue to be out of control. Massachusetts isn't alone. In many states the Tax payers in the Private Sector have 401K plans and the Sate Employees have Defined Pension plans and Great Medical Benefits.

Apparently, we voters are either DUMB or really generous. Sadly, I think folks don't even realize how "overly well" we treat the State. local, and Federal employees.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Tue May 22, 2007 2:34 pm GMT    Post subject: Reply with quote

I feel so much that you have hit the nail on the head.

The only thing is that it was typically the well connected in the public sector that got the sweetheart deals. There are plenty of retired teachers that retired with very low salaries and need the COLAs.

The public sector has always been a mutual bond between the taxpayers and them. In most instances an employee took less pay for job security, the pride in serving the community, and the great benefit package. The private sector got higher salaries all along so comparing the two isn't fair. If we screw the public retirees, you won't have many people wanting to be teachers and the result will be that we will need to pay out higher salaries because we broke that bond.

Where I totally, totally agree with you is the Bulgers, Finnerans and even Marty Meehan who took his golden parachute and who's special election to replace him is going to cost us in the hundreds of thousands.

I think they're ought to be a cap on the amount a janitor gets, a teacher, fire fighter, policemen gets, and a politician. The reason why I think this is fair is that if a policeman is getting $100k per year he has plenty extra to put into 401k's. The retirement policy was conceived when that policeman wasn’t the highest paid person on the city payroll. You will find that proximity to politicians pays dividends. Check out and see how the secretaries of politicians make so much more than the secretary's in some other departments. The job is the same but the compensation is totally skewed. This compounds when the higher paid secretary gets his or her pension. This is the reason why we need to put a cap on positions, its fair to even public servants as well as the private sector.

There is a difference between the fat well connected lazy no show public employees that have hogged off the trough and the honest hard working public employees who have served us very, very well and at a modest cost. When you hear the debate on this you will hear the Republicans talking about Bulger and the Democrats talking about the Brockton school teacher who can't pay her heating costs. The reality is that we should have a mechanism to pull the parasites off and preserve the host.
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BK- former Owner
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PostPosted: Tue May 22, 2007 4:26 pm GMT    Post subject: Pension and benefits for Teachers - sinking of City/Towns Reply with quote

First - I'll disclose that my parents were both teachers - and one sybling is a teacher - my grandmother, my grandfather, and two aunts - all teachers.

Sorry - we are providing our Teachers with benefits that are better than we get. There was a time when Teachers got truely meager benefits. Those days are gone - but, the average person still thinks that a Teacher is struggling. The Healthcare and Pension benefits will have to be re-written if most towns of Massachusetts want to survive financially.
Benefits
*Home from work at 3:30-4PM
*Defined Pension
*Very low Healthcare contribution for Blue Cross Blue Shield
*Dental Plan
*16 sick Days per year that you can accrue every year for your entire career.
*Low expenditures for clothing - no ties or suit jacket required
*Three weeks off during the year- plus lots of Holidays
*July and August OFF

If a teacher goes into teaching for only the Money - they probably lack interest in education and my lack the intuitive skills that make a Great teacher.
Interestingly - name two high profile local or National politicians who had their children in Public Schools??? I'm not sure I could come up with one.
The Facts are that most local towns are Faced with out of control costs - because the school budget makes up 80%of the cost of running a school.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Tue May 22, 2007 6:09 pm GMT    Post subject: Reply with quote

I honestly can't argue with this, other than to say, I'm going to tell your Mom on you. Wink

I talked to this guy and he told me that they had one kid in their community with special needs that cost the town $250,000 per year. The kid has special dedicated teachers... It sounds bad but if the town just gave the family a $1M settlement you wonder if it would be cheaper. In a way it is a very honorable community bond to pull together for a family carrying a very heavy load, but you wonder to what extent is this reasonable.

I am finding time and time again that it is the sacred cows that people abuse situations. The father that can spare no expense on his daughters wedding day, the sick relative that the hospitals overcharge to give a bed to, the cost of a casket. The political sacred cows are: dealing with anyone who is a relative of a powerful politician, you can't protest overtime pay for police officers because every politician wants the policeman’s union's support. etc. I don't mind paying more for cops, I want to make sure it goes to the right cops. It sounds bad, but if we don't the police will develop a political structure and reward based on personal politics and the hunters who are good at catching the bad guys won't get their fair reward. I say we give a bonus to a cop who gets a collar on a drug dealer, a pedophile, etc. You almost wonder if there should be a new term like "political correctness" where it is socially acceptable to be George Costanza when someone is trying to flood you with guilt, or holds you hostage politically and put you in a situation where you look like a scumbag if you protest the fact that you're being gouged. Because the prior generation let some costs creep out of control, our generation will have to face the uncomfortable situation of addressing them.
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john p



Joined: 10 Mar 2006
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PostPosted: Tue May 22, 2007 6:32 pm GMT    Post subject: Reply with quote

Whenever I do a post that seems off topic (ohh never...) It makes me benchmark against the housing issue. If you look at the new Fortune 500 magazine you'll see who made a ton last year. Oil companies, financial companies made huge gains etc. This redistribution of wealth has resulted in some winners and some losers. It sounds like the IT guys are in a more turbulent situation than say the hedge fund managers. I often wonder if the market will correct itself when one group feasts and shoulders another one out of the way to get a common asset like housing.

As far as the teachers are concerned, because the cost of living is so high and housing is so expensive, we need to pay them more. Because we live with this overly generous pension package, the more housing costs drive up public servant compensation, the ensuing compounding retirement payout hits you again.
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