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Boston Bubble Brief: The Real Story for MA - May 2007
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JCK



Joined: 15 Feb 2007
Posts: 559

PostPosted: Tue Jul 24, 2007 6:44 pm GMT    Post subject: Re: Don't Shed a Tear Reply with quote

RMG wrote:
...and don't shed a tear for me because I don't own. I live in a big, beautiful 4 bedroom house very near the ocean (mile or less). I pay about 1/3 in rent as I would for a mortgage. I pay for no property tax or home owners insurance. I don't pay for upkeep or maintanence.


That sounds like a sweet deal. If I had been in your situation, I wouldn't have bought.
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Guest






PostPosted: Tue Jul 24, 2007 6:59 pm GMT    Post subject: Re: Don't Shed a Tear Reply with quote

JCK wrote:
RMG wrote:
...and don't shed a tear for me because I don't own. I live in a big, beautiful 4 bedroom house very near the ocean (mile or less). I pay about 1/3 in rent as I would for a mortgage. I pay for no property tax or home owners insurance. I don't pay for upkeep or maintanence.


That sounds like a sweet deal. If I had been in your situation, I wouldn't have bought.


It is. Hey look, I want to buy but not with this downward trend happening. For too long a lot of good people were priced out of the market. With people moving out of Massachusetts and this correction starting, a lot of people will be back in the game, but I really feel it's a natural thing. The masses either can or can't afford. For too long they couldn't. Trust me, and I swear I say this as a person who is doing pretty well for himself, the population is far poorer than it used to be and it's that Massachusetts arrogance that's a big problem here.

...and so they leave. and leave. and leave.

That is what makes this simple. The poor souls who got into exotic mortgages ( a pretty name for scams not limited,by any means, to sub-prime just you watch), and so-called flippers were the ones driving the illusion.

Well, that is over now.
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Tue Jul 24, 2007 8:05 pm GMT    Post subject: Reply with quote

It may be over ... but the credits are still going to roll for a couple of years while blame is assigned, ARMs reset, and fallout continues.

I suspect we've got a good two or three years left before the melt down is complete ... longer if government interference blocks up the process.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon Jul 30, 2007 4:53 am GMT    Post subject: Reply with quote

RMG:

From what I'm gathering about your posts, I'm picking up a few things and here are some thoughts:

Cash Reserves for building fatigue- Before when people were going in and out of houses trading up with prices going up, maintenance was optional. Now, if you're upside down on a place you've got to fix the roof etc... Refinancing and yanking out paper equity is not an option either because interest is inching upward and prices are going down, so where is the money for the deck and the new roof going to come from and if these young folks don't have the big down payment from the 100k appreciation of the sale of their condo they are in trouble in cash when the maintenance bills come.

Who's got the whip hand now- I get it. I got whipped myself so I'm glad to see it come back into a fairer balance. However, dig in, keep doing homework so the whip hits its mark.

Cross section of buyers- in order for prices to decline steeply people need to be successful in lowballing. From what I'm gathering from your notes is that by passively waiting, sellers will drop their prices little by gradual (that's conceiveable). Then, you need to account for the amount of desperate sellers and how much gravity they have in the market. Many others will just wait it out. I think if other markets like Florida tank, people might accept taking a bath in Massachusetts to get a steal in Florida.

If the correction is based on transactions (lowballing) The first early adapters will most likely be of the more aggressive nature. If you pair them up with the sellers that might be out there (some desperate nervous nellies) you might get the right chemical combination to host some steep declines. Nervous buyers will wait it out; and guess what, they will build in numbers and you might get some pent up demand on the other side of built up inventory. In your mind have some metrics like watch the rentals. I know in Florida, they are taking investor properties and renting them out now instead of flipping them, so the softer rental market will hurt the sales price.

Pick a target- In your mind do you have "bottom" in mind? You need to have in mind at which point you would pull the trigger. In my mind, I said I wanted a newer house for the reasons you described on a lot (land value) that was about 70% or so less in value and 85% of the cost per square foot to build new. That made fundamental sense to me...

Make lemonade out of lemons- Can you live cheap and get the Boston salaries? Look around, in some communities it's not quite as painful. It sounds like you've seen some real turds; keep looking so when you do strike you know right just where you want to be.

Look beyond Boston- Lots of States are in the same boat. Take Virginia, their houses are cheaper, but so aren't their salaries. Boston isn't in California's situation. The housing bubble is almost a world-wide concern, which is why I think a sizeable portion of the correction, again, might come in the form of inflation and currency adjustments.

Look beyond your investment in real estate- if all what you say is true, if your money is invested in other stuff couldn't that also suffer the same fate as well? A mortgage is a ball and chain, but do you think that housing will tank while your investments will go significantly up? If so, why; that would be a great value add for this collaboration.
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krishnarama
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PostPosted: Wed Aug 08, 2007 2:43 pm GMT    Post subject: You answered yourself Reply with quote

Look beyond your investment in real estate- if all what you say is true, if your money is invested in other stuff couldn't that also suffer the same fate as well? A mortgage is a ball and chain, but do you think that housing will tank while your investments will go significantly up? If so, why; that would be a great value add for this collaboration.

The housing bubble is almost a world-wide concern, which is why I think a sizeable portion of the correction, again, might come in the form of inflation and currency adjustments.

Inflation and Currency Adjustments. Currency Adjustment against what?. Right now it is other currencies.CAD,EUR. Buy them if you still believe they can run furthere.They are having excellent run. So are the currencies in Orient except japan. May be commodities. Dow Jones and US real estate is already in serious bear market in terms of crude oil and Gold.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Aug 08, 2007 3:23 pm GMT    Post subject: Reply with quote

My thoughts are trying to get at weighing the alternative investment to real estate. If people like renting versus buying, you might find that equities are better than an investment in real estate as well. What I'm saying is that everyone here is worried about a big drop in real estate prices; what about a big drop in their 401k's? Because real estate is less volatile than equities people tend to find it as a port in the storm of stocks. What do you think I might be missing here?

I'm saying that the volatility in the currencies will affect the equities. I like things more if they are Red, White and Blue; and too much effluent from other nations is coming in to the plumbing of the U.S. markets. We need a back flow preventer.

http://en.wikipedia.org/wiki/Backflow_prevention_device
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