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When will it burst in Boston
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GUEST4
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PostPosted: Sat May 12, 2007 8:43 pm GMT    Post subject: Reply with quote

I have noticed that higher price homes have been selling very slowly or not at all. Here are some stats for Sherborn Ma:

- 9 total sales for the first 4 months of 2007, two of which were land only valued under 350k

- No sales of properties over 750k, 51 is the current number of listings greater than 750k on Zip realty


If you have been following an area/town please post your findings....
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Guest






PostPosted: Wed May 23, 2007 11:48 pm GMT    Post subject: not really dropping in some MA towns lately Reply with quote

I've been watching a local market VERY closely since late last year, since I hope to buy soon (have to.... really need more room for the growing family!!)

Here is some local data... a town I'm watching vary carefully.
According to this there is not much drop going on in prices.
The inventory isn't building and DOM isn't increasing.

Disappointing to this bubble head Smile

================
All are medians

Hoses sold To 1799 sq ft
Sept –Oct 06 $278.37/sqft $344,000 saleprice 95% of assessment 11 houses
Nov-Dec 06 $251.26 $377,000 90% 6
Jan-Feb-Mar 07 $278.06 $421,800 93% 6
Apr-May 07 $277.42 $360,500 93% 4

1800-2599 sq ft
Sept –Oct 06 $230.11 $512,500 98% 8
Nov-Dec 06 $216.47 $471,250 96% 8
Jan-Feb 07 $231.05 $429,250 92% 8
Mar-Apr $214.89 $450,000 93% 10
May 07 $230.32 $560,000 96% 3

More than 2600 sqft
Sept –Oct 06 $218.09 $645,000 106% 7
Nov-Dec 06 $218.84 $688,000 93% 11
Jan-Feb 07 $229.42 $735,500 98% 7
Mar-Apr-May 07 $227.11 $642,000 105% 11
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Thu May 24, 2007 1:19 pm GMT    Post subject: Reply with quote

Looking at the cost per square foot, I'd say the lower end is still far too overpriced. Given inflation in-effect, a stable price is still a losing proposition for the opportunity cost of the capital ... which is akin to stuffing money in a mattress.

I live in Worcester, and it frustrates the hell out of me that I can't find a reasonably affordable place even one town east of the city. Maybe more of the population drain will fix this problem for me in the next year or two. Smile

Some communities are able to run this whole "exclusivity" thing about them, but a time will come when that will change and gravity will take hold.
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BK-former Owner
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PostPosted: Thu May 24, 2007 1:58 pm GMT    Post subject: Guest -which town and high end towns Reply with quote

Which town are you watching?

There are many careers and Industries that thrive in our current Inflationary world-
Finance, Medical , and Education

There are a number of Masachusetts Towns where lots of folks from the Financial Services Industry choose to live - Wellesley, Hingham, Needham

Towns with Great schools systems and Train or Boat service to the Financial District.

Never forget what Barnum said "there is a sucker born every minute" - and well heeled suckers can afford to take the financial hit of negative returns on Real Estate - I can't and won't.
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PostPosted: Fri May 25, 2007 3:19 am GMT    Post subject: Amen to that! Reply with quote

AgentGrn wrote:
Looking at the cost per square foot, I'd say the lower end is still far too overpriced. Given inflation in-effect, a stable price is still a losing proposition for the opportunity cost of the capital ... which is akin to stuffing money in a mattress.


The prices of the smaller houses reflect more the price of land than the house itself. Almost all the houses in all three categories I posted are on between .4-.6 acres

AgentGrn wrote:
I live in Worcester, and it frustrates the hell out of me that I can't find a reasonably affordable place even one town east of the city. Maybe more of the population drain will fix this problem for me in the next year or two. Smile


Amen. I make a good salary ($120k) but cant give my kids a decent house with good schools??!!! And I'm not even a "granite counter top" type of guy Smile Just want a house built within this century not on a main road with 4 beds and a half acre. I've lived in several parts of the country and always thought by the time I was in my 40's and making a good salary I'd be a good provider. bzzzzzzt. New England humbled me. I love this area but I really am beginning to seriously think about moving outta state. Plenty of high tech elsewhere (maybe more!) without feeling like a failure.
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Guest






PostPosted: Fri May 25, 2007 3:24 am GMT    Post subject: Re: Guest -which town and high end towns Reply with quote

BK-former Owner wrote:
Which town are you watching?


Acton.


BK-former Owner wrote:
Never forget what Barnum said "there is a sucker born every minute" - and well heeled suckers can afford to take the financial hit of negative returns on Real Estate - I can't and won't.


I guess so. Can't believe when I see these couples making a combined salary of $100k making offers on $650k houses! What are they thinking!!!! I used to figure they must have all inherited big $ but now I'm realizing most are just being as dumb as they look.... or maybe they are smart... Uncle Sam will bail them out!!!!!!!!!!
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PostPosted: Fri May 25, 2007 4:11 am GMT    Post subject: Reply with quote

Hey fellows, read my post on the white collar rust belt. If my prediction comes true then the Boston area could be looking at a real long term decline in housing valuations (sans stagflation) for quite some time.
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Hank



Joined: 27 Apr 2007
Posts: 37

PostPosted: Fri May 25, 2007 11:22 am GMT    Post subject: Reply with quote

This morning's globe has an article on the coming housing slump.
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jimbo
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PostPosted: Fri May 25, 2007 12:28 pm GMT    Post subject: Still Reply with quote

Hank wrote:
This morning's globe has an article on the coming housing slump.


From that article:
"Clayton-Matthews said the price adjustments will make housing here more affordable. During the housing boom, prices rose too fast for incomes. By the 2005 peak, the median home price was 8.5 times higher than per capita income, compared to 6 times nationally. That gap should narrow by mid-2008, when the median Massachusetts home price is projected at 6.5 times income, compared to 5.5 times nationally, according to the forecast."

So this fellow is predicting another 10% or so slump in MA prices which makes avg housing 6.5x salary in MA. Frankly, even the 5.5x national multiple is crazy. 6.5x for old housing stock in a bad weather/hard on a house weather area where maintenance is frequent and expensive is even more out to lunch (esp folding in high prop taxes as well). And this guy was considered pessimistic!

It's my age old questions...

-- Either we are no where near capitulation or something really has fundamental changed (like multiples)
-- Maybe MA really *is* different; or is it just VERY sticky.
-- Will the market *be allowed* to drop to 3.5x-4x salary or will the powers that be are stopping that kind of regression to the mean in order to avert a major recession/depression? I mean, they want a soft landing... maybe the unspoken part is that they want an artificially early terminated soft landing, too?
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Fri May 25, 2007 2:12 pm GMT    Post subject: Reply with quote

Great points.

The whole 6.5, 5.5 multiplier has to be factored into the Ponzi issue.

If a guy bought a starter condo and had it before the bubble, he'd have upwards of about $135 or so to put down on it on his second house. New buyers don't bring this to the table. Even with the Ponzi correction you still have a ways to get down to the 3.5 multiplier. Even worse, new home buyers endured ridiculous education costs and are more financially bonded than the previous "St. Elmo's Fire" generation. Oh, right, and don't forget your point about the old and tired neglected housing stock that needs the home repair fund. I wish some old financial person who was good at research would come forward with the aligning assumption for taxes and interest rate that the 3.5 multiplier was derived and corresponding debt ratio. My guess is that the 3.5 multiplier was based on a higher 8-9% interest rate but a lower debt ratio.

The financial context for the younger generation is like parking situation in the North End. We inherited it. After it took many of us a long time and paid a high price for a spot, all the people that double parked in the middle of the street just got their tickets forgiven.

Lastly, think about the percentage of the population that is really feeling the pain. We're a minority. It is only new buyers in the past 3-4 years that are out there. I guess you could assert that the people that took out home equity loans are kind of in the same boat.

Because the "St. Elmo's Fire" Generation is out in front of us, they will drive up the costs on almost everything we face. Think about it, they went to school when colleges were cheaper, graduated with plenty of work available and high salaries, they bought real estate cheap, hit the stock market bubble, and then hit the real estate bubble. So in 3-4 years when their kids hit college they'll have tons of extra cash on hand to pay the crazy tuition costs. The God-dam wave crashed on my generation's head. College prices shot up right when we went; we graduated and were in our formative career years during two recessions, we got priced out of a housing market... It sounds crazy, but if you exercised financial discipline, it may be better off in the long run. Napoleon said that even more important than the courage of the troops was the ability for them to be hardened to the conditions of being a soldier. He went on further to say that the soldiers that came from poorer backgrounds were better conditioned. That which doesn't kill you makes you stronger kind of stuff....

Look at what this hack says on page 2 Wink


http://www.boston.com/realestate/news/articles/2006/12/31/market_continues_a_slow_adjustment/
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admin
Site Admin


Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Fri May 25, 2007 3:09 pm GMT    Post subject: Re: Still Reply with quote

jimbo wrote:

-- Will the market *be allowed* to drop to 3.5x-4x salary or will the powers that be are stopping that kind of regression to the mean in order to avert a major recession/depression? I mean, they want a soft landing... maybe the unspoken part is that they want an artificially early terminated soft landing, too?


Maybe it will be allowed if those who are held up as experts keep predicting that the declines are almost over. Why bother trying to fix something that is just about done self correcting? That is the silver lining to the perplexingly optimistic statements from Lereah, the NAR, the MAR, etc. - if the powers that be believe it, or at least think that voters believe it, then the need for intervention is diminished.

- admin
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Fri May 25, 2007 3:35 pm GMT    Post subject: Reply with quote

The market will adjust itself to where it needs to be ... allowed to or not. If we've learned anything from history, it should be that government interference in opposing a market direction really only draws out the pain for a longer period of time.

Given all the available rental stock out there, imagine if everyone going for a house decided to take the money they'd be saving and shuttle that away towards a down payment. Smile That's a pattern I imagine a lot of people are in.

There was something that I was reading awhile ago that put housing in the terms of a chain. On one side, there's the new buyer starting on the chain, usually buying the house from someone who is moving up. On the other side of the chain, it's usually a sale because someone died or moved into assisted living. Each link later in the chain relies on the previous link up to the start of the chain. The gist of the article is that the meteoric rise in prices have effectively prevented new buyers from getting onto the start of a chain ... which is affecting everyone along it.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Fri May 25, 2007 4:00 pm GMT    Post subject: Reply with quote

Exactly; they call that a "supply chain".

Regarding governmental intervention. The libertarian side of me say's hands off. The realist in me sees that capitalism seeks the path of least resistance and profit. If we didn't set parameters in a society we'd be a third world nation. Lots of businessmen see the environment that they operate in as "playing rules". They often times see incongruent policies or gaps in the intent of legislation as windows of opportunity for profit. So when you have all these parasites looking for a chink in the armor, you need to set clear parameters.

I'm a capitalist, no two ways about it, I just think as our skills and abilities graduate, we need to elevate our conduct and establish professional standards on those who are in a position where they have power to do things that can hurt others.

There is a great old Irish drinking song called the "Parting Glass" which was sung about a guy that liked to party but "alas, all the harm he did to himself". There is this unspoken salutary neglect for people who break rules but don't harm anyone else. It's like running a red light at 3:00 a.m. in the morning when it is completely dark and nobody is around. Hell, even the unspoken rule of driving in Massachusetts is it is ok to come in and out of my lane so long as you don't put any risk onto me; then I'll follow you home! So as far as housing, the parameters were way too broad. We had so many layers of insurance, nobody was accountable for failure. It is like an open bar tab for a company party; if you abuse it, you won't get another party any time soon. The loose play by some individuals cause lots of problems for people that play by the rules. Most importantly when judging a society, you look at the lives of those that are working hard and "playing by the rules". If those people are getting screwed you need to change your policy.

Lastly, if you find that an industry is irresponsible, or that politicians will eventually pollute the system by granting favors for friends, you need to shorten the leash so that they don't ever get into an area where they can cause damage to the most important people in our society, those that work hard and play by the rules.
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BK-former owner
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PostPosted: Sun May 27, 2007 1:20 am GMT    Post subject: Govenment interventions is what create the Housing Mess Reply with quote

You do realize that Government Intervention got us inot this mess.

A contrbution to Itulip did a great piece on the impact of the s&L crisis.

When did home prices start to recover from the 1980's S&L crisis - 1995.

Bottomline the Feds agreed to Reduce the fraction reserver requirements for Banks - this allowed them to loan out even greater multiples of the money on deposit at their Institutions - this drastically increased the money suppy.

More Mone = Higher prices
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Sun May 27, 2007 1:57 pm GMT    Post subject: Reply with quote

You're totally right.

People seem to protest when certain people get a subsidy and qualify it as an "entitlement". Lots of times it is a fair characterization.

What bugs me is that we bail out the airlines; we bail out the oil companies after Katrina but couldn't get busses in to get the people out. How about this turn around, Bush sends in the Military to point guns at the stranded people when it seems that the Army Corps of Engineers didn't do all they could with regard to prevention of that situation? So, oil companies get a subsidy during their biggest year of profit, but getting a broader health care system is socialism. I find it ridiculous that people can pick and choose what is socialism and what is emergency relief; it usually runs right down political lines.

Another turn around for you, it was Big Oil and Republicans that were buddy-buddy with all those psychos in the Middle-East. Sadam used weapons we gave him to slaughter his own people. Big Oil has done all they can to prevent any alternative sources of energy the same way tobacco tried to get young kids hooked on smoking. This political prism distorts people’s judgment. It totally bugs me that they bailed out one generation with the interest rates and tucked it to the next. The stock market bubble was deflated by lowering the cost of capital for investors (they could go to the bank versus issue stock). This "solution" created the housing bubble. Bush supporters believe that he inherited the recession because of the stock market bubble; his policies influenced the housing bubble.
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