bostonbubble.com Forum Index bostonbubble.com
Boston Bubble - Boston Real Estate Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

 
Go to: Boston real estate bubble fact list with references
More Boston Bubble News...
DISCLAIMER: The information provided on this website and in the associated forums comes with ABSOLUTELY NO WARRANTY, expressed or implied. You assume all risk for your own use of the information provided as the accuracy of the information is in no way guaranteed. As always, cross check information that you would deem useful against multiple, reliable, independent resources. The opinions expressed belong to the individual authors and not necessarily to other parties.

Boston homeownership keeps sliding

 
Post new topic   Reply to topic    bostonbubble.com Forum Index -> Greater Boston Real Estate & Beyond
View previous topic :: View next topic  
Author Message
Optimus1
Guest





PostPosted: Wed May 25, 2016 7:32 pm GMT    Post subject: Boston homeownership keeps sliding Reply with quote

I keep reading about how house prices in Boston are still relatively affordable and sustainable. If that is the case, one would think that homeownership rates would rise. If it keeps falling, that means many houses are being bought up by businesses and investors. I can't see how this market can be sustainable.

https://www.bostonglobe.com/business/2016/01/28/for-first-time-record-boston-area-homeownership-dips-below-percent/4sCXLkl9D4YPKRWXNookNL/story.html
Back to top
Dudeman
Guest





PostPosted: Wed May 25, 2016 8:01 pm GMT    Post subject: Reply with quote

Quote:
I can't see how this market can be sustainable.

When everyone feels it is not sustainable, it should sustain for at least another couple of years, before the storm finally hits. The time lag between is called the 'Pendulum momentum'. It is hard to predict when the end would come, but if your guts tell you everything doesn't add up, then something bad will happen eventually.
Back to top
Richthofen



Joined: 02 Apr 2014
Posts: 68

PostPosted: Wed May 25, 2016 9:21 pm GMT    Post subject: Reply with quote

That's one of the weird things about the bubble this time around. The last housing bubble had broad market participation, while this bubble does not. This one seems way more driven by small inventory. The real question is what is a big trigger of inventory coming on the market.
Back to top
View user's profile Send private message
Guest






PostPosted: Fri May 27, 2016 11:45 am GMT    Post subject: Reply with quote

Quote:
This one seems way more driven by small inventory


Low inventory might not be 100% true statement anymore in 2016. It might be true back in 2014, but with many new builds for the past 2 years, and much more on its way, I don't think that is the case any more. What is true is, there is very low amount of affordable housing inventory. That is because rapid inflation due to money printing and ultra low interest rate since last bubble burst.

Now let's look at some possible major causes of low inventory in a bit more details.

1. Building activities need more time to catch up. We recovered from last bubble burst not too long ago. The last top of boston housing market was 2007, the last bottom in boston housing market was the spring of 2011. with 6 years of recovery, new building activities start to kick in full gear only since 2013 and 2014. We should see a lot more new condos and houses in the coming year or 2.

2. Demand of home/condos as investment is high, due to rapid inflation globally. We see landloard as local, as well as from other countries.
Rent is going up very quickly for the past 4 years. We won't see the top of bubble, until we see lack of ability of landloard to raise rent further.

3. People who own extra properties are not willing to sell, as they all feel currency is being devalued rapidly due to inflation, and it generates only 1% interest in saving, far behind the inflation rate.
With rent keep going up, holding a property is a much better option to hedge inflation.

4. There are a lot of people not willing to trade up, as last bubble burst still in their memory, and they don't want to take risk. Also higher tax rate due to trade up is another reason holding people back, since many people still enjoy very property tax rate, due to town tax assessment usually disconnected with your home's market value, as long as you live there for a long while. I also see senior allowing their children to move in and take their homes, instead of putting it on the market. Mostly due to their children can not afford to buy in current market, so it is cheaper option to pass down the house within family then sell to the public, so the parent don't have to pay fees on selling, and children get a place to live with less money to put out as downpayment.

5. Boston is lack of land to build. And a lot of new build were not affordable. Within city zone, there is almost no land to build. I see a lot of building activities in suburb. I see majority of those new build are labeled 'luxury'. So if you try to search price level of mid 500,000 and below, you will only see crapy properties, which give you false feel of 'lack of inventory'. If you try to search home/condos above 1 million, you will see so much inventories out there, just those are out of reach for you.

Each housing bubble are different, but similar in the core causes. Once you think it through, all things will connect and make much more sense.
Back to top
admin
Site Admin


Joined: 14 Jul 2005
Posts: 1798
Location: Greater Boston

PostPosted: Fri May 27, 2016 1:46 pm GMT    Post subject: Reply with quote

Quote:
Low inventory might not be 100% true statement anymore in 2016. It might be true back in 2014, but with many new builds for the past 2 years, and much more on its way, I don't think that is the case any more.


Zillow has actual inventory numbers and Boston inventory is still very low.

- admin

Back to top
View user's profile Send private message Send e-mail Visit poster's website
Guest






PostPosted: Fri May 27, 2016 3:12 pm GMT    Post subject: Reply with quote

Quote:
Zillow has actual inventory numbers and Boston inventory is still very low.


Admin,
Sometimes number could be manipulative, and lack behind of reality for 6 to 12 months at least. Any person can come up with some charts. Without fully understand how the numbers came by, you normally only see what chart producer want you to see.
I am not saying Zillow had a bad intention while creating this chart, but all I see out there are so many housing developments going on whenever there are empty lands since late 2014. And there is no sign of all these activities slowing down in the near future. Unless we are have a gigantic baby boom going on, or investors from China will increase by 3 folds in the coming years, low housing inventory will soon be a thing of past, if it is not happening already.

As I mentioned on my previous post, what I felt truth was we are lack of affordable housing inventory, which is price below 350,000 for condos, and below 450,000 for SFH.
If you only try to figure out things based on some data from major media sources, you might be better off just trusting your gut feeling.
Back to top
admin
Site Admin


Joined: 14 Jul 2005
Posts: 1798
Location: Greater Boston

PostPosted: Fri May 27, 2016 3:29 pm GMT    Post subject: Reply with quote

Sure, there's a lag between when the inventory trend changes and when it shows up in the data, but why would the lag be 6 - 12 months in this case? Zillow's data tends to be about a month old. Maybe you're referring to forthcoming inventory which is in the pipeline but not yet for sale, in which case, sure I could see that lag being much longer. I don't trust my own gut in running that far ahead of the data, though.

- admin
Back to top
View user's profile Send private message Send e-mail Visit poster's website
Guest






PostPosted: Fri May 27, 2016 5:51 pm GMT    Post subject: Reply with quote

Quote:
Sure, there's a lag between when the inventory trend changes and when it shows up in the data, but why would the lag be 6 - 12 months in this case? Zillow's data tends to be about a month old. Maybe you're referring to forthcoming inventory which is in the pipeline but not yet for sale, in which case, sure I could see that lag being much longer. I don't trust my own gut in running that far ahead of the data, though.


6 to 12 months lag is general term I was using for charts and data in real estate world. In this situation the lag might not be that long.

Beside this inventory chart failed to see potential inventory in the pipeline, the inventory number also might not be able to tell in situation such as, if high price tier inventory percentage went up, but got subtracted by bigger shrinkage of low price tier inventory percentage, and the sum even out to a low number. As I keep mentioning, I truly feel there is lack of low price tier affordable inventory in Boston, yet the market flood with home with very expensive price tag.

Also I assume the inventory number in the chart is the remain inventory number, not just for new inventory; which means add the new inventory, and subtract the home sold, for particular month, become the inventory number of that month.
In that case, the rise of inventory trend could potentially get covered up by strong sold records on that month. It is a red hot housing market since 2014, there were a lot of homes being sold for the past 2 or 3 years, compare to the years before. Yet if you look at the trend of the chart, you see since 2014, inventory seems bottom bouncing, instead of go down much further, that could indicate inventory is actually catching up already, but just not fast enough to over come the strong home sold activities yet. Because building new home does take time.

Again, if you read my original statement carefully, my point was low inventory is not 100% true anymore in 2016. I agreed inventory was very low back in 2014. I also list things that could contribute to low inventory as well.

All I am trying to point out is, do not get carry away by this 'low inventory' term, when many clues around you is telling you that might not be the only and major reason of high housing price anymore. I believed ultra low interest rate lead to loosen lending standard and inflation are much bigger factors here to cause the high housing price.
Back to top
MR
Guest





PostPosted: Sat Jun 04, 2016 9:45 am GMT    Post subject: Reply with quote

There are lots of places in the country that is in a bubble (like Texas currently), but I don't think Boston is one of them. There's no land in Boston, you can only build up, and much of those high-rise construction are high cost and out of the reach of most people looking to buy. Within Rt. 128, all the land is already privately owned. Boston's economy is also not dependent on any one industry. The labor market here is very stable and many are unionized with defined pensions after retirement. The only way for Boston's housing market to collapse would be something truly catastrophic in the American economy, and at that point the losers won't just be the homeowners but everyone in the country. There's also a lot of old money in the Boston area. This is still one of the few areas of the country where family ties still matter. I can't count the number of Millennials here who get help from their parents and grandparents to buy a home here. Furthermore, there are more married couples in the Boston area and they tend to both work, this helps provide a cushion during difficult times and delays the need for forced relocation.
Back to top
Guest






PostPosted: Sat Jun 04, 2016 9:50 am GMT    Post subject: Reply with quote

In short, Boston's housing market and its nuclear and extended family dynamic is very similar to the large East Asian cities. Home prices are going to be high in those environments regardless of income.
Back to top
Guest






PostPosted: Sat Jun 04, 2016 10:04 am GMT    Post subject: Reply with quote

The other problem with the Boston area that makes prices within Rt 128 so high is that the transportation (public transit and road) in this city is so shitty. Prices in Brockton are still affordable, but who wants to sit on Rt 24 and I-93 for 3 hours a day? Then it becomes a cycle as the professionals all move closer to the city, the schools in the less desirable suburbs start to go down the toilet.

There's no opportunity to disrupt the existing housing market when you aren't building new highways and new subways to increase access elsewhere. You can't even add an extra lane on the Expressway now.
Back to top
Guest






PostPosted: Sat Jun 04, 2016 6:49 pm GMT    Post subject: Reply with quote

Honestly, I'm glad I bought recently, even having paid substantially more than asking price. My job in Boston is 7 miles from my house in a walkable suburb with good schools and reasonable transportation into the city. That's worth a lot to my young family. And I absolutely see this house as a vehicle for building durable (even inter generational) wealth. Even if it appreciates only at inflation, which is the historic norm, at least it will hold its real value at a time when there are no safe assets that can be relied on to do the same. My little boy will one day inherit this house.

I have a lot of sympathy for those who can't afford to do what I've done. I put together a lot of savings over a lot of years, and it's been hard. While I feel good about my purchase, I am not thrilled about the eventual outcome for the Boston area. Boston is already a town for the rich and it's only getting worse. Those without money are already being forced out. We're NYC in the making. NYC has outlying areas of the Bronx, Queens, Staten, LI, etc., where the middle class may be able to find something affordable. Boston has Chelsea, Lynn, and comparable areas, to which all but the upper- and upper-middles- classes will be relegated. The next generation will struggle hard to achieve what was much easier for us, and even easier for our parents. Sucks.
Back to top
Guest






PostPosted: Mon Jun 06, 2016 2:16 am GMT    Post subject: Reply with quote

There is a global currencies devaluation trend going on. Start from US back in 2008, going through Europe, now in Japan. China has been printing money like crazy for years, but the Chinese government just not publicly admitting so.
It is not that home price is getting too expensive, I rather see it as home price went up quickly because the money just worth less in general, and it generates lower interest as well.

Printing money can temporary re-inflate the market, but it is not creating new productivity that could support the current market level. Whenever the loose liquidity condition is reverted, market condition will be worsen immediately. And the snowball effect out of this worsen market condition is worrisome and unpredictable.

In this type of so called 'artificially hyper' economic condition, you can throw all the regular buy vs rent formula out of the window.
It is not about return of investment anymore. It is about how to exchange your ever devaluing currency, to some forms of asset that will preserve capital. Because money printing is a global event, and I can see the current real estate bubble is also a international phenomenon.
When the tide turn in real estate market, you should see bubble burst happening in many places around the world in relatively short amount of time.

People could argue Boston's real estate market could sustain it value better than other areas, when current bubble burst; I personally think Boston's real estate market will not be immune from such global event. It is going to be a ugly one, just don't know what will trigger it, and when it will come.
Back to top
RealEstateCafe



Joined: 11 Dec 2007
Posts: 148
Location: Cambridge, MA

PostPosted: Wed Jun 15, 2016 2:51 pm GMT    Post subject: Reply with quote

Quote:
It is not about return of investment anymore. It is about how to exchange your ever devaluing currency, to some forms of asset that will preserve capital. Because money printing is a global event, and I can see the current real estate bubble is also a international phenomenon.
When the tide turn in real estate market, you should see bubble burst happening in many places around the world in relatively short amount of time.


Well said! For a snapshot of which countries are beginning to slide, see this report on global real estate through 1Q2016:

http://bit.ly/GlobalRE_1Q2016

Quote:
People could argue Boston's real estate market could sustain it value better than other areas, when current bubble burst; I personally think Boston's real estate market will not be immune from such global event. It is going to be a ugly one, just don't know what will trigger it, and when it will come.


Instead of taking a "wait and see" attitude, follow lead of other governments including Singapore and Australia (enacted 12/15) that are already putting fees on foreign buyers to ease artificial demand. What can @CambMA/#Boston learn, and how can we influence policy makers?

If members of Boston Bubble were invited to speak with the Attorney General's office or the Bloomberg-funded #HousingILab at the City of Boston, what would you want them to know about this toxic stew?

http://bit.ly/DistrustRE

Note article on urban markets being driven by foreign investors, and rising inventory of overpriced single-family homes in Somerville (aka DelusionVille):
_________________
Bill Wendel
The Real Estate Cafe
Serving a menu of money-saving services since 1995
97a Garden St.
Cambridge, MA 02138
617-661-4046
realestatecafe@gmail.com
http://realestatecafe.com/blog/
http://twitter.com/RealEstateCafe
Back to top
View user's profile Send private message Send e-mail Visit poster's website AIM Address
formerArlingtonian
Guest





PostPosted: Fri Aug 12, 2016 7:30 pm GMT    Post subject: Low Inventory and yet empty homes for sale Reply with quote

My mom just sold her house and it was empty for six months prior to finding a buyer and the other home nearby and forsale was empty.

How is it that real estate is tight and yet you can buy a home (there are lots of them) that has been empty of people for 6 months to 1 year?

Ask your older friends and relatives about their home shopping in previous decades. You will discover it is unusual to be able to look at multiple homes for sale that are empty and for sale?

Sadly, there will be lots of families that will be wiped out from this frenzy in real estate. Friends still ask why my family is still renting and I say the average guy who goes bankrupt usually the has mortgage (and has been calling himself a home owner .... instead of a renter from the bank).
Back to top
Display posts from previous:   
Post new topic   Reply to topic    bostonbubble.com Forum Index -> Greater Boston Real Estate & Beyond All times are GMT
Page 1 of 1

 
Jump to:  
You can post new topics in this forum
You can reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Forum posts are owned by the original posters.
Forum boards are Copyright 2005 - present, bostonbubble.com.
Privacy policy in effect.
Powered by phpBB © 2001, 2005 phpBB Group