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What's really going on in Boston
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PostPosted: Tue Oct 18, 2016 1:01 am GMT    Post subject: Reply with quote

http://moneymorning.com/2016/10/17/6-u-s-cities-on-the-verge-of-a-housing-bubble/

Sometime you just have to deal with the fact that you made the wrong call.
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Tue Oct 18, 2016 1:29 am GMT    Post subject: Wrong move- nope Reply with quote

I am very glad to be sitting out and focus on growing wealth without real estate. Feeling left out and wrong is exactly how people felt sitting on the sidelines and when the pop happens you are so happy not to own real estate.

There is absolutely no way o play every hand perfectly - you just need to understand your own long term strategy.

Best Regards.

- Happily sitting on the sidelines eating my pop-corn!
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PostPosted: Tue Oct 18, 2016 5:34 pm GMT    Post subject: Reply with quote

Quote:
I am very glad to be sitting out and focus on growing wealth without real estate. Feeling left out and wrong is exactly how people felt sitting on the sidelines and when the pop happens you are so happy not to own real estate.


I can not agree with this statement.
Growing wealth without real estate doesn't work too well in long run, as well as in the past 5 years.
Rapid inflation with stagnated income growth is the cause of all evils. It is the direct product of prolong ultra low interest rate and money printing between 2009 and 2013. It cuts down cash buying power, and jack up real estate price in the same time. That is exactly why people felt left out by seating on the sideline.

You can hold out from buying now, but you need to be able to execute when bubble burst, otherwise all your holding out becomes meaningless. Buying in the down market usually be harder than buying in the hot market, as getting loan is harder, and people usually have less confidence with their job security. Think it through, know your investment style and capability through up and down of economy, then you should know better for yourself if you should buy, and when to buy home.
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PostPosted: Tue Oct 18, 2016 5:42 pm GMT    Post subject: Reply with quote

Are you a realtor!

Buy in a hot market!

A self assurance we all feel when real estate is at all time highs and equity prices are at all times high is an illusion.

I agree and will one day buy a home. But, I hope it is in a own market.

Regards,
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PostPosted: Wed Oct 19, 2016 2:46 pm GMT    Post subject: Reply with quote

Good luck to one and all, but keep in mind diversification is the only true free lunch when it comes to investing. I own stocks, T-bills, TIPS (up nearly 7% YTD), and real estate (not a REIT, we're talking actual, tangible property). Everyone should hold some kind of real asset. Property is as good as any. Hell, maybe even better. For whatever it's worth, I'm LONG Boston real estate. This place is still on the rise.
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PostPosted: Fri Oct 21, 2016 6:26 pm GMT    Post subject: Renting, owning, Boston non-bubble Reply with quote

I have lived my whole life here as a renter, and despite the unrelenting social pressure to "own" a house...for several reasons that I won't go into, I have continued to rent. One reason is having cheap rent in a desirable neighborhood.

Thus, I can certainly relate to the whole "pride of ownership" discussion…not having a mortgage does mean being looked down upon and enduring comments and judgement from "owners". "How long are you going to live in that apartment?". Sigh. Yet, despite being as wealthy if not more than my "owner" peers, I do regret waiting and not buying during the last down market.

I agree that the Federal Reserve unprecedented manipulation of interest rates has definitely contributed to the dramatic increase in prices in the Boston Area. It does seem that a crash in the markets is on the horizon, of course, no one can predict just when it will happen.

One thing that gives me pause: just how much worse the traffic has gotten even in the last year so has the population increased? Thus with continued demand and low inventory in this area, I wonder if prices will ever come down, even if there is a "correction".
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PostPosted: Sun Oct 23, 2016 12:57 am GMT    Post subject: Reply with quote

That's what's so frustrating. Not knowing when or even if prices will come down.
During the last "downturn" about 8 years ago, prices may have stabilized for a little while, but there wasn't the precipitous drop everyone was hoping for.
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PostPosted: Mon Oct 24, 2016 1:12 am GMT    Post subject: Reply with quote

Quote:
During the last "downturn" about 8 years ago, prices may have stabilized for a little while, but there wasn't the precipitous drop everyone was hoping for.


I would like to try to explain how this 'non precipitous drop' actually is a pretty precipitous drop. the key is the precipitous drop is not on price, but on home value.

If you only looked at price difference between the top and bottom of last housing bubble, Boston's price did not drop like a rock from 2008 to 2011, and 2011 was the bottom of Boston market price vise. The tricky part is, the precipitous drop in home value come in 2 phases, and you need to be smart enough to get into phase one first, before you can benefit from phase two.

phase one, price did drop a bit between 2009 and 2011, due to bad economy, lack of job confident etc.. I would say drop of 10% to 20% from the top did happen. Price didn't drop further, because QE1,2,3 kick in. I think QE2 stop price drop further, and QE3 really re-inflated the asset price. Whoever brought home before QE2 was in place, they got the phase one benefit lock in.

phase two, mortgage rate drop like a stone, due to central bank's big rate manipulation, in help with QE2 an QE3, This give whoever lock in on a home price in phase one, a golden opportunity to drastically cut down on their monthly mortgage payment by re-financing.
Based on every 0.5 rate drop, give average mortgage 100 dollars price break. I see 300 to 400 dollars price drop on average mortgage, if you refinance from high 4% back in 2009, to low 3% at the rate bottom recently. If you get both phases, I would say your monthly payment will be drastically lower than what you would pay, if you brought at the top of housing market back in 2008.

I don't think too many people foresee the rate will go this low, and not many people figure out the ugly affect of QE until too late. The potential home buyers who didn't figure out all these become those bitter sideline sitters.
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PostPosted: Mon Oct 24, 2016 11:44 am GMT    Post subject: Reply with quote

Quote:
One thing that gives me pause: just how much worse the traffic has gotten even in the last year so has the population increased? Thus with continued demand and low inventory in this area, I wonder if prices will ever come down, even if there is a "correction".


Low inventory not totally due to high demand, very big part of it is due to existing home owner with more than 1 property not willing to sell. Those people rather holding real estate than other forms of asset, to hedge inflation that is really bad due to money printing and prolong ultra low interest rate.

population increase is least thing you should look at, if you are trying to find the reason of low inventory. Home price is directly related to interest rate. If any other form of asset's investment return is minimal, due to ultra low interest rate; People are more willing to park their capital in real estate, as rental return could be higher, at least on paper term.

I hold my predication of, if interest rate increase from currently low 3% to even merely above 5%, we should see a flood amount of homes get dump into the market. And the cause of interest rate hike like such, most likely relate to protecting U.S. dollar as international reserved currency. Can not tell when that would happen, but it will happen.
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PostPosted: Mon Oct 24, 2016 4:36 pm GMT    Post subject: Reply with quote

Anonymous wrote:
I hold my predication of, if interest rate increase from currently low 3% to even merely above 5%, we should see a flood amount of homes get dump into the market. And the cause of interest rate hike like such, most likely relate to protecting U.S. dollar as international reserved currency. Can not tell when that would happen, but it will happen.

That's retarded. Rates and prices are inversely correlated. Why would owners sell into a high rate environment, further depressing prices? And moreover, if mortgage rates go to 5%, deposit rates would go up, too. Why would someone give up a fixed rate mortgage at 3.725% when deposit rates are comparable, or even greater? Why give up the inflation hedge?
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PostPosted: Tue Oct 25, 2016 1:04 am GMT    Post subject: Reply with quote

Yes a home is an investment. And there will always be a reason why it's not a good time to buy. But if you find a house you really like, in a location you like. If you can afford it, and you plan to be there a while (that's the key), then take advantage of the low rates and buy it.
And no I'm not a realtor.
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PostPosted: Tue Oct 25, 2016 5:28 am GMT    Post subject: Reply with quote

Quote:
That's retarded. Rates and prices are inversely correlated. Why would owners sell into a high rate environment, further depressing prices? And moreover, if mortgage rates go to 5%, deposit rates would go up, too. Why would someone give up a fixed rate mortgage at 3.725% when deposit rates are comparable, or even greater? Why give up the inflation hedge?


hmm, I guess I didn't explain it well. Please allow me to explain it again, and hopefully this time it will make sense to even a knucklehead like you.

current low inventory situation mostly due to investment demand, not relate to population increase. meaning investor is going to dump investment properties to the market when interest raise drastically. For those only have one property, there is nothing to dump to the market. Those might lose their primary homes if price drop eat up all their home equity.
people get into real estate investment look for positive return, which means the rent of the property generates, at least should cover mortgage and other expenses, and still left some. House price is so high right now, rent of the property generates, usually can not cover mortgage and other expenses. Why investors still buying if property not generating positive return? Because they believed home price will go up in the future, as currency buying power is decreasing due to inflation. So as long as home price will keep going up, buying now with negative return is still ok. That is the current situation.

Then I will use your words. 'Rates and prices are inversely correlated.' Exactly. So when interest rate goes up, home price will go down. For those investors holding on to houses already with negative return, expecting price will goes up, this will be a brutal wake up call. They can not accept their investment's price go down further, as mortgage rate move in the up trend. They will panic and dump those investment properties to cut the lost.

Again I will use your words. ' if mortgage rates go to 5%, deposit rates would go up, too'. Exactly, deposit rate goes up. With relative similar return rate, investors now become more willing to park capital in CDs and bonds, as it is much more comfortable to get interest as investment return, instead of dealing with tenants, fixing houses, and all those extra work landlords need to deal with.

I can see your point of view is, if interest rate goes up, home owners will only hold onto their ultra low fixed interest rate mortgage. That most likely will be true. But you failed to see what interest rate hike will affect investors, and how it will hammer the value of their principals. Especially for those investors who get into real estate for the past couple of years, with negative investment return, yet hoping home price increase will keep their investment above water.

Hope this make sense.
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PostPosted: Tue Oct 25, 2016 11:53 am GMT    Post subject: Reply with quote

This is what is going on in San Frans. But kind of reflect other hot markets in certain degrees. When the tide turns, we shall see whose weevee are hanging out.

let me remind everyone, money printing, prolong low interest rate were the causes of this. Go hate whoever put these on top of us at the first place, instead of still wondering what the heck happened since the last bubble.


https://www.youtube.com/watch?v=SBjXUBMkkE8
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PostPosted: Tue Oct 25, 2016 1:35 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
That's retarded. Rates and prices are inversely correlated. Why would owners sell into a high rate environment, further depressing prices? And moreover, if mortgage rates go to 5%, deposit rates would go up, too. Why would someone give up a fixed rate mortgage at 3.725% when deposit rates are comparable, or even greater? Why give up the inflation hedge?


hmm, I guess I didn't explain it well. Please allow me to explain it again, and hopefully this time it will make sense to even a knucklehead like you.

current low inventory situation mostly due to investment demand, not relate to population increase. meaning investor is going to dump investment properties to the market when interest raise drastically. For those only have one property, there is nothing to dump to the market. Those might lose their primary homes if price drop eat up all their home equity.
people get into real estate investment look for positive return, which means the rent of the property generates, at least should cover mortgage and other expenses, and still left some. House price is so high right now, rent of the property generates, usually can not cover mortgage and other expenses. Why investors still buying if property not generating positive return? Because they believed home price will go up in the future, as currency buying power is decreasing due to inflation. So as long as home price will keep going up, buying now with negative return is still ok. That is the current situation.

Then I will use your words. 'Rates and prices are inversely correlated.' Exactly. So when interest rate goes up, home price will go down. For those investors holding on to houses already with negative return, expecting price will goes up, this will be a brutal wake up call. They can not accept their investment's price go down further, as mortgage rate move in the up trend. They will panic and dump those investment properties to cut the lost.

Again I will use your words. ' if mortgage rates go to 5%, deposit rates would go up, too'. Exactly, deposit rate goes up. With relative similar return rate, investors now become more willing to park capital in CDs and bonds, as it is much more comfortable to get interest as investment return, instead of dealing with tenants, fixing houses, and all those extra work landlords need to deal with.

I can see your point of view is, if interest rate goes up, home owners will only hold onto their ultra low fixed interest rate mortgage. That most likely will be true. But you failed to see what interest rate hike will affect investors, and how it will hammer the value of their principals. Especially for those investors who get into real estate for the past couple of years, with negative investment return, yet hoping home price increase will keep their investment above water.

Hope this make sense.


Christ, you're an idiot. Learn something about leverage. You might also want to learn English.
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PostPosted: Tue Oct 25, 2016 1:51 pm GMT    Post subject: Reply with quote

http://www.bostonglobe.com/business/2016/10/25/home-prices-you-guessed-are-again-mass/qd6amI95S9hwJNBcZr8I1L/story.html

It's not getting any cheaper out here, folks.
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