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What's really going on in Boston
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PostPosted: Tue Oct 25, 2016 2:14 pm GMT    Post subject: Reply with quote

Quote:
Christ, you're an idiot. Learn something about leverage. You might also want to learn English.


show your point of view, and let others to judge who is the idiot here.
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Richthofen



Joined: 02 Apr 2014
Posts: 69

PostPosted: Wed Oct 26, 2016 2:08 am GMT    Post subject: Reply with quote

Hey, OP. I was in a very similar boat. Bought an overpriced condo in Malden in 2006, short-sold in 2011. First go round I was not married and buying because it was the 'right' thing to do with my money.

I just finished two years of house hunting with my new wife and son. We were looking to buy because rental pressures really got to us. We saw 20%+ per year increases and the rental market really squeezed us. I wanted the stability of a fixed monthly payment that inflation would eventually eat away at (I am NEVER refinancing or cashing out or anything dumb like that. My goal is no mortgage someday).

We gave up on Boston in the end. The market was too competitive and we only have one income because my wife is at home with my son. We were never going to beat the offers out there, there wasn't enough inventory and so many wealthy people competing. It really was an awful time. I don't miss it.

We wanted to live in a city and I have the ability to live anywhere because I'm a software engineer and I work for a company that supports remote work. So we explored other cities that were more affordable but still had historical architecture and great walkability. We're on the East Side of Providence now since August 1st. It's been really, really great. It's not Boston, it doesn't have as good a public transit system and the taxes are higher, but in the end we have a large beautiful home with a ton of character in a historic neighborhood and great neighbors. The house we bought had a few open houses, we never felt rushed, we paid $5k less than asking, and got the owners to fix a few things. I'm glad we considered another city. I don't have to commute so my situation is unusual, but I'm glad I gave Providence a chance. Will my home sell for YUUUGE appreciation like Boston? Nope. But I'm not buying a house to brag to assholes about how smart I am and how much money I made in real estate. I bought a house to stop worrying about housing, and to give my family a stable place to live our lives. To be part of a community and make friends and be surrounded by a pleasing place to live.

Whether you buy or not is a personal decision. If you are already married, have a good long term job, and don't plan on changing locations for a while, you can ride out even a 50% drop. It's easier to ride out a loss in a SFH as you have some separation from bad neighbors and insolvent condo associations (had both in my Malden condo!) In my opinion, we are in a bubble. But whether that bubble manifests itself in a lower home price in the future or a lower dollar value in the future is unclear to me. At least now my pay is still going up annually, and my mortgage will not. PM me if you have questions or if I can help at all.

- Ed
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PostPosted: Thu Oct 27, 2016 6:11 pm GMT    Post subject: Reply with quote

Quote:
Christ, you're an idiot. Learn something about leverage. You might also want to learn English.


Christ, one of the guests called you an idiot. He must be deeply disturbed by his own sub-intelligence brain function. Please forgive his rudeness, and give him a chance to redeem himself by expressing his point of view. Hope his idea will be resourceful and educational to other. If he failed to do so, then grant him the same title of what he grant you.
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PostPosted: Fri Oct 28, 2016 1:05 am GMT    Post subject: Reply with quote

This board has always been a place of civility.
People would disagree respectfully.

It wouldn't surprise me if people stop posting to it.
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bsg61
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PostPosted: Sat Oct 29, 2016 10:43 pm GMT    Post subject: Reply with quote

@Richthofen:

Thanks for sharing your story and congrats on the house purchase in Providence. I really like Providence and it's only 1 hour from Boston yet you're close to Newport and some great beaches in the ocean state.

Your story of condo problems in Malden is a real concern when I consider buying property. I am single, 50's female and not sure I want to take on a SFH on my own at this point in life. Yet, I really want privacy. Even in a SFH you often will have to deal with "other people" but in a condo, it's a guarantee! I can't imagine being sandwiched in the middle of one of these older condo-ized triple deckers: noise on top, noise from below and who knows what other kind of headaches.

Sounds like you did well. Funny, just the other night I found myself looking at properties AND rentals in Providence the other night. I'm inspired!

I'm fear interest rates may be manipulated by the Fed for a loooong time and prices in the Boston area will just continue to rise. Although who knows, after the election - if the country/world doesn't blow up - maybe things will change!

If I have to rent for another year, it won't be a tragedy (cheap rent, great location) but I'm in a 4th floor walk-up and although I'm a young 50-something, the writing is on the wall. I am also looking at other rentals but the rents - even in Malden - are ridiculous (as you know!)
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Tue Nov 01, 2016 1:01 pm GMT    Post subject: Reply with quote

Richthofen,

I hope you find an investment that is the inverse of your real estate purchase. You could consider taking some money and going short homebuilders.

Can't people see the very people that piled into the last Bubble are jumping aboard the current Bubble.

My family could be living a lot cheaper if we bought a home and we would live in a bigger home. But, buying in this market is a mistake.

We are living through the lowest interest rates /mortgage rates of 5000 years. In shorter period of times in easy for central banks to control interest rates and then there is an external shock that takes control away.

http://www.marketwatch.com/story/charting-the-lowest-interest-rates-in-5000-years-worst-commodity-returns-in-80-years-2016-06-14

I know I am advocating a course which is impossible for most people to follow. But, often in life the best course of action is the hardest and goes against the herd.

What is happening in Boston is happening all around the world because of ultra low interest rates (and negative rates in some countries). I love Boston, but this run up in Boston Real Estate has nothing to do with spectacular winter weather or bucolic traffic jams. I think anyone on this board would be hard pressed to find a major city (not Providence) that hasn't seen double digit real estate value price increase because this run up in R/E is a global phenomena.

Best Regards,
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PostPosted: Tue Nov 01, 2016 5:55 pm GMT    Post subject: Reply with quote

You also should consider the cost of rent. If you have really cheap rent,
then maybe you have a point. But market rent in Boston can be over $3000
for a 2 BR 1000 sf. It might make sense to buy.
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Tue Nov 01, 2016 6:18 pm GMT    Post subject: Rents are always insanely high before real estate crash Reply with quote

Sorry - buying because rent is high is wrong headed when interest rates are at 500-5000 year low.

Rents have sky rocketed to unaffordable levels in every real estate boom. I would argue that the spiking of rents is the key way to identify that the bust is not far away.

In the 1980s Spielberg, tom Hanks, Shelly Long collaborated on the movie "MoneyPit" - premise of the movie rents were too high, no good homes available and a young couple buys a fixer upper in the Suburbs.

https://www.youtube.com/watch?v=OLJeRlmyN80

regards,
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PostPosted: Wed Nov 02, 2016 12:26 pm GMT    Post subject: Reply with quote

I bought my condo 8 years ago. PITI and condo fee are under $2400. My unit would rent for over $3400 (in the South End and includes parking). It will be paid off in 12 years.
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Wed Nov 02, 2016 12:55 pm GMT    Post subject: Twelve years is a long time Reply with quote

Good for you.

Yup, owning a condo in Boston feels really great at the moment -

I have absolutely no interest in a Boston Condo at 2006 or 2016 prices.

Maybe I'll buy one of your neighbors condo in bankruptcy sale in 3-4 year.
Wink
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PostPosted: Wed Nov 02, 2016 1:23 pm GMT    Post subject: Reply with quote

I'm just saying, buying could make sense if you plan to be there a while. It used to be that you could just flip a property after a couple of years and make some money. Noone thinks you can do that any more.
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Wed Nov 02, 2016 1:31 pm GMT    Post subject: No - it has been very risky to own Reply with quote

Yes, when R/E prices are going up or staying up everyone says - "see no risk".

The tough part arrives without warning and a nice little family is living in a Condo the bought with a mortgage. The nice little family had better not miss their Mortgage payment, their HOA payment, and the property tax payment.

If the nice little family misses any one of these three monthly obilgations - then all hell will break loose. What percentage of Condo owners who bought in the last 10 years can go without income for 1-3 years?????

Kind regards
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PostPosted: Wed Nov 02, 2016 2:39 pm GMT    Post subject: Reply with quote

You get evicted if you can't pay your rent.

I know. You won't lose a down payment.

Life doesn't come without risk.

Where there is risk, there also can be reward. One day your mortgage payment will be less than your rent. And eventually you'll own the property.
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Wed Nov 02, 2016 2:48 pm GMT    Post subject: Maximum obligation for a renter - one years lease payments Reply with quote

Sure - I can beat that...

Maximum obligation for the renter of a condo - one year of rent payments + security deposit.

Maximum obligation for owner of Condo - property taxes (if you can's sell you still have to pay) + HOA fees (if you can't sell you must continue to pay) and both of the fees keep pace with inflation.

Thank god we all don't agree - it would make a very dull world and can you imagine the monthly rent my family would have to pay if everyone became a renter... Wink
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Richthofen



Joined: 02 Apr 2014
Posts: 69

PostPosted: Wed Nov 02, 2016 8:04 pm GMT    Post subject: Reply with quote

Former Arlingtonian wrote:
Richthofen,

Can't people see the very people that piled into the last Bubble are jumping aboard the current Bubble.


Yes, I know this is a risk. Please do not think I did not agonize over this decision. Fool me twice and all that. We looked for TWO YEARS. Two years of open houses and price increases and frustration and triple-guessing myself. I know prices have the potential to dive 30-50%. But I had two concerns: Where am I going to put my money otherwise? The stock market? What am I going to do to provide stability for my family? There's risk in EVERY approach. The difference between 2016 me and 2006 me is that 2016 me recognizes the risk and is financially and mentally prepared if there is a fall in prices. 2006 me borrowed $2000 from my mom to close the loan on my condo and settled for a neighborhood, unit and interest rate that were all subpar. This Time It's Different (tm). I am way better off financially, I have a family and support group now I didn't have, I have amazing employment flexibility and so much experience that my phone rings off the hook with recruiters, etc

In the end, I was unhappy renting. Our landlords raised our rent $200 every year for 3 years and we were going to have to shell out $2600 to live in a much smaller house than I do now. My PITI is $2695. So for 95 additional dollars a month I am going to get a fat tax break from the IRS due to mortgage interest. I will also pay down debt on an asset that will eventually be mine outright. I will finish paying for this house right as I enter retirement, which will make retiring that much easier. We have 4 bedrooms and only 3 family members including me, so we could rent out a spare room if there was financial hardship. Providence hasn't seen the same run-up since 2009 that Boston did, so if there is a fall to happen, we are not falling from such a great height. I am ok deploying my money to my house, because we need to live somewhere, and this puts me in more control than renting did of my finances, if you can believe that. And I am ok doing something to change the fact that I was unhappy. I don't know how long I was supposed to wait for the next crash but putting your life on hold and obsessing over this shit was really making everyone unhappy. This is actually my first time back to the forum since i bought. It's nice not to obsessively check zerohedge and housingbubbleblog. I'm playing pinball and spending time with my son and grabbing pizza and watching Arsenal at a restaurant that is like 1,000 ft from my front door with new friends and a lot going for it. The magic numbers in my bank account or zillow estimate don't do shit for me anymore.
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