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Are you priced out of where you like to live too?
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Tue Nov 29, 2016 8:29 pm GMT    Post subject: Are you priced out of where you like to live too? Reply with quote

Wife and I are hoping to stay in Boston and live either in or just south of any neighboring town to Boston. However, we've been priced out of Boston and other towns. Why? We make a combined salary of $135K, which qualifies us for only a $380,000 mortgage. Now we are a family of 3.5 people(expecting soon) but we just can't come up with 50k-70k for a deposit to help us reach a mortgage of $450k to $470k. (now this is only South of Boston. Cambridge and other places have much higher prices)

2 questions:
Is it us (my wife and I) who are not making enough to justify a higher pre-approval amount? or is this everyone else?

I'm trying to poll the Boston Bubble visitors/guests - If you don't mind me asking - what is your current combined salary?
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PostPosted: Thu Dec 01, 2016 11:05 pm GMT    Post subject: Reply with quote

Dude, $135,000 annual income should get you mid 600,000 mortgage with no issue. You better shop around on your mortgage.
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Mon Dec 12, 2016 9:00 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Dude, $135,000 annual income should get you mid 600,000 mortgage with no issue. You better shop around on your mortgage.


how is that even possible? what about 3% down and PMI? Can you give me a contact?
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PostPosted: Wed Dec 14, 2016 3:48 pm GMT    Post subject: Reply with quote

I tend to be more financially conservative than most. We saved up $350K for a down payment, $100K cash for emergency fund, and $400K in tax-deferred retirement savings before we pulled the trigger on an $800K house this year. We saved/invested that dough over a period of 10 years, with a gross household income of $100K in 2006, stepping up over the years to $260K in 2016. Hate to say it, but $135K gross income in Boston is just not that much. Particularly if you pay over $20K/year per kid in day care. Good luck.
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PostPosted: Fri Dec 16, 2016 11:05 pm GMT    Post subject: Reply with quote

Quote:
with a gross household income of $100K in 2006, stepping up over the years to $260K in 2016


Just wondering, is the $260k salary range for senior executive job? or some big investment job? I know some surgeons or corporate lawyers also easily earn beyond that figure. $260k is pretty high income in Boston area.

For most of the average middle class folks with regular job in boston area, they get paid between 50k to 100k a year. Couple both work will earn about 100 to 150k in average. So $135,000 is considered pretty average for family earn, and reflects a pretty massive income level locally.
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PostPosted: Sat Dec 17, 2016 4:40 am GMT    Post subject: Reply with quote

We make $80K and $95K.
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PostPosted: Sat Dec 17, 2016 5:05 am GMT    Post subject: Reply with quote

Listen people, I've been reading this blog from afar for some time. The answer is simple: leave. Boston is simply not worth it. Maybe there will be a "correction" some day and we'll return, but if not I'll survive.

Don't fool yourself. If you're reading this blog it's not time to buy its time to go.

Ps. My wife and I make $185k.
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PostPosted: Sun Dec 18, 2016 5:06 pm GMT    Post subject: Reply with quote

Quote:
Don't fool yourself. If you're reading this blog it's not time to buy its time to go.


The question is going where? If you own a sub-1500 SQ feet home in city area and you need to do morning commute, then you are basically stuck. Even you try to sell high and buy high for upgrade, the much higher property tax bill will still hurt you. And that is the best situation already.

Renter who is willing to move further away from the city, should get much cheaper rent with much bigger home. As those fools who got suck into those in-the-middle-of-nowhere investment properties are pretty desperate currently, and situation will get worse.

I see market slowly change to renter's market, as over supply of empty housing and high price will mix with higher interest rate to produce some strong headwind for housing market.
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PostPosted: Tue Dec 20, 2016 1:45 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
with a gross household income of $100K in 2006, stepping up over the years to $260K in 2016


Just wondering, is the $260k salary range for senior executive job? or some big investment job? I know some surgeons or corporate lawyers also easily earn beyond that figure. $260k is pretty high income in Boston area.

For most of the average middle class folks with regular job in boston area, they get paid between 50k to 100k a year. Couple both work will earn about 100 to 150k in average. So $135,000 is considered pretty average for family earn, and reflects a pretty massive income level locally.


Sorry, I meant to emphasize household income, meaning two jobs. Wife was a grad student in '06 when I got my first real job, and now we both have real jobs that add up to about $260K. She's in pharma and I'm in medical management.
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PostPosted: Tue Dec 20, 2016 1:51 pm GMT    Post subject: Reply with quote

Anonymous wrote:
I see market slowly change to renter's market, as over supply of empty housing and high price will mix with higher interest rate to produce some strong headwind for housing market.


Not in the premier towns inside of 128. Prices are up, as are interest rates. My town, Arlington, is insane. New construction condos sell at $860-900K. An ugly 4,000 SF SFH on Jason Street just sold for $1.6M. A crappy house in need of renovations on a very busy double-yellow just sold for over $600K.
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admin
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Joined: 14 Jul 2005
Posts: 1816
Location: Greater Boston

PostPosted: Tue Dec 20, 2016 2:19 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Anonymous wrote:
I see market slowly change to renter's market, as over supply of empty housing and high price will mix with higher interest rate to produce some strong headwind for housing market.


Not in the premier towns inside of 128. Prices are up, as are interest rates.


The rise in interest rates only started about a month ago. That wouldn't be reflected in prices yet. This time of year is also very off-season, so there is very little activity that would aid in price discovery. Rates were as high as they are now in the peak season of 2014, but then again selling prices were lower then too. I don't think we'll know until after spring if the rate increase has been enough to make an impact. Also importantly, we don't know that rates have finished spiking. There is a ton of upside left on rates - think back to Nixon, as there are other parallels.

- admin
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Wed Dec 21, 2016 11:31 pm GMT    Post subject: Feels like the boom will never end Reply with quote

I will sound like a broken record - but, this real estate boom will end and you don't want to have over paid for a home when that happens.

Turn on the time machine and you can read about what CASE-Shiller learned from studying the 1980s boom.

The Boom last from 1983 until 1988 and the hang over was frightening.
Read it here
https://www.bostonfed.org/-/media/Documents/neer/neer294d.pdf

Sitting out a real estate boom is not for those without intestinal fortitude. There is rental stock out there and yes it won;t be as comfortable as signing up for a $500K Mortgage like all of your friends. You can expect to be ridiculed, you can expect to be considered a financial luddite, and one day you will be very thankful to have waited.

Boston is a center of education, finance, and government with means that real estate booms go more extreme because of the money flows connected to education, finance, and government.

Interest rates are at 5000 year lows and it might be the most dangerous time in history to buy a home.
http://ei.marketwatch.com//Multimedia/2016/06/13/Photos/NS/MW-EP161_chart1_20160613094902_NS.jpg?uuid=963be77e-316d-11e6-8156-0015c588dfa6
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Former Arlingtonian



Joined: 23 Oct 2013
Posts: 141

PostPosted: Wed Dec 21, 2016 11:47 pm GMT    Post subject: 90 Jason Street - Arlington = 98iK mortgage Reply with quote

Anonymous wrote:
Anonymous wrote:
I see market slowly change to renter's market, as over supply of empty housing and high price will mix with higher interest rate to produce some strong headwind for housing market.


Not in the premier towns inside of 128. Prices are up, as are interest rates. My town, Arlington, is insane. New construction condos sell at $860-900K. An ugly 4,000 SF SFH on Jason Street just sold for $1.6M. A crappy house in need of renovations on a very busy double-yellow just sold for over $600K.


$1.6 Mil paid for Jason - demonstrates the crazy things people do in Booms - in 2008 90 Jason sold for $951K - Mortgage was $700K
http://www.zillow.com/homes/recently_sold/56401781_zpid/globalrelevanceex_sort/42.416882,-71.153309,42.407202,-71.171805_rect/15_zm/?

People lose their sense of value during a boom and do really dumb things.
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PostPosted: Thu Dec 22, 2016 10:40 pm GMT    Post subject: Reply with quote

I found out a few folks recently purchased homes with over million dollars price tag. Their families are in similar situation of having 2 or more kids, and both husband and wife work to earn decent incomes. I am guessing their household income level should be in mid $200,000 level.
All of them are upgrading, by selling what they currently have, and put the profit as down payment, and carry $800,000+ to $1,000,000+ mortgage. They all buying in towns famous in public school system, so they can pull their kids out of private school. They are not willing to pay the tuition anymore, all fed up with the private school cost.

From their cases, I see a few things that worth thinking about.

1. Banks are really willing to lend just to everyone, as long as they are willing to take the loan.
2. People are willing to take a lot of risk in housing market.
3. Any home below $700,000 in any decent town is crap. Compare to what you will get for $700,000, you actually will get more than twice the value, if you were willing to bump up the price you are willing to pay above the million dollar mark.
4. private school(education) cost is too high, people are more than willing to buy a very very expensive home in town with good public school system, than paying 2+ kids through private school.

The conclusion is, if you still want to buy a decent home today, you need to make the top 20% income level in your local market, and still willing to buy more than you could afford, then you actually will find yourself some good deals. And that is actually a much better alternative, compare to keep in the line of your affordability, and pay 700,000 for a shit hole that you will feel ashamed to live in.

This is alarming, but who is judging? Happy betting in the housing bubble.
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PostPosted: Fri Dec 23, 2016 2:47 am GMT    Post subject: Reply with quote

I thinks it's fine to buy a house that needs some work. Make it just the way you want it. And you don't have to live in Wellesley or Lexington for your kids to get a good education. Lots of towns get kids into top colleges.
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