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Effects of requiring 20% down
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optimus



Joined: 23 May 2008
Posts: 27

PostPosted: Tue Apr 11, 2017 2:31 am GMT    Post subject: Effects of requiring 20% down Reply with quote

What do you think would happen to the real estate market in Massachusetts if 20% down was mandated? What would happen to all those people buying $700K fixer-uppers with only 3% down.
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PostPosted: Tue Apr 11, 2017 11:50 am GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

optimus wrote:
What do you think would happen to the real estate market in Massachusetts if 20% down was mandated? What would happen to all those people buying $700K fixer-uppers with only 3% down.


According to this article (on a national basis)
62% of buyers put down less than 20%

I don't think 3% downpayments are rampant yet... and with a 700k property, I don't think 3% down is that common either

https://chicagoagentmagazine.com/2017/04/10/average-mortgage-size-reaches-record-high/
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Tue Apr 11, 2017 1:52 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

optimus wrote:
What do you think would happen to the real estate market in Massachusetts if 20% down was mandated? What would happen to all those people buying $700K fixer-uppers with only 3% down.


in Massachusetts - especially inside the 495 Belt. Virtually impossible...

Then most would be renting. How does one come up with $140k down, especially with child care, current rental prices and cost of living?

You couldn't do it. Myself - college educated with masters, could NEVER have put 140k down for any house and I've been saving since 23 y/o when I graduated, which was 20 years ago.

Some of us don't have the privilege of wealth in our families to just fork over that amount for a down payment.
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PostPosted: Wed Apr 12, 2017 3:46 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

victorgbishop wrote:
optimus wrote:
What do you think would happen to the real estate market in Massachusetts if 20% down was mandated? What would happen to all those people buying $700K fixer-uppers with only 3% down.


in Massachusetts - especially inside the 495 Belt. Virtually impossible...

Then most would be renting. How does one come up with $140k down, especially with child care, current rental prices and cost of living?

You couldn't do it. Myself - college educated with masters, could NEVER have put 140k down for any house and I've been saving since 23 y/o when I graduated, which was 20 years ago.

Some of us don't have the privilege of wealth in our families to just fork over that amount for a down payment.


Why don't you have 140k saved after 20 years of working? I'm 34, grew up in blue collar Randolph (I'm not from a wealthy family), and have been working since I was 13 years old delivering papers. Two years ago, I put 25% down on a condo in JP and am now looking to put another 20% down on a home in the suburbs since we have a child on the way. We'll rent out the condo in JP as a investment property. It sounds like you like to make excuses for your circumstances in life. It would behoove you to take more responsibility for your life.
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FromRandolph



Joined: 12 Apr 2017
Posts: 1

PostPosted: Wed Apr 12, 2017 3:50 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

Anonymous wrote:
victorgbishop wrote:
optimus wrote:
What do you think would happen to the real estate market in Massachusetts if 20% down was mandated? What would happen to all those people buying $700K fixer-uppers with only 3% down.


in Massachusetts - especially inside the 495 Belt. Virtually impossible...

Then most would be renting. How does one come up with $140k down, especially with child care, current rental prices and cost of living?

You couldn't do it. Myself - college educated with masters, could NEVER have put 140k down for any house and I've been saving since 23 y/o when I graduated, which was 20 years ago.

Some of us don't have the privilege of wealth in our families to just fork over that amount for a down payment.


Why don't you have 140k saved after 20 years of working? I'm 34, grew up in blue collar Randolph (I'm not from a wealthy family), and have been working since I was 13 years old delivering papers. Two years ago, I put 25% down on a condo in JP and am now looking to put another 20% down on a home in the suburbs since we have a child on the way. We'll rent out the condo in JP as a investment property. It sounds like you like to make excuses for your circumstances in life. It would behoove you to take more responsibility for your life.


Sorry, that was poorly written. Made it sound like I've been delivering papers for the past 21 years. Worked in the corporate for 10 years after attending a state college and now run my own business.
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PostPosted: Wed Apr 12, 2017 4:07 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

victorgbishop wrote:
optimus wrote:
What do you think would happen to the real estate market in Massachusetts if 20% down was mandated? What would happen to all those people buying $700K fixer-uppers with only 3% down.


You couldn't do it. Myself - college educated with masters, could NEVER have put 140k down for any house and I've been saving since 23 y/o when I graduated, which was 20 years ago.


Just curious, what is your current salary? If you are a teacher, I can understand how its harder to save as the salary relatively flat.

Just for arguments sake:

Assume 1 car. $300 a month in payments,gas,etc
1 -5 years - 30k, 1,000 in rent. 15k before taxes
6 - 10 years - 40k, 1,400 in rent. 20k before taxes
10 - 15 years - 50k - 1800 in rent. 36k before taxes
15 - 20 years - 60k - 2200 in rent. 31k before taxes

fixed cost of food, entertainments of 800 a month means


1 -5 years - max save 5k
6 - 10 years - max save 10k
10 - 15 years - max save 26k
15 - 20 years - 60k - max save 21k

under this scenario you can frugally save 50k after 20 years. And I haven't even factored in taxes! but should be fairly low under these brackets... But the salary I've listed is quite low, but could be typical in some sectors
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PostPosted: Wed Apr 12, 2017 4:40 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

victorgbishop wrote:


in Massachusetts - especially inside the 495 Belt. Virtually impossible...

Then most would be renting. How does one come up with $140k down, especially with child care, current rental prices and cost of living?

You couldn't do it. Myself - college educated with masters, could NEVER have put 140k down for any house and I've been saving since 23 y/o when I graduated, which was 20 years ago.

Some of us don't have the privilege of wealth in our families to just fork over that amount for a down payment.


Come on, this is nonsense. My wife and I lived below our means for 10 years while banking every promotion we could and chasing fatter paychecks. We saved up $350K to put down on our $800K house and another $100K to have as an emergency fund, not to mention $350K in 401k. We're in our mid-late 30's. Both in tech.

Live like a student for 10 years while making bank in tech (or law, or medicine, etc.). That's how you manage 20% down.
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PostPosted: Wed Apr 12, 2017 4:45 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

Anonymous wrote:


Come on, this is nonsense. My wife and I lived below our means for 10 years while banking every promotion we could and chasing fatter paychecks. We saved up $350K to put down on our $800K house and another $100K to have as an emergency fund, not to mention $350K in 401k. We're in our mid-late 30's. Both in tech.

Live like a student for 10 years while making bank in tech (or law, or medicine, etc.). That's how you manage 20% down.


What you are saying true, but.. you are also living in a "bubble".
Not everyone can be in tech, lawyer or finance..

Yes, hard work = rewards, but if we have a society where only these professions can afford a house, then we have a broken society (by American standards)

too many NIMBYs choking the supply which is take up by these 3 professions
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PostPosted: Wed Apr 12, 2017 5:35 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

Anonymous wrote:
Anonymous wrote:


Come on, this is nonsense. My wife and I lived below our means for 10 years while banking every promotion we could and chasing fatter paychecks. We saved up $350K to put down on our $800K house and another $100K to have as an emergency fund, not to mention $350K in 401k. We're in our mid-late 30's. Both in tech.

Live like a student for 10 years while making bank in tech (or law, or medicine, etc.). That's how you manage 20% down.


What you are saying true, but.. you are also living in a "bubble".
Not everyone can be in tech, lawyer or finance..

Yes, hard work = rewards, but if we have a society where only these professions can afford a house, then we have a broken society (by American standards)

too many NIMBYs choking the supply which is take up by these 3 professions


1. You're right - not everyone can be in a high-paying job. So they'll live in Chelsea, Lynn, Mattapan, etc. Sucks, but that's the market.

2. How is it a bubble when 2 kids out of grad school, in their mid 20's, can make $130K each? When tech is growing at an accelerating pace? Look around and absorb the reality. Do you realize there are umpteen companies in Cambridge that are at the forefront of the new field of genomic medicine? Those are probably $150K jobs at the low end. Boston, SF, and rising cities like Seattle are where young people in tech and medicine go to make good salaries. Demand for housing outstrips supply. What do you think is going to happen to housing? Hint: we're on the same trajectory in Boston as is SF. They're a few years ahead of us. My mediocre $800K house is going to be a mediocre $1.2M house in 10 years (and no, I didn't buy as an investment and don't plan on selling at a profit).

None of this is going to change, because established, moneyed interests are pulling all the strings.
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PostPosted: Wed Apr 12, 2017 8:26 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

Anonymous wrote:

2. How is it a bubble when 2 kids out of grad school, in their mid 20's, can make $130K each? When tech is growing at an accelerating pace? Look around and absorb the reality. Do you realize there are umpteen companies

None of this is going to change, because established, moneyed interests are pulling all the strings.


You obviously were not around the 2001 tech bubble Smile

I was in silicon valley at time, and no exaggeration the highways went from 1-2hour rush hour to 20 min drive home. The exodus was brutal and stayed that way for several months

I can say it did not feel like a bubble at the height, it just felt normal. Tech would continue to grow and job market has good.. until it didn't

It really was only saved by the rise of facebook and social media

The only advice I can give is to start saving very aggressively now to have a good cushion incase of a 5 year downturn. Industry of course will still be around but we will have an oversupply problem... too many unemployed tech/bio chasing too few jobs
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PostPosted: Wed Apr 12, 2017 11:01 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

Anonymous wrote:
optimus wrote:
What do you think would happen to the real estate market in Massachusetts if 20% down was mandated? What would happen to all those people buying $700K fixer-uppers with only 3% down.


According to this article (on a national basis)
62% of buyers put down less than 20%

I don't think 3% downpayments are rampant yet... and with a 700k property, I don't think 3% down is that common either

https://chicagoagentmagazine.com/2017/04/10/average-mortgage-size-reaches-record-high/


No bank will let you buy a 700k property with 3 % down. The most you can buy is a 620k property with 3.5 % down only if you qualify for the mortgage.
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PostPosted: Wed Apr 12, 2017 11:09 pm GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

Anonymous wrote:
Anonymous wrote:

2. How is it a bubble when 2 kids out of grad school, in their mid 20's, can make $130K each? When tech is growing at an accelerating pace? Look around and absorb the reality. Do you realize there are umpteen companies

None of this is going to change, because established, moneyed interests are pulling all the strings.


You obviously were not around the 2001 tech bubble Smile

I was in silicon valley at time, and no exaggeration the highways went from 1-2hour rush hour to 20 min drive home. The exodus was brutal and stayed that way for several months

I can say it did not feel like a bubble at the height, it just felt normal. Tech would continue to grow and job market has good.. until it didn't

It really was only saved by the rise of facebook and social media

The only advice I can give is to start saving very aggressively now to have a good cushion incase of a 5 year downturn. Industry of course will still be around but we will have an oversupply problem... too many unemployed tech/bio chasing too few jobs


Back during the tech bubble, the US was bringing in over 300k h1bs into US every year. Also most of the new tech hires used to work at Home Depot before getting a job in tech. After the bust, they went back to India and Home Depot. When people stop using smartphones and people chose to die instead of taking drugs to live, there will be too many unemployed tech/bio chasing too few jobs.
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PostPosted: Thu Apr 13, 2017 12:06 am GMT    Post subject: Re: Effects of requiring 20% down Reply with quote

Anonymous wrote:
Anonymous wrote:
Anonymous wrote:

2. How is it a bubble when 2 kids out of grad school, in their mid 20's, can make $130K each? When tech is growing at an accelerating pace? Look around and absorb the reality. Do you realize there are umpteen companies

None of this is going to change, because established, moneyed interests are pulling all the strings.


You obviously were not around the 2001 tech bubble Smile

I was in silicon valley at time, and no exaggeration the highways went from 1-2hour rush hour to 20 min drive home. The exodus was brutal and stayed that way for several months

I can say it did not feel like a bubble at the height, it just felt normal. Tech would continue to grow and job market has good.. until it didn't

It really was only saved by the rise of facebook and social media

The only advice I can give is to start saving very aggressively now to have a good cushion incase of a 5 year downturn. Industry of course will still be around but we will have an oversupply problem... too many unemployed tech/bio chasing too few jobs


Back during the tech bubble, the US was bringing in over 300k h1bs into US every year. Also most of the new tech hires used to work at Home Depot before getting a job in tech. After the bust, they went back to India and Home Depot. When people stop using smartphones and people chose to die instead of taking drugs to live, there will be too many unemployed tech/bio chasing too few jobs.


I'll give you a brief lesson in economics. What happens when risk free returns are essentially zero. You have to take extreme risks to get even a decent return.

Do these new hot tech bio companies make money? No. Who is funding? Anyone who wants more than 0% return.

When fed rates start to creep up more, risk is tolerated less. Who is going to fund companies which make no money?

Shut down 30% of companies without profit, do I think it will affect the tech market?

Basic supply and demand. Fed has caused these risky tech companies to live
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PostPosted: Thu Apr 13, 2017 1:21 am GMT    Post subject: Reply with quote

Don't be such a simpleton. The IP on CRISPR was just worked out. In favor of the Harvard & MIT spinoff companies. Do you really imagine that the ability to edit genomes will have no successful commercial applications? If you don't like that particular example, what about the arrival of GE? Do you realize that some of the world's best selling drugs were developed in Boston? See Enbrel, for example. All of the world's major RNA drug companies are in Boston. This city has the second largest financial sector in the US.
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Guest






PostPosted: Thu Apr 13, 2017 2:10 am GMT    Post subject: Reply with quote

Anonymous wrote:
Don't be such a simpleton. The IP on CRISPR was just worked out. In favor of the Harvard & MIT spinoff companies. Do you really imagine that the ability to edit genomes will have no successful commercial applications? If you don't like that particular example, what about the arrival of GE? Do you realize that some of the world's best selling drugs were developed in Boston? See Enbrel, for example. All of the world's major RNA drug companies are in Boston. This city has the second largest financial sector in the US.


No one is denying the validatity of the sector. It's simply the inflated valuations which allow the outsized incomes and excess hiring.

What I'm trying to convey is, at the top of the 2001 bubble.. What was considered "normal" was anything but. And it's hard to realize that if you have entered the workforce in the last 5 years
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