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Too many buyers
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Sat Jul 08, 2006 1:11 am GMT    Post subject: to Dorchester Grandma Reply with quote

http://www.massresources.org/pages.cfm?contentID=7&pageID=2&Subpages=yes

Framingham has some condos; you need to be at 150k to get into a 2 bed. The Pike can get you west or east and there is route 30 if you don't want to pay the toll...

http://www.realtor.com/ ... truncated ...

If I were in your shoes, I'd try to use the human highway, meaning let as many people know as you can that you are looking. Maybe someone you know has a two family that is renting and you can see if you can buy a unit from them; it would cut out the realtor and they would know who their neighbor would be... Lots of people who have bought two or three families for investments may want to cash out. If a property has been in someones family for a long time, they don't need to make much.

Believe me, I don't want Massachusetts to be filled with fake yuppies. Not everyone is driven by the almighty buck. Regardless of what your income is, play like a champion and get yourself the best deal you can!!! Good Luck!!

Editor's Note: This post was edited to abbreviate a URL which was widening the page due to the way that the forum software lays out posts. No other changes have been made, and the URL still points to the original destination - only its display has been shortened.
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Sweat_Equity
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PostPosted: Tue Jul 11, 2006 2:12 am GMT    Post subject: Protected Pockets Reply with quote

Regarging the opinion that certain areas will be protected from
a downturn because of special qualities like location, schools,
parks and services:

These areas are luxuries, desirable but not needed. Luxuries get
hit harder in downturns not softer. Restaraunts suffer before
supermarkets, cruise vacations before cab fare.

There is possibly an order of operations in effect.

Low end homes are bought on ecomony. Low end home buyers are
first time home buyers. Low end home buyers are young. Low end
home buyers have less capital to buffer the changing market. Low
end home buyers have less income.

These generalities lead me to guess that low end buyers are more
likely to follow market moves immediately. They should feel changes
in prices and rates first.

First time buyers represent a smaller portion of luxury homes. Luxury
home buyers are trading up, not down. Luxury home buyers are older.
Luxury home buyers have spent a longer time scoping out their target
areas. Luxury home buyers start with higher equity.

These generalities lead me to guess that high end buyers have more
inertia. It takes longer for them to get moving, longer for them to change
direction and longer for them to stop moving.

Summing it up, I think the low end is a leading indicator for the high end.

The low end has a natural floor set by unemployment rate and interest
rate. I don't see any higher floor for the high end except fickle preference.

(BTW I live in a "snooty" town too).
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BikerGeek
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PostPosted: Tue Jul 11, 2006 8:49 pm GMT    Post subject: Re: Protected Pockets Reply with quote

Sweat_Equity wrote:
Regarging the opinion that certain areas will be protected from
a downturn because of special qualities like location, schools,
parks and services:


"It's different here."

Uh, no it's not.....
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BikerGeek
Guest





PostPosted: Tue Jul 11, 2006 8:50 pm GMT    Post subject: Re: Protected Pockets Reply with quote

Sweat_Equity wrote:
Regarging the opinion that certain areas will be protected from
a downturn because of special qualities like location, schools,
parks and services:


"It's different here."

Uh, no it's not.....
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here it comes
Guest





PostPosted: Wed Aug 23, 2006 2:14 pm GMT    Post subject: I know it's not different here, but... Reply with quote

Alright... I know I sound like a broken record about Brookline, but I want to understand how much seasonality I'm seeing (e.g., folks pulling their houses off the market as the summer draws to a close), and how much there actually have been people coming into snap up property in Brookline now that they have negotiating power...

The following data (all self-collected from ZipRealty.com using a search for Brookline, MA with no other conditions) shows that the current inventory levels are almost two standard deviations below the mean since I started collecting data in late May.

It's fine to say that there are no ports in the storm and all the factors are lining up for there to be a huge huge correction. I admit it, I bought in the last year, and I'm hoping that I'm somewhat less of a bigger fool than the next guy by dint of where I bought and the negotiating that I did - I bought with 20% down, 30 year fixed, and got about 10% below asking price. I bought knowing that I might take a big, even huge hit, just comparing my cash flows to the alternative rental payment and deciding that it made approximate sense on a pure cash-flow basis, and that I'd likely hold long enough to come out even on price (even if there was opportunity cost vs. other investments). I'm not tryng to argue any of the wisdom of buying - that is what it is, and now I have to take my lumps now along with the rest of the buyers who all live in the same macroeconomy.

But none of that is material to the micro question of what's going on in some individual towns... Does someone with experience in the dynamics of housing markets know what seasonal inventory levels look like overall? Frankly, given that I believe the storm is gathering and that doom and gloom is beginning to come true all over the place, what is the meaning of this data?

Date Brookline, MA Housing Inventory
5/24/06 645
5/25/06 648
5/29/06 641
5/31/06 653
6/3/06 661
6/6/06 660
6/7/06 670
6/16/06 657
6/17/06 652
6/20/06 654
6/21/06 664
6/22/06 660
6/25/06 675
6/28/06 649
7/5/06 622
7/6/06 626
7/9/06 636
7/13/06 632
7/18/06 633
7/20/06 624
7/29/06 616
8/2/06 611
8/6/06 616
8/9/06 611
8/11/06 621
8/14/06 622
8/17/06 611
8/18/06 612
8/23/06 599

Using the Warren Group figure of 89 sales in July, that means that there's now ~6.7 months of supply (of course 89 is way lower than the 130 sales in July 2005). Just trying to get a sense of how self-delusional I might be being by hoping that the equilibrium will be different in Brookline vs. the rest of Boston or the world... Surprised The argument that "blue chip towns" have more momentum than more marginal towns and that they will move slower and swing further doesn't make sense to me. In fact, the appreciation in Brookline has been much lower than in MA in general because it started from such a high base...

Anyhow, this has turned into a ramble about more than one topic. Would appreciate any of your thoughts...
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Renting and loving it
Guest





PostPosted: Wed Aug 23, 2006 4:48 pm GMT    Post subject: The number Reply with quote

Do the Warren Group include for Sale By Owner? I also believe that there are a significant number of folks that will attempt to rent out their Real Estate than sell when they perceive the market for selling is weak. Of course, the potential problem with that is you can never predict how long a market will go up or how long it may trend downward.

I hope you end up even on your Brookline home. I believe there will be better times to buy down the road.
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admin
Site Admin


Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Fri Aug 25, 2006 5:35 pm GMT    Post subject: Reply with quote

"here it comes",

Sorry, but it doesn't look like the inventory in Brookline is behaving differently from the rest of metro Boston at the moment. I took the inventory data available at http://www.benengebreth.org/housingtracker/location/Massachusetts/Boston/ , limited it to the same date range that you used for Brookline, and calculated how far from the mean each data point is in terms of standard deviations:

Code:

Date Inventory  Standard Deviations From Mean

05/21/06  7454  0.74
05/28/06  7454  0.74
06/01/06  7403  0.57
06/07/06  7586  1.19
06/14/06  7579  1.17
06/21/06  7517  0.96
06/28/06  7541  1.04
07/01/06  7239  0.01
07/07/06  7221  -0.05
07/14/06  7234  -0.01
07/21/06  7167  -0.24
07/28/06  7056  -0.62
08/01/06  7019  -0.75
08/07/06  6866  -1.27
08/14/06  6781  -1.56
08/21/06  6673   -1.93


Inventory for Metro Boston in general is about two standard deviations below the mean for the time frame you are using, so Brookline's behavior in that respect is not out of the ordinary.

It would be interesting to see your data from Brookline and the HousingTracker data put into graph form (normalized) so that there is a visual indication of how closely Brookline tracks Metro Boston. I've only really looked at the mean and the last end point for this post, so there is much left to compare. If it is apparent that Brookline usually does track the general market, then that should help you get a better handle on seasonality because the HousingTracker data goes back a little further than yours.

- admin
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here it comes
Guest





PostPosted: Fri Aug 25, 2006 8:41 pm GMT    Post subject: Reply with quote

You're right... inventory in both Boston Metro and Brookline down about 10% in the same period. The graph of the full period of metro boston inventory is actually really interesting to look at - I just can't figure out how to post an Excel graph here...
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here it comes
Guest





PostPosted: Fri Aug 25, 2006 8:48 pm GMT    Post subject: Wierd behavior... Reply with quote

Ok, since I can't figure out how to post an excel graph, I'll leave it to someone more clever than I to create a jpg and host it somewhere...

The interesting thing is if you go to housing tracker and graph the total metro boston inventory figures for the full period of available data. Inventory took off in early September, and ended up about 35% higher in late October than it had been two months earlier. By the new year it had dropped back down to late august levels. Is that fairly typical for a fall inventory pattern? Lots of people list again in the autumn? Or was that just a bubble phenomenon?

Sorry to be naive, but it's all new to me... Embarassed
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admin
Site Admin


Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Fri Aug 25, 2006 8:55 pm GMT    Post subject: Reply with quote

Quote:
The graph of the full period of metro boston inventory is actually really interesting to look at - I just can't figure out how to post an Excel graph here...


The best way to do it is to export the graph as an image, or take a screen shot of Excel and crop to just the graph, and then embed it in your post using the "img" BBCode tag. In order to use the "img" tag, you need to have the image up on the web somewhere. If you don't have your own web server, you may want to give the ImageShack image hosting service a try at http://imageshack.us/ I have never used this myself or seen it in action (at least that I am aware of), but it looks like it could be worth checking out. It is free and it looks like it's pretty easy to use. Right after you upload an image, they even give you the BBCode that you can cut and paste to display the image in a forum (including this one).

Quote:
The interesting thing is if you go to housing tracker and graph the total metro boston inventory figures for the full period of available data. Inventory took off in early September, and ended up about 35% higher in late October than it had been two months earlier. By the new year it had dropped back down to late august levels. Is that fairly typical for a fall inventory pattern? Lots of people list again in the autumn? Or was that just a bubble phenomenon?


Check out the thread from yesterday and today at http://www.bostonbubble.com/forums/viewtopic.php?t=118 There is a discussion of inventory, what is seasonal, and how there is a huge swell in inventory due to the bubble. There are links to graphs.

- admin
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Guest
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PostPosted: Sat Mar 24, 2007 10:34 am GMT    Post subject: Population and Demand Reply with quote

If you examine the Massachusetts Census Bureau data, you'll notice that the demographics show that the population will decline over the next 30 years quite dramatically. There are a million+ baby boomers over 60 and a million over 50 who will in the next 20 years, retire, die, move into assisted living, to warmer climes, to foreign countries, etc. The next generation of 40+ falls to under a million. The generation of 30+ is 500,000!!! These numbers decline softly for gen 20+, 10+, who will be the home buying market in next 20 years. That means that if you believe that the home you buy in this decade will be the nest egg for your retirement, you are mistaken. Home prices will drift down in the next year(2007), fall sharply in a couple of years after that (2008-2012), and then drift down very very slowly afterwards for 30 years. There will be 1.2 million homes, and 400,000 people living in Mass in 2020, when late baby boomers are ready to retire. Homes will not be equity reserves, they will sell for 1-2 year salary, and the incoming generation will wonder why our generation paid so much for a home.
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guest
Guest





PostPosted: Sat Mar 24, 2007 9:55 pm GMT    Post subject: References please? Reply with quote

I could not locate a reference to the claims in the previous post, about the Mass population declining in the next 30 years. The data that I saw in the following link:

http://www.census.gov/population/www/projections/projectionsagesex.html

shows that the Mass population will rise from 6.3 million to 7 million by 2030, a 10% increase. If one were to look at a house as an investment, one might want to purchase a house in Texas, which is projected to have a population increase of almost 70% or Florida.

However, to concede your point partially, the people coming into Massachusetts are primarily low-income immigrants with large families, who would not be able to afford the high cost of homes here. If the population is only projected to grow by 10%, then it may be hard to sustain the high price/income ratio, since the number of new households formed may be lower than the population increase simply because of the large family effect. I am sure the Census projections would have taken into account the possible migration of retirees to the southern states in the above data. Hence, it does not appear that such price ratios can be sustained.

Also, I should note that I am not a US citizen. There are others in the Mass area, who are in the services industry, and can see that once outsourcing goes beyond a certain tipping point, it can definitely influence a decision whether to stay in the US or not. I am not sure when or if, that tipping point might be reached, but if it does, it could portend greater declines in the housing prices.
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Sat Mar 24, 2007 11:52 pm GMT    Post subject: Reply with quote

If prices are positioned to drop ... or not rise that much ... I wonder what that will do to the rental market.
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RMG
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PostPosted: Mon Mar 26, 2007 5:18 pm GMT    Post subject: Reply with quote

In response to your worries regarding "too many buyers" I'd have to say, "do not worry." The only people who should be buying now are people who have to.

Nobody in their right mind would buy for investment reasons or to be impulsive. If these people would just wait a year or two (what's that compared to a 30 year mortgage?) when prices are attractive, then there'll be some competition, however, the state is losing people. Young college graduates can't afford it here. They go. Baby Boomers now retiring. They go. People who sayed here to stay close to family lose their parents. They go. Most middle class families can't afford it here. They move.

This over-priced, weather-beaten state is losing people. Don't be a statistic. Wait, and buy low. There'll be plenty of houses. Don't you worry.
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guest
Guest





PostPosted: Tue Mar 27, 2007 3:41 am GMT    Post subject: South and West Reply with quote

I am the same guest who posted about the link to the census data a few days ago. I am inclined to agree with RMG. I am a fairly high-income immigrant (think 90's), and I still cannot find anything which I can confidently say that it will sustain its value over a period of 5 years. The south and the west, where the weather is warm, you save a bundle instead of buying a bundle of clothes, your car does not need its muffler replaced every couple of years, and you can spend more time outside and improve your waistline, is definitely the place to be.

While brokers have pressed me to buy, I have pointedly mentioned the flawed data that resonates behind their "it is a great time to buy" song and dance. Finally they have stopped calling, but at least I went and saw a few places on their dime, and realized I was not going to mortgage my future on some unappealing dump. The housing stock north of Boston is really old, and that combined with the glum weather have me thinking of sunny climes Smile

At the end of it all, I ponder, what is the real worth of a home? Is it the building material, the physical location, the surrounding culture? In the end, I have become cynical, and I now think the value of a home is not intrinsic, but really how much someone else is willing to pay for it, which sounds somewhat similar to a Ponzi scheme. If sentiment turns bad, the pyramid could collapse.
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