Home prices have peaked (Cambridge, Newton: mortgages, loan, house prices)

[Dm84]

Originally Posted by MikePRU

I'm sure people were saying the same thing when these houses were $40K.

The world was a different place back then. Wage growth isn't as strong as it was back then and outsourcing wasn't a thing.

[Parsec]

Originally Posted by Dm84

The world was a different place back then. Wage growth isn't as strong as it was back then and outsourcing wasn't a thing.

Today the median price of a home compared to the median wage is multiples higher than it was 30 years ago due to an increase in 2-income households. Home price growth in the next 30 years will not be as high as it was in the last 30 years unless we start seeing 3-person marriages (you never know with the way things are going these days) or 50-60 year multi-generational mortgages.

[traffic_lover]

Originally Posted by Nobodybody

My observation is that with a strong enough demand, the impact of rising interest rates will be muted. An example: A 1% increase on a 500k mortgage is a difference of about $200-$300 per month. When you are already paying $2100 a month for a mortage (not including taxes, insurance, etc which can push this closer to $3,000, how much of a difference will an extra $250 a month make? Sure, its still a notable amount, but when someone has the good Boston job lined up, and a family they want to raise in a good town/good school system, people will find a way to make the extra $250 work. At least, I don't think it's going to make a lot of people turn away from the purchase. High demand and low supply should keep things moving forward in my opinion.

The biggest effect will probably be for new home buyers deciding to move one town further out or something.

You have to think at the margin. What percent of ppl have ALREADY overextended and $250 means ends don't meet.

[traffic_lover]

Originally Posted by Parsec

or 50-60 year multi-generational mortgages.

This is common in SoCal. I shudder to think

[BostonMike7]

Originally Posted by Parsec

50-60 year multi-generational mortgages.

Was wondering when we'd start seeing more then 30 year loans.


I remember when 5 years was typical for a standard auto loan. Now as car prices increased, 6, 7 and even 8 year loans have begun to pop up.

When will we see the same with houses. Drag that $250K mortgage out for 50 years. Bank makes money hand over fist.

[Parsec]

Originally Posted by BostonMike7

Was wondering when we'd start seeing more then 30 year loans.


I remember when 5 years was typical for a standard auto loan. Now as car prices increased, 6, 7 and even 8 year loans have begun to pop up.

When will we see the same with houses. Drag that $250K mortgage out for 50 years. Bank makes money hand over fist.

Yup, and if the 2nd signer on the loan (usually the child) doesn't find a good job to continue making the loan payments after his father retires, then the bank will get to foreclose on a house that's not only halfway paid, but has 20-30 years of price appreciation. Win-win for the bank!

[traffic_lover]

My prediction next 10-20 years:
Sea change in millenial buyer preference away from your private, wooded, large, country gentleman farm home in lincoln, carlisle, dover, sherborn, harvard, etc
To:
Walkable, sidewalk, downtown, suburban-urban mixed high density hoods like arlington, lex, melrose, wakefield, even waltham & medford

Biggest potential for price decrease being exurbs with high price tags like harvard, bolton, groton

[Parsec]

Originally Posted by traffic_lover

My prediction next 10-20 years:
Sea change in millenial buyer preference away from your private, wooded, large, country gentleman farm home in lincoln, carlisle, dover, sherborn, harvard, etc
To:
Walkable, sidewalk, downtown, suburban-urban mixed high density hoods like arlington, lex, melrose, wakefield, even waltham & medford

The preference is already there, but they simply can't afford it.

[Dm84]

Originally Posted by traffic_lover

My prediction next 10-20 years:
Sea change in millenial buyer preference away from your private, wooded, large, country gentleman farm home in lincoln, carlisle, dover, sherborn, harvard, etc
To:
Walkable, sidewalk, downtown, suburban-urban mixed high density hoods like arlington, lex, melrose, wakefield, even waltham & medford

That sounds nice but doesn't deal with the affordability issue. My guess is the safe towns with average school districts will turn around as people who are priced out of more expensive towns settle there. I'm seeing it where I live and I expect the trend to continue.

[traffic_lover]

Originally Posted by BostonMike7

Drag that $250K mortgage out for 50 years. Bank makes money hand over fist.

Not necessarily. Look up "time value of money."