Spring 2016 Real Estate Market - Boots on the Ground? (Arlington: vacation home, buyers)

[Shrewsburried]

Originally Posted by Parsec

I've never considered this before, but both you and NewfieMama have both touched on this now.

Another thing to consider if you are trying to get the best bang for your buck is how much house you are getting at specific price points among different towns. You might find actually find a better deal in a more expensive town. A town's median house price can be very misleading because the size/condition of housing at the median price point varies widely from town to town. People looking in Natick might completely dismiss Sudbury due to the higher median home prices. This was me when I was looking in 2012-13. I was finding 3000sf homes that needed a lot of updating in Natick in the $650k range, so I was pleasantly surprised that $650k got me a completely renovated 3000 sf home in Sudbury. Overall, homes are a lot bigger, newer, and more updated in Sudbury than in Natick which drives up the median home price. If you compare similar 3000 sf homes, you'll see Sudbury is actually a little cheaper than Natick. It was a no brainer for me because the schools have a better reputation and we now live much closer to where my wife works. I'm also leaving my job in Boston soon, so I'm going to have my sanity back.

Which gets the core reason why larger/higher end homes always appear to be the "better value". The biggest drivers of home cost are unavoidable sunk costs - land, septic/utilities/systems. Framing square footage is cheap and unless one is buying a truly high-end/custom home, differences in materials and material costs are minimal between builds. With land values and median incomes what they are, the mid and bottom end of the market will always be the "worst deal" because land value represents the bunk of the cost and competition guarantees what ever underpriced properties exist will not be underpriced once the offers are in.

This is how I ended up with one very long, very s____y driveway ... at least I get a nice view once parked.

[traffic_lover]

Thanks all yalls for dem kind words. It's more important than ever in this market to get best LOCAL realtor

[sal1181]

Originally Posted by traffic_lover

Thanks all yalls for dem kind words. It's more important than ever in this market to get best LOCAL realtor

Congrats on the move! Now you can update your location. No longer homeless 👍

[pennyone]

Originally Posted by MikePRU

Congrats! I know you had a longer than anticipated home search. Glad to hear you found something.



Moving to a more expensive town really compounds the problem though. Upsizing definitely means have a bigger mortgage but hopefully as you say these people have had increases in their income since they purchased their current home which will allow them to absorb the extra debt comfortably.

Yeah, until some disaster happens, heaven forbid. You say stretch now, and pay more comfortably later....that's a big gamble on the future on many fronts.

[Dm84]

Originally Posted by pennyone

Yeah, until some disaster happens, heaven forbid. You say stretch now, and pay more comfortably later....that's a big gamble on the future on many fronts.

Agreed. People should buy what they can comfortably afford today instead of what they might be able to afford in the future.

[Parsec]

Originally Posted by pennyone

Yeah, until some disaster happens, heaven forbid. You say stretch now, and pay more comfortably later....that's a big gamble on the future on many fronts.

Originally Posted by Dm84

Agreed. People should buy what they can comfortably afford today instead of what they might be able to afford in the future.

A disaster will also affect their future ability to afford what they can comfortably afford today. It's not for everyone, but people in certain job fields can reasonably expect their incomes to rise substantially over the course of 5 years. A disaster such as an expensive medical condition will screw them either way.

[MikePRU]

Originally Posted by pennyone

Yeah, until some disaster happens, heaven forbid. You say stretch now, and pay more comfortably later....that's a big gamble on the future on many fronts.

My post says nothing of the sort. In fact, it advises to wait until your income has grown before upsizing.

However, people can certainly take a calculated risk when it comes to stretching. As Parsec said some people can reasonably expect their income to grow over time. If there's a disaster and you have no income then you're up a creek whether you stretched or not.

[BostonMike7]

Originally Posted by MikePRU

If there's a disaster and you have no income then you're up a creek whether you stretched or not.

But there are different levels of being up a creek.

You have a disaster, but have 20+% in equity in your home, a healthy emergency fund and reserves, and low debt and a good retirement portfolio, it's sure as hell a lot better than having virtually no equity, and no savings, credit card debt, etc and needing to bring cash to the table to sell your home and not having it at all.

If you really think about it, if you put 3% down on a home, and then have an emergency and need to sell ASAP, you need to sell it for 6% more just to cover realtor fees and break even....otherwise you are bringing cash to close. Given that you may find yourself in an emergency, you may not even have that.

[Nanotube]

Originally Posted by MikePRU

My post says nothing of the sort. In fact, it advises to wait until your income has grown before upsizing.

However, people can certainly take a calculated risk when it comes to stretching. As Parsec said some people can reasonably expect their income to grow over time. If there's a disaster and you have no income then you're up a creek whether you stretched or not.

I can understand the stretching part but it'd be too scary for me to pull it. Looking back, I wish I had taken the risk and bought a bigger house and potentially "made more money" when selling it.

[MikePRU]

Originally Posted by BostonMike7

But there are different levels of being up a creek.

You have a disaster, but have 20+% in equity in your home, a healthy emergency fund and reserves, and low debt and a good retirement portfolio, it's sure as hell a lot better than having virtually no equity, and no savings, credit card debt, etc and needing to bring cash to the table to sell your home and not having it at all.

If you really think about it, if you put 3% down on a home, and then have an emergency and need to sell ASAP, you need to sell it for 6% more just to cover realtor fees and break even....otherwise you are bringing cash to close. Given that you may find yourself in an emergency, you may not even have that.

Clearly part of the problem here is that my definition of "stretch" is not the same as yours. What you're describing I would refer to as financial idiocy. Stretching in my mind is a much milder situation than what you're describing.