Is waiting for home prices to come down pointless? (Boston: condos, neighborhoods)

[MikePRU]

Originally Posted by RBThescot

Agree 100 %.

Real estate is like surfing. When the market is strong, everyone rides the wave up. When the market softens, everyone rides the wave down. If you're not in the game, then you're not winning or losing in the game. Therefore, buy when you can.

A lot of people pat themselves on the back, and think "aren't I such a smart boy," when they've been lucky to buy low and sell high and come out way ahead. It's definitely advantageous to be well informed but few people can predict the future accurately, despite the messaging they get from their ego.

It's my observation that many start out already ahead because they have baseline money to get in the game - trust fund money, inherited money, grandparent money, lawsuit money, bar mitzvah money, etc. They profit more in the up turn and survive the down market better but not through wisdom or being able to predict the future.

Not everyone wants to own their own house. I have friends in their 70's and 80's who have rented all their lives. There are smart ways to rent that provide stability. But if you want to own, then buy when you can, where you can have the lifestyle you want long term, and ride the wave

Well said. Buy when you want to and when you're financially able to. That's the best time to do it.

Timing the market is not easy to do and certainly there's no guarantee that if you bought at a low point that the market will be at a high point when you're ready to sell.

[Shrewsburried]

Originally Posted by MikePRU

Well said. Buy when you want to and when you're financially able to. That's the best time to do it.

Timing the market is not easy to do and certainly there's no guarantee that if you bought at a low point that the market will be at a high point when you're ready to sell.

To a degree, but there have been multiple moments within even the last decade where, without the advantage of hindsight, buying/selling/holding was rather obvious.

-In the summer of 2007 when home prices were sliding and whisperings of home defaults were rapidly increasing, it was an obvious "wait and see" market
-In 2009 when the FED made it clear they would do everything to prop a bleeding market, it was an obvious "buy now" for those flush with capital and a tolerance for risk.
-In 2010(ish) when large hedge funds and "whale" investors started buying RE en masse, and banks started triggering foreclosures ... it was an obvious "buy now", including for those financing a purchase.
-In 2012 when the economy was stabilizing and projecting sustained growth/optimism, and inventory and home prices showed clear recovery, it was an obvious "buy now" moment.


There have even been windows in that 2012-2016 time frame where a 3-5% percent differential potentially occurs between spring and winter ...particularly for properties which require some sweat equity. Q4 2015 is an example of a confluence of factors creating some temporary uncertainty. I saved a good 15K+ by waiting out a fairly hot spring and buying as the market ground to a halt in late 2015/early 2016. Same in Q4 of last year when some sellers priced for a quick sell due to the equities markets tanking.

[bugelrex]

Originally Posted by Shrewsburried

To a degree, but there have been multiple moments within even the last decade where, without the advantage of hindsight, buying/selling/holding was rather obvious.

In most cases, your personal job situation would have affected your judgement. If you were in a job unaffected by the bad market (teaching, government) rather than financial/tech then you could make an unemotional decision.

[Shrewsburried]

Originally Posted by bugelrex

In most cases, your personal job situation would have affected your judgement. If you were in a job unaffected by the bad market (teaching, government) rather than financial/tech then you could make an unemotional decision.

Yes, but your point, which is very real and valid, substantiates my position that current buyers need not rush into to this current market for fear that the YoY gains we've seen since 2012 will persist. In terms of risk, it is preferable to continue saving capital with the intention of exploiting a weakened market.

One just has to look at the 2018 Q4 market to see how quickly sentiment can turn.

Those considering buying should read/listen to the theses laid by savvy RE investors like Ivy Zelman, keep an eye on market and corporate macro trends (financial, industry, and RE), and evaluate their personal circumstances to decide whether they should buy. Once they decide to buy, they can then talk to a real estate agent. The former will provide a sober look at the risks, the latter will almost always tell you not to time markets and "now is as good a time as any" ... including in 2007 when downward pressure on RE was so clear the Goldman boys on Wall St. selling/shorted the hell out of publicly traded home builders while equity markets as whole were at all time highs. Then it imploded.

Simply put - don't try to be perfect (i.e., time market bottoms/highs), but do be smart and know your risks.

[Shrewsburried]

Since I mentioned her, Zelman did a brief interview with CNBC a few months back on housing market and, while she remains quite coy to serve her business, she did wink at the near term market.

General takeaways:

- lower rates = good for maintaining current housing prices (duh).
- When asked about strength, she made a very tactful comment regarding near term volatility. Main st. is not Wall St. and, therefor, less savvy and perhaps ignorant to current market volatility. Main St. largely buys on rates/monthly payments and current consumer sentiment (which is high right now). More savvy buyers (i.e., those who follow equity markets) are much more resistant (she used trepidatious) to buying given current volatility. In short, she was suggesting "smart money" is holding due to uncertainty.
- Housing was hammered in 2018 thanks FED raising rates; i.e., housing strength is directly tied to cheap debt.

[Louisville Slugger]

If I waited to buy my condo I don't think I would be able to afford it today.

[Shrewsburried]

Originally Posted by Louisville Slugger

If I waited to buy my condo I don't think I would be able to afford it today.

Sure, but someone who bought in '88 weren't able to say this for a decade plus; i.e., what was may not continue to be. Granted, FED policy is pro inflation so a long term bullish outlook is not unwarranted.

[yesmaybe]

Originally Posted by Shrewsburried

Sure, but someone who bought in '88 weren't able to say this for a decade plus; i.e., what was may not continue to be. Granted, FED policy is pro inflation so a long term bullish outlook is not unwarranted.

Condos are much more volatile and will always be so. Nearby condos got obliterated in 2008, like we are talking -50% in a short period. Riding that out when you are so underwater is tough I imagine.

[porterhouse]

Originally Posted by yesmaybe

Nearby condos got obliterated in 2008, like we are talking -50% in a short period.

Not anywhere near downtown Boston/Cambridge.

[Shrewsburried]

Originally Posted by porterhouse

Not anywhere near downtown Boston/Cambridge.

Considering MA as whole down roughly 20-22% from peak (2005) to trough (2009), there is little chance condos in Boston halved.

My former landlords bought a condo on the Brookline border at literal peak (Aug. 2005) and I think the worst they were down was 12-14%.