2020: (1) Mass. Home Sales Hit 16-Year High and (2) another strong year for Boston condo sales (Worcester: real estate, rental)

[sawyer2]

"More single-family homes were sold last year in Massachusetts than in any other year since 2004, despite a once-in-a-century pandemic that threatened the financial security of thousands of residents and dramatically changed the process of buying and selling a home.

There were 61,469 single-family home sales in 2020 — a 3.9% increase over the sales total of 2019, according to The Warren Group. The median sale price for those homes climbed 11.4% from 2019 to hit $445,500 last year."


https://www.wbur.org/bostonomix/2021...-sold-increase

https://www.thewarrengroup.com/ma-de...sales-podcast/


Also, here is the Warren report for 2020 for Boston condo sales - you have to look at the individual neighborhoods but it looks to have fared a lot better than many predicted.

https://www.warrenre.com/uploads/age...%202020%20.pdf

[yellowstatus]

Boston real estate is expensive for a good reason. There's only a half dozen other cities in the US with such a concentration of high paying, highly educated jobs. My view is that institutions like Harvard, MIT, Moderna, Fidelity, Chewy, Mass General, etc. will continue to prosper.

With interest rates, you can borrow $1.5 million with a monthly interest cost of $3,200 a month.
I've been advocating for years that Boston real estate is a remarkably good value. I still hold this view. I don't have the knowledge to make claims about the home valuation beyond the Boston metro region though.

[massnative71]

Originally Posted by yellowstatus

Boston real estate is expensive for a good reason. There's only a half dozen other cities in the US with such a concentration of high paying, highly educated jobs. My view is that institutions like Harvard, MIT, Moderna, Fidelity, Chewy, Mass General, etc. will continue to prosper.

With interest rates, you can borrow $1.5 million with a monthly interest cost of $3,200 a month.
I've been advocating for years that Boston real estate is a remarkably good value. I still hold this view. I don't have the knowledge to make claims about the home valuation beyond the Boston metro region though.

Only a realtor could come up with a spin like that.


Covid has changed all the rules bro. More remote work is going to be the "norm" for a long time to come. Interest rates are all uphill from here on out, do not let that tempt you unless you plan on sitting on it for 30 years. Otherwise, now is certainly not the time to be investing in Boston real estate. A MASSIVE correction is on the horizon.

[yellowstatus]

Expecting interest rates to rise is an argument in favoring of buying now. Lock in that 30 year interest rate now, and you'll win big if inflation picks up.

The ability to buy a $1.8MM property with just over $3k of monthly interest payments is a great deal in my view. Comparable rents for that property are far higher than that, so rents would have to seriously drop by 30-50% long term for this to not make sense. Boston continues to draw some of the best and brightest in the world, and the pharma industry is doing particularly well. I'm a skeptic on remote work being the new norm long term. Prior to Covid, the unambiguous trend is towards consolidating the most talented in a few city centers rather than spreading out.

Anyways, people can decide what they believe to be true. I've laid out my view and the underlying assumptions. If i'm wrong, i'll lose money.

[massnative71]

Originally Posted by yellowstatus

Expecting interest rates to rise is an argument in favoring of buying now. Lock in that 30 year interest rate now, and you'll win big if inflation picks up.

The ability to buy a $1.8MM property with just over $3k of monthly interest payments is a great deal in my view. Comparable rents for that property are far higher than that, so rents would have to seriously drop by 30-50% long term for this to not make sense. Boston continues to draw some of the best and brightest in the world, and the pharma industry is doing particularly well. I'm a skeptic on remote work being the new norm long term. Prior to Covid, the unambiguous trend is towards consolidating the most talented in a few city centers rather than spreading out.

Anyways, people can decide what they believe to be true. I've laid out my view and the underlying assumptions. If i'm wrong, i'll lose money.

As I already said, that only makes sense if you plan on being there for the very long term (usually not the case for your typical fly-by-night tech bro who's been dominating the housing market for 15+- years now). Rising rates will push prices down, and whoever jumped all over these low rates will be underwater and either stuck or forced to take a huge loss.



And it's not just Covid, the trend away from the largest/most congested cities had already been underway for a few years. Covid just accelerated that, made it more long term. I see huge movement towards the 495 belt, and Worcester area/Southern NH/Southern ME in the coming years. And obviously cities in North Carolina, etc.

[porterhouse]

Originally Posted by yellowstatus

Boston real estate is a remarkably good value.

While I don't believe the bottom is going to fall out of this market, I think that is an overly optimistic view. Through friends in real estate development I know of some high end developments have been put on hold. Eventually the inventory of luxury units and the rental glut is going to impact the Boston market. How significantly is unknown.

[Shrewsburried]

Originally Posted by yellowstatus

Expecting interest rates to rise is an argument in favoring of buying now. Lock in that 30 year interest rate now, and you'll win big if inflation picks up.

Yeah, and your potential equity is stripped in the process. People buy on monthly payments and in a rising-rate environment something has to 'give'. That 'give' is typically RE valuations, though demand can offset the pain by some degree.

Of course, this is only a problem if you plan to convert that RE equity into capital at some point in the future. Until that day, you have a predictable monthly cost and housing security.

The rose-colored glasses are in full supply as millions of retail traders yeet on short-squeeze equity runs while chanting "to the moon". This current low-rate environment doesn't exactly inspired confidence.

[massnative71]

Originally Posted by Shrewsburried

Yeah, and your potential equity is stripped in the process. People buy on monthly payments and in a rising-rate environment something has to 'give'. That 'give' is typically RE valuations, though demand can offset the pain by some degree.

Of course, this is only a problem if you plan to convert that RE equity into capital at some point in the future. Until that day, you have a predictable monthly cost and housing security.

That's why the smart thing is usually to buy during a soft market (with as much cash down as possible) even when rates might be higher. You always have the option of refinancing when they drop again.

[Shrewsburried]

Originally Posted by massnative71

That's why the smart thing is usually to buy during a soft market (with as much cash down as possible) even when rates might be higher. You always have the option of refinancing when they drop again.

While I agree, people need housing and cannot sit around indefinitely waiting to see if there’s clean exit from massive central bank intervention and extremely tight inventory. Our lives are terminal.

What people can stop doing is suggesting this exact moment is the perfect time to buy given that we’re still in a global pandemic which has not yet terminated and could cause a massive shift in societal/corporate behavior, meanwhile nearly every asset is approaching or exceeding historic highs. 2009 was a great time to have a bullish thesis on housing, not now. Particularly not in the near term.

Opinions of a dude on an internet forum.

[yellowstatus]

Interesting that I'm so optimistic compared to others. Over a 15 year time frame, I simply can't think of many scenarios where Cambridge, Back Bay, Brookline, Beacon Hill, Wellesley, Newton real estate decline in nominal dollars. All the while IMO, these are excellent places to live.

If you finance with a fixed rate mortgage, the carrying cost is surprisingly cheap. Granted, prices could very well drop in the short 5 year time frame; I won't pretend to accurately predict the short term.