2023 Real Estate Observations (Boston, Cambridge, Brookline: bike, top 10, adult)

[lrfox]

Originally Posted by msRB311

I guess what has still surprised me (and this has been discussed ad nauseam) is all the people still keeping up with the prices. There are some very high salaries out there but it still surprises me the amount people will pay for a home the past few years.

I know it's been beaten to death, but I'm also wondering who is buying some of these homes? We did some active searching on the North Shore (and expanded to pockets of the South Shore) and have shifted back to a more passive hunt after not really coming close. We're DINKs, have some equity in our condo, and have a combined HHI that sits comfortably above the median for metro Boston. Our checklist was fairly tame compared to some I see here on CD (not looking for a palace or elite school district, don't need a huge yard or subdivision, willing to live closer to neighbors, tandem parking is fine, not scared off by some cities/towns with less than great reputations, etc.), and we couldn't find anything in our range that didn't need some serious work or require some big compromises.

I can see a top 1% HHI family with savings and equity being able to buy around here without breaking too much of a sweat. But I'm floored when I see first-time buyers in their early/mid-20s doing it. Even with a $100k/yr salary immediately after graduation, it's not easy to save enough for a down payment on a $700k home in a couple of years. Especially if they're also paying off student loans and $1.5-2k/mo in rent (not to mention car payments, traveling, entertainment, etc.). I'm not in the field, so maybe it's just that I don't know enough to be able to wrap my head around it. But even with limited inventory, it's hard to believe there are that many people who can truly afford these homes.

[ca1337]

Originally Posted by MikePRU

Everything I'm reading though and everyone I'm talking to doesn't seem to think when the market flips that this will be like what we saw in The Great Recession.

I was in a different region when the great recession happened, and I didn't see a whole lot of price decreases. In fact, that is when I bought my first home. It was the Philadelphia Main Line- topmost desirable Philly suburb.

In your experience, how did the "equivalent" Boston suburbs do during the great recession (Brookline, Newtown, Wellesley, Weston, Lexington, etc.)? Lots of big price decrease or more like a flat line for a couple of years? Or actually increase (haha)

[ca1337]

Originally Posted by BostonMike7

If they go lower

Historically speaking, the period of low interest rates may be more of an outlier than the norm.

https://themortgagereports.com/61853...ge-rates-chart

I know the charts tell a story but the other story is that the fed's default mode is money printing, and that is the only way to keep this modern 21st century economy going (worldwide). They only have one lever instead of a steering wheel. The lever is stuck on LOW INTEREST by default, and they sometimes raise it when **** hits the fan, and then it springs back to its default position.

I think we will see 4% within the next 2 years. Not saying 2%, but I can see 4% as being pretty likely in my crystal ball.

[ca1337]

Originally Posted by newenglandgal123

Yes, it is pretty amazing. I'm still in awe how so many people are doing it at these high prices and rates. I know MA is flush w/cash buyers but even those who aren't....how much are these folks really making and what types of jobs are paying enough to support a ~$1M house plus all of life's other expenses. I'd consider myself as someone making an above average salary for this state and I still stick with the 28% or less of my income going toward housing. I even like to stay below that when I can.

Mid-aged with kids, 500k total household comp in pharma, with $1M+ in liquidity and no debt, 20% down. That's a profile that works at 2M. But barely at 6% rates.

[msRB311]

It's not just the home prices themselves but even the renovations and the furniture all at once, lol. It's like some people have money coming out their butt. Must be nice to be able to buy a 1.5M home, re-do the kitchens and bathrooms, make everything look picture perfect, etc. Plus they've got kids and go on vacation...maybe they save nothing and have no retirement money or maybe they are making 1M a year salary. Paying over 1M for a house and then doing renovations seems to be a dime a dozen in these parts. Heck some people get a pool and outdoor kitchen too.

I'm not jealous...I'm just amazed because many of these people are like me.

[Moh1988]

Originally Posted by msRB311

It's not just the home prices themselves but even the renovations and the furniture all at once, lol. It's like some people have money coming out their butt. Must be nice to be able to buy a 1.5M home, re-do the kitchens and bathrooms, make everything look picture perfect, etc. Plus they've got kids and go on vacation...maybe they save nothing and have no retirement money or maybe they are making 1M a year salary. Paying over 1M for a house and then doing renovations seems to be a dime a dozen in these parts. Heck some people get a pool and outdoor kitchen too.

I'm not jealous...I'm just amazed because many of these people are like me.

I'm not following here! What do you mean when you say "many of these people are like me"?
You are basically talking about rich people who could afford more things than you. That's life my friend,,, what is the issue?

[Moh1988]

https://www.zillow.com/homedetails/1...56412582_zpid/

I remember this house being sold in 2021 around when I moved to town! Great location in Belmont/Lex area, but this Concord road is terribly busy.
It's now on the market for +400k (was sold for $1mil) less than 2 years ago.

[newenglandgal123]

Originally Posted by ca1337

Mid-aged with kids, 500k total household comp in pharma, with $1M+ in liquidity and no debt, 20% down. That's a profile that works at 2M. But barely at 6% rates.

That profile certainly works but how many folks out there actually fit that profile and have two earners w ~250K+ /yr comp? Do any of them actually think about what happens if one loses their job? Would it be that easy to get another $250K/yr job? Would you really want to be locked in that much to corporate America knowing you each have to maintain those high salary jobs for the term of your mortgage or time living in that expensive $2M+ home to support that lifestyle? I guess that's the part that always gets me. Yay, we bring in $500K/year, so let's go buy that $2.2M colonial we always wanted in Hingham, along with the Porsche Cayenne and oh yes, the two annual European vacations too. Then after 3 years....cue the husband or wife dreading the daily commute into Cambridge/Boston and the 50+ hr work weeks.

[simplexsimon]

Originally Posted by newenglandgal123

That profile certainly works but how many folks out there actually fit that profile and have two earners w ~250K+ /yr comp? Do any of them actually think about what happens if one loses their job? Would it be that easy to get another $250K/yr job? Would you really want to be locked in that much to corporate America knowing you each have to maintain those high salary jobs for the term of your mortgage or time living in that expensive $2M+ home to support that lifestyle? I guess that's the part that always gets me. Yay, we bring in $500K/year, so let's go buy that $2.2M colonial we always wanted in Hingham, along with the Porsche Cayenne and oh yes, the two annual European vacations too. Then after 3 years....cue the husband or wife dreading the daily commute into Cambridge/Boston and the 50+ hr work weeks.

Do you tell yourself this to make yourself feel better about other people’s choices?

[newenglandgal123]

Originally Posted by simplexsimon

Do you tell yourself this to make yourself feel better about other people’s choices?

No, they're the same type of questions I consider myself whenever making a career change, buying a new home or whatever the case may be. I consider things like ...is this going to be sustainable, if the household experiences a downturn in income will it still be sustainable and if so, for how long, do I have enough in liquid assets to ride out a downturn, do I have flexibility, etc.