Will the home prices ever go down? (Boston, Brockton: low income, apartment complex)

[Arya Stark]

Originally Posted by shiraziman

is there any hope for home prices to go to something normal?
How do people afford these homes that are $600 to a million??! With crazy down payments of $100K plus?!
How can someone save up so much with middle class income?!
Or maybe I'm doing it wrong?

A real estate agent let me in on the secret. Rich foreigners buy them as investments. Drives up the prices and then they either sell or let kids / relatives live here. I work next to a new luxury condo in the seaport. Empty condos abound but they are all paid for.

[jayrandom]

Originally Posted by redplum33

I do.

Hypothetically, let's say I have 1 million dollars, no place to live, and a desire to live in the Boston area. What would you suggest?

Living in a cardboard box and investing the money in derivatives tied to the housing market going down. That seems to be the logical conclusion of your advice so far.

Or, you know, a whole bunch of other things that depend on what you want out of life. Not buying a house is way different than selling a house just to rent in the same area.

[redplum33]

Originally Posted by redplum33

I do.

Hypothetically, let's say I have 1 million dollars, no place to live, and a desire to live in the Boston area. What would you suggest?

Originally Posted by massnative71

It would all depend on how long I planned on staying. Renting is basically pissing your money away, but unless you plan on spending a minimum of 5 years then it's tough to come out ahead when owning unless you plan on renting it out down the road.

I think it depends on how you view the market. More specifically, the Boston market. I see it as volatile. You may not.

In my mind, paying interest and/or condo fees is pissing away money.

Getting back to the hypothetical, let's be clear that the 1 million isn't a housing budget...it's everything.

So, what do you do?

[redplum33]

Originally Posted by redplum33

I do.

Hypothetically, let's say I have 1 million dollars, no place to live, and a desire to live in the Boston area. What would you suggest?

Originally Posted by jayrandom

Living in a cardboard box and investing the money in derivatives tied to the housing market going down. That seems to be the logical conclusion of your advice so far.

If that's the conclusion you came up with, you're clearly not following or you're just looking for an argument. Perhaps both. I suspect I may have upset you with my comment about buying into a bubble. You very recently purchased, correct?

Originally Posted by jayrandom

Or, you know, a whole bunch of other things that depend on what you want out of life. Not buying a house is way different than selling a house just to rent in the same area.

Nah, it's the same thing other than factoring in selling costs. In either situation, you'll have a big chunk of money and will need a place to live.

Do you have any thoughts about the hypothetical?

[jayrandom]

Originally Posted by redplum33

If that's the conclusion you came up with, you're clearly not following or you're just looking for an argument. Perhaps both. I suspect I may have upset you with my comment about buying into a bubble. You very recently purchased, correct?



Nah, it's the same thing other than factoring in selling costs. In either situation, you'll have a big chunk of money and will need a place to live.

Do you have any thoughts about the hypothetical?

It’s not the same thing once you factor in selling costs. It has the same return once you factor in selling costs (which are not small, so it’s quite literally not the same thing). Have you ever sold a house and moved? It’s A LOT of work. You are assinging zero value to your time.

And you didn’t get my point, either. Investment considerations should be secondary or even tertiary when considering what to do about your primary residence. If the only thing you’re after is maximizing your return, you should totally minimize your housing expense (by living in a cardboard box). That totally neglects the utility of having a nice place to live as well as the utility associated with having a permanent housing situation.

I bought and sold in 2014: and originally bought in 2008, so I’m not exactly a recent buyer. There’s certainly been a big run up since 2008. I have no qualms with you posting there’s a bubble. My issue is you making recommendations on a primary residence based on what you think the market might do. I actually don’t have a problem with you making the recommendations, I just think they’re bad suggestions for the majority of people. Real estate speculation is risky. As is market timing. You’re recommending both. Some people do very well, but they should be far better informed than having read a few messages on the Internet.

As for the hypotheticsl, I meant exactly what I said. It depends on your life situation. How long do you plan to be here? Do you like renting or buying? Do you have a big family? And if someone specifically says they only care about maximizing their return, the only good advice I have is “spend as little as possible”.

[timberline742]

Originally Posted by jayrandom

Who thinks like this? I place a high value on having somewhere permanent to live. I did the move every year nomad life and it's OK, but moving is hassle, as is looking for a new place to live, as is waiting on a landlord to fix stuff, as is having to ask a landlord when you want to change stuff. If you don't like having a house and paying property taxes (directly to the city/town, as opposed to through the landlord to the city/town) and for home maintenance (again, at least directly), this plan makes sense. It's not an investment decision, though, it's a personal decision.

It's a personal decision, yup, more than financial. I hate when people say you're throwing money away renting... lol, not if you do all the math and compare apples to apples. You're getting something for your money, and often renters are coming out ahead if you calculate all the costs and are honest about the cost of time/sweat equity. I am hoping that if I stay 15+ years the pendulum might shift and I might come out ahead on purchasing, but it certainly will take at least a decade or more for that to happen. It was a decision to want to stop moving and customize a space far more than financial.

[yellowstatus]

Whenever I see someone put out the sophomoric "renting is throwing money away" comment, I stop reading. By corollary, I'm pissing money away buying a ticket for the Martha's Vineyard ferry instead of owning my own ferry.

[jks1985]

Every renter in the world is throwing their money away. Instead of throwing their money away, I guess they should sleep under a bridge. Giving money to a landlord in exchange for a roof over their heads is basically flushing money down the toilet, according to some.


Mortgage interest, homeowner's insurance, property tax, and HOA/condo fees... now THOSE are great investments!

[massnative71]

Originally Posted by redplum33

I think it depends on how you view the market. More specifically, the Boston market. I see it as volatile. You may not.

In my mind, paying interest and/or condo fees is pissing away money.

Getting back to the hypothetical, let's be clear that the 1 million isn't a housing budget...it's everything.

So, what do you do?

That's why I said 5 years minimum, depending how the market goes it could be more. After that, I would much rather pay interest on my own asset than for somebody else's (even if it seems like you are pissing it away for the first few years of the mortgage).

[sawyer2]

The best time to buy a home is when it is the right time/place/financial threshold for your own very unique situation, and yes there is also an intangible personal value to owning your own home.

Lots of calculators on line to help with deciding whether to rent or buy is right for you ... here is a decent one from the NYT
https://www.nytimes.com/interactive/...alculator.html

If you plan or end up having to sell in 5 years you are for the most part speculating. Your hurdles are a lot higher on both the buy and sell side and transaction costs could erode any gains, or end up underwater. You also can't hunker down and weather any financial crisis.

The problem in the greater Boston area, and in many others, is that many people see real estate as a means to rapid wealth creation rather than at most a hedge against inflation, and at minimum a roof over your head. Long term, real estate always has been and always will be important for any diversified investment portfolio - at least buy a REIT if you don't want to buy a house/condo.