Housing inventory

[kingeorge]

Originally Posted by MikePRU

The spread between rates at their lowest point and what they are now is not as wide as you make it out to be. When it becomes wider then yes people may decide to stay put instead of moving up, but I just don't see that happening in large numbers right now.

Also, (especially if you're staying in the same town) if you're moving up your next house has shot up in value but so has your current home. So, the spread between the value of the two houses is roughly the same as it would have been a few years ago.

The market is extremely competitive right now as you mention. People who don't want to end up in temporary housing often decide to buy first and then sell. If you do it right, you just end up carrying both houses for a couple of weeks.

Mike, my argument did not come out clear. I come with perspective on Cambridge area RE market which was and still is brutal for buyers in the last few years.

To clarify, it is not so much about mortgage rates per se, you are right about that, but how much more money you need to spend to get into home that is an upgrade from what you already own. Especially if you still need to spend money on renovations as well.

Prices are raging. Therefore new mortgage amount, with possibly higher interest rate as well, plays into decision to buy something else, and to put your existing home on the market soon, or not at all.

Personally, I know of few debating this same question, for a while. They would like nicer home, or would like better school district, but they are unsure if it is worth all the expense/hassle right now. People still remember recession, and underwater homes. Some are scared that we are at some sort of peak again.

In general, last two spring selling seasons, in low inventory/high competition areas in Cambridge, Somerville, Belmont, Newton, Arlington etc. you practically need to give your firstborn to seller--absolutely no contingencies of any kind, and you are not even in the running, or deemed to be serious buyer, unless you have at least 25-35% down-payment. Buyers were bending backwards for "privilege" to buy anything half-decent. I am very curious to see if this madness continues or slows down this year.

And yes, you are right that bold sellers/buyers with good cash reserves who take the plunge before they sell, come out smelling like roses. It is however not a sure thing with more buyers, and less available homes. But, no guts no glory, as usual.

[MikePRU]

Originally Posted by kingeorge

Mike, my argument did not come out clear. I come with perspective on Cambridge area RE market which was and still is brutal for buyers in the last few years.

It's like that in a number of markets surrounding Boston. It's really crazy.

Originally Posted by kingeorge

To clarify, it is not so much about mortgage rates per se, you are right about that, but how much more money you need to spend to get into home that is an upgrade from what you already own. Especially if you still need to spend money on renovations as well.

I think I addressed that facet of your argument in my last post as well. Basically, it's not a problem for most people who are already homeowners. When they go to sell, they'll experience the positives of bidding wars, no contingencies, etc. All the things they hate when they buy, they'll love when they sell. From what I'm seeing, the spread in prices when people are going to trade up hasn't widened significantly. So, the extra money they invest to trade up is roughly the same amount they would have had to spend a few years ago.

Originally Posted by kingeorge

Personally, I know of few debating this same question, for a while. They would like nicer home, or would like better school district, but they are unsure if it is worth all the expense/hassle right now. People still remember recession, and underwater homes. Some are scared that we are at some sort of peak again.

Personally, I think this is more the reason that some people are not moving.

Originally Posted by kingeorge

In general, last two spring selling seasons, in low inventory/high competition areas in Cambridge, Somerville, Belmont, Newton, Arlington etc. you practically need to give your firstborn to seller--absolutely no contingencies of any kind, and you are not even in the running, or deemed to be serious buyer, unless you have at least 25-35% down-payment. Buyers were bending backwards for "privilege" to buy anything half-decent. I am very curious to see if this madness continues or slows down this year.

Right now, unfortunately, I'm not seeing any signs of slowing. It looks like it's going to be nutty again this spring/summer.

Originally Posted by kingeorge

And yes, you are right that bold sellers/buyers with good cash reserves who take the plunge before they sell, come out smelling like roses. It is however not a sure thing with more buyers, and less available homes. But, no guts no glory, as usual.

There are all kinds of risks and expenses when it comes to trading up. You have to measure what's a likely risk and what's unlikely and make a plan from there. If you're in a hot market, then don't worry about selling. If you're in a slow market, then don't worry about finding something to buy.

[life4orce]

Originally Posted by kingeorge

Hopefully in Mach RE market will thaw little bit. Be ready to jump on a good place.

Good luck.

Thank you. Hope things do break a bit, but things don't seem to look good. As Mike mentioned, several listings over $1Million in that area, but I'm looking at a lot lower. Looks like I'll probably be priced out. I was looking at Needham and tear downs are going for over 500K. Is there really that much demand for million dollar homes?

[chris1214]

I am not a professional but a few realtors have told us inventory is low in many of the markets we are looking in. They also have mentioned for Metrowest, they have seen high competition once a listing goes on the market (again due to the lack of inventory buyers just jump once something becomes available). Like MikePru mentioned they expect a crazy spring, which we will start to see a little later than usual due to snow storms.

[MikePRU]

Originally Posted by life4orce

Thank you. Hope things do break a bit, but things don't seem to look good. As Mike mentioned, several listings over $1Million in that area, but I'm looking at a lot lower. Looks like I'll probably be priced out. I was looking at Needham and tear downs are going for over 500K. Is there really that much demand for million dollar homes?

A lot of the teardowns are selling for close to $700K, but if it's on a busier street or less desirable location in some way then yes it will sell mid 5's.

Originally Posted by chris1214

Like MikePru mentioned they expect a crazy spring, which we will start to see a little later than usual due to snow storms.

You raise an excellent point. This spring may end up crazier than the last two because of all the snow delaying the start of the spring Real Estate market.