MA Spring RE will start early & be flooded with inventory (Boston: transplants, 2013)

[MikePRU]

Originally Posted by traffic_lover

I'D bet a 30 pack of bud light the interest rate starts to hike in Dec. @ 0.25 pt each quarter from there.

Prices are at a whole different level vs. 3 yrs ago and wages & inflation haven't kept pace. With prices going up so fast, sellers keep waiting for next spring b/c prices will be even higher. Agreed, This wait it out has been for years now. At some point, likely when interest rates hike, the price momentum will stop & level off and sellers will feel like they're at a peak. Many sellers won't be buying into same peak market, but will be downsizing, retiring, moving out of MA etc. The flood of inventory into the market will be met with demand tempered by higher interest rates. Higher supply, lower demand, lower prices, and the cycle shifts. This is cyclical like every other economic phenom

While I absolutely agree with your statement that the real estate market goes in cycles, I have a hard time agreeing with the rest of your theory. Even your postulation that retirees will move out of state is not so true. Many people are choosing to age in place now and contractors that specialize in retrofitting a house with walk in tubs/showers, grab bars, etc., etc., etc. are a booming business.

[gf2020]

Originally Posted by traffic_lover

I'D bet a 30 pack of bud light the interest rate starts to hike in Dec. @ 0.25 pt each quarter from there.

The only Bud Light I drink is in those 16 ounce aluminum bottles when I am on my boat. They keep the beer colder and they don't break. I think you can get them in a 24-pack.

The current average 30-year fixed conforming mortgage rate in the Boston area is 3.875%. You think that by 12/31/2016 it will have increased to 5.125 or even 4.875%? Really? I would take that bet.

The last time the 30-year fixed rate was above 5% was in February 2011, and that was only briefly, before it started an historic slide in to the low 3s by the end of 2012.

I know you are looking to move closer in to 128 and an increase in housing inventory and a rise in interest rates would lead to a pricing decline, but I just don't see it happening. The life sciences job market is booming and the desire to live closer to jobs in Cambridge and Lexington is going to continue to keep the north and northwest suburbs of Boston in demand.

[Parsec]

Originally Posted by gf2020

The only Bud Light I drink is in those 16 ounce aluminum bottles when I am on my boat. They keep the beer colder and they don't break. I think you can get them in a 24-pack.

The current average 30-year fixed conforming mortgage rate in the Boston area is 3.875%. You think that by 12/31/2016 it will have increased to 5.125 or even 4.875%? Really? I would take that bet.

The last time the 30-year fixed rate was above 5% was in February 2011, and that was only briefly, before it started an historic slide in to the low 3s by the end of 2012.

I know you are looking to move closer in to 128 and an increase in housing inventory and a rise in interest rates would lead to a pricing decline, but I just don't see it happening. The life sciences job market is booming and the desire to live closer to jobs in Cambridge and Lexington is going to continue to keep the north and northwest suburbs of Boston in demand.

Gross. You know they make Sam in a can, right?

Agree w/what you said though. Unaffordable housing in MA doesn't cause the fed to raise interest rates. Most states don't have the same problem we do. At worst we will see price stagnation if the life sciences job market cools down.

[traffic_lover]

Originally Posted by Parsec

Gross. You know they make Sam in a can, right?

Agree w/what you said though. Unaffordable housing in MA doesn't cause the fed to raise interest rates. Most states don't have the same problem we do. At worst we will see price stagnation if the life sciences job market cools down.

Huhh??? I don't think you understand. The fed raises rates based on several macro economic target metrics including domestic employment rate and inflation rate, as well as global market factors. My premise is that housing prices & inventory in eastern MA will be impacted by the rate hike, not vice versa.
The effective federal funds rate has been at zero for 6 yrs now, which is the lowest and longest stretch since data started in 1954. 30 yr mortgage is strongly correlated. Housing prices in eastern MA are outpacing wage & inflation which is not sustainable.
Prices right now are inflated by 1. Low interest rates and 2. Low inventory. Ppl are happy sitting on their nest egg in the form of massive equity in their homes b/c they can't get a safe return elsewhere. Once interest rates inch up, more Ppl will cash out their risky equity (reliant on home prices) b/c they can see a safer return in money market ie bank interest. It's cyclical and we are soon getting a macro economic nudge

[Parsec]

Originally Posted by traffic_lover

Huhh??? I don't think you understand. The fed raises rates based on several macro economic target metrics including domestic employment rate and inflation rate, as well as global market factors. My premise is that housing prices & inventory in eastern MA will be impacted by the rate hike, not vice versa.
The effective federal funds rate has been at zero for 6 yrs now, which is the lowest and longest stretch since data started in 1954. 30 yr mortgage is strongly correlated. Housing prices in eastern MA are outpacing wage & inflation which is not sustainable.
Prices right now are inflated by 1. Low interest rates and 2. Low inventory. Ppl are happy sitting on their nest egg in the form of massive equity in their homes b/c they can't get a safe return elsewhere. Once interest rates inch up, more Ppl will cash out their risky equity (reliant on home prices) b/c they can see a safer return in money market ie bank interest. It's cyclical and we are soon getting a macro economic nudge

Sorry it's Friday and I misread your comment. I don't think the the fact that the federal funds rate being at zero for a 6-year stretch is any indication that it will begin to rise again. I'm thinking about what's happened to Japan over the past 20 years:


Housing in Tokyo is even more unaffordable than in San Francisco and NYC. They now have multi-generational mortgages that you pass onto your children. It's becoming a real problem over there because young people can't afford to move out, get married, and have kids. We've had more economic bubbles in the past 2 decades than we've had in the 200 years prior to that. Our bubbles are lagging Japan's by about 10 years and our government is repeating all the same mistakes they made. This is just the start of it and at some point we will be in for a long and painful recovery.

[Steephill2]

If you adjust for inflation, homes arent exactly great investments over the past century, so theres a hundred years of data for everyone. If you want more just google "robert shiller home bad investment". I try to look at homes now as places to live and create memories. Its really hard to time things right where you buy low and sell high. what is it 25% chance success with the other 25% chance of losing alot? Unless im rich, sounds kinda risky. But the people who can pull that off get alot of money.

[jan0105]

If we have snow like we had last year, the market's not going to start early. I very much hope you're correct, though!

[495neighbor]

Originally Posted by traffic_lover

I see a flood of inventory finally meeting demand and stabilizing, even reducing prices this spring. It's a combo of factors:
1. Ultra peak home prices. Ppl feel like they can make a small fortune on their home & some have waited since 2004 for prices to rebound. 10 yrs of backlog inventory waiting to hit market as Ppl finish renovations/prep to hit market
2. Rising interest rates (finally)
3. Retiring/downsizing baby boom
4. Reduced foreign buyer upward pressure as global markets moderate
-listing will ramp up fast as early January especially if mild winter (El nino)
This is a slightly contrarian view as I feel like EVERYBODY has adopted the mantra that low inventory + unsustainable price increases are the norm. Just when you think you have it figured out the market flips.

Was wondering where you went? No luck finding anything you like?

Am I having deja vu or did you not make a similar prediction and post last summer?

2. I'm in accord with the above poster who pointed out that this is unlikely to happen during this upcoming election year. I've been closely following ALL of the debates. Even the Republican candidates are saying they will only increase the rate by gradual small increments.

3. This was thoroughly discussed in a recent thread. Consensus was no mass migration of baby boomers in the near future.

Sorry you are getting so frustrated with your home search. BTW I was in Groton today. Quite frankly, I find the town so beautiful and laid back, I can't see why anyone with a decent commute to a job from there would be so unhappy with the town.

[johngolf]

In MA in the mid-80's I can remember getting 10% on my bank CD's but paying 14% for bank mortgage money. Same bank........LOL

[johngolf]

Someone said the last 100 years were bad for home investment. Here are some MA actual numbers. Bought in 1982 for $100K. Sold in 1994 for $180K. Bought in 1994 for $200K. Sold in 2001 for $425K.

I loved MA real estate......LOL