Housing Bubble - Massachusetts (Boston, Worcester: sale, condo, loans)

[Maverick21]

Originally Posted by Dm84

During the last bubble you got a mortgage as long as you had a pulse. Those days are over.

So? A real estate bubble is only defined on soft lending requirements?

[sawyer2]

I agree with others .... the fundamentals that are driving the current (local) housing market seem to be unchanged

- Low inventory
- Employment expansion in highly paid fields/industry
- Low interest rates
- Disposable income due to market highs, IPOs etc
- Foreign demand as a currency and inflation hedge


....leads to high demand and increasing prices

For the most part this market does not appear to be speculative in nature, and buyers are truly qualifying for mortgages ..... both of which were different in the 05-07 bubble

[Dm84]

Originally Posted by Maverick21

So? A real estate bubble is only defined on soft lending requirements?

That was part of why prices were able to go so high. People were buying houses left and right regardless of whether they could actually afford them. Now the prices are high because people are actually buying houses they can afford and living in them. It's a different situation.

[chicagoliz]

Originally Posted by Maverick21

So? A real estate bubble is only defined on soft lending requirements?

It certainly plays a very large part. They were giving mortgages to people who had no income documentation. And they were giving loans on properties that had no proper appraisal. Some of these transactions were outright fraud. Others bordered on fraud. And others were just based on monumental ignorance and stupidity. People got loans that were so large they couldn't possibly pay them. And when they eventually didn't repay them, they went into foreclosure, which left the banks with a house that they needed to sell. When this happened a lot, the supply of houses increased, and prices came down.

Appraisals now are more stringent, as are lending requirements. They are at least now requiring some verification of incomes and assets. (At some point in the future, this will change and go back to the way it was, when everyone forgets all about it, but that won't be for quite some time. I'm sure it will happen again but it might not be for several decades.)

In some markets, the even bigger driver was speculative investing by having investors buy up tons of houses, thereby increasing the price and then reselling them. But that could only last so long. I haven't seen any evidence that that is as widespread here as it was in some other markets. You do have investors/flippers here, which does drive up the price in some towns, but I don't think it is as out of control as it was as in places like Vegas, Phoenix and Miami, where a lot of these investments were for second/vacation homes, whereas here it is for the end-buyer, the primary residence.

[Maverick21]

If your a 1st home buyer in and around Boston GL to you, you better buy a home your gonna stay in for more than 5 years+

Watch when the fed starts to raise rates....(if they ever do).

[sawyer2]

Originally Posted by Maverick21

If your a 1st home buyer in and around Boston GL to you, you better buy a home your gonna stay in for more than 5 years+

Watch when the fed starts to raise rates....(if they ever do).

Conventional wisdom in a housing make/buy decision would be that 5yrs is the absolute minimum for buying..... I would suggest renting if not

[Maverick21]

FED decided to continue with the bubble...no rate hike today.

[timberline742]

Originally Posted by Maverick21

FED decided to continue with the bubble...no rate hike today.

Why do you think it is a bubble?

[Maverick21]

Originally Posted by timberline742

Why do you think it is a bubble?

Besides the reasons I already stated?

The market for assets is frothy. Why? Because the FED is keeping interest rates low and investors/institutional money needs to be put to work, and cash now is easier to get at a low cost then ever and banks are more than willing to put that money to work.

You are seeing homes being bought for cash..that ain't Mr. & Misses jones that is investors and institutions. (Maybe a small percentage if individuals). Tons of liquidity

When the FED starts to raise rates and you see the 10 year treasury start to rise, ding ding ding mortgage rates will go up. When mortgage rates go up.....ding ding prices will come down..obviously not in some markets (boston/Cambridge). But I sure as sh&t wouldn't buy a home in and around boston in a town that doesn't always have strong demand.

Low inventory is raising prices yes. But IMO the FED is creating a bubble in the housing market and stock market that they were just trying to over regulate to stop from happening.

(In 2008 FED balance sheet was 914billion now it's a staggering 4 trillion dollars)

Only people that think real estate is going up forever are Real Estate Agents

(I'm done.)

[semiurbanite]

People can rarely call the top in a bubble. As a matter of fact just when everyone is convinced that there is no bubble - it pops.