Fortune: Home Price Correction Could Take Place in MA…Maybe (real estate market, apartment)

[Japanfan1986]

This article popped up in my feed: https://fortune.com/2022/05/20/these...e-prices-drop/

Looking at the interactive map it looks like most of MA has a medium chance of having a home price correction.

I thought it could be good food for discussion. I’m not one to rely on Fortune though. I mean they did put Elizabeth Holmes on the map after all.

[aboucher33]

Anecdotally, the market seems to be softening. Homes seem to be sitting longer, been seeing more price cuts of existing listings, etc. Definitely not a buyers market or anything but some air seems to have come out.

[MikePRU]

Only time will tell what will happen. Keep in mind though, we're coming out of one of the most seller favorable real estate markets in history spurred on by some of the lowest mortgage rates in history. So if the market softens or rates go up, we're still possibly in a seller's market with historically low rates.

I remember when i bought my first home about 20 years ago, I was paying a 6.5% mortgage rate and I was very happy about it.

[chicagoliz]

Originally Posted by MikePRU

I remember when i bought my first home about 20 years ago, I was paying a 6.5% mortgage rate and I was very happy about it.

Yeah, when we bought our first house, our rate was about 7.5% and everyone said that was a historically low rate and how great that was and it'll only go up. Then our next house we had a 5.5% rate and everyone said the same thing again. Then in our current house, we got like a 3.5% rate. I feel lucky to have that rate, but even if the rates go back up to 5, 6 or even 7%, those are still historically reasonable rates.

[bostongymjunkie]

The rates are good, it's the prices in many markets that are not reasonable right now.

[MikePRU]

Originally Posted by bostongymjunkie

The rates are good, it's the prices in many markets that are not reasonable right now.

When I think about "affordability" I don't just focus on the mortgage rates or the real estate values. The majority of people live in their monthly payment. So, I consider both. Just focusing on the assessed value and ignoring the local RE tax rate when you're talking about RE taxes would be the same thing.

Anyway, the levels of demand that we're still seeing in the market right now despite a large increase in mortgage rates over a very short time period tell me that housing is still affordable for a lot of people.

[mdovell]

Values depend on who is buying and when they are buying and a general expectations. Housing isn't not one-size-fits-all.

Obviously a single parent with three or more kids is not going to be living in a one-bedroom apartment. Having said that though it gets a little bit harder to gauge prices when we start parking say over $1000000. Back in the day people on the maximize well by buying a bigger house but as everything has been progressively shrinking in terms of what you need for entertainment and music it adds up. It's also much easier to buy things is so much in the way of shopping is online so reasons to live in a given area have just been lessened then add in telecommuting had a really changes.

[simplexsimon]

Originally Posted by MikePRU

Anyway, the levels of demand that we're still seeing in the market right now despite a large increase in mortgage rates over a very short time period tell me that housing is still affordable for a lot of people.

I am curious about how many buyers over the last couple of years are investors. What's the % in your experience?

[GeoffD]

Originally Posted by MikePRU

When I think about "affordability" I don't just focus on the mortgage rates or the real estate values. The majority of people live in their monthly payment. So, I consider both. Just focusing on the assessed value and ignoring the local RE tax rate when you're talking about RE taxes would be the same thing.

Anyway, the levels of demand that we're still seeing in the market right now despite a large increase in mortgage rates over a very short time period tell me that housing is still affordable for a lot of people.

I guess the other way of looking at it is that with the historically low amount of inventory, only higher income buyers are participating in the market. With the spike in building cost and the labor shortage, it’s not like there’s going to be affordable new construction. Around me, people are remodeling and doing additions instead of trading up.

[msRB311]

I’ve noticed a lot of people doing remodeling and additions as well. From what I understand those are very pricey as well. I’m not sure that they are any less expensive than buying a new home in the end particularly if you aren’t a first time home buyer.