Is 700k the new 300k? (Boston, Worcester: credit, lenders, home)

[BostonMike7]

My only data point for 1980's real estate is what my family had.

My parents bought their home in Revere in 1987. 2200sf total with a rentable apartment. They were mid/late 20's at the time. They paid $140k. The house was built in 1975, so it was not a fixer upper by any means.

At that time my mom was a SAHM to 3 kids under 10, and my dad (HS dropout) worked from 6AM to 11PM every day doing various jobs I never understood. We were a 1-vehicle household. The in-law apartment was rented to supplement the mortgage

They sold the house in 2017 shortly after finishing the mortgage note for ~$600K.



I don't think a family in a similar situation could pull that off today.

[charolastra00]

Originally Posted by BostonMike7

My only data point for 1980's real estate is what my family had.

My parents bought their home in Revere in 1987. 2200sf total with a rentable apartment. They were mid/late 20's at the time. They paid $140k. The house was built in 1975, so it was not a fixer upper by any means.

At that time my mom was a SAHM to 3 kids under 10, and my dad (HS dropout) worked from 6AM to 11PM every day doing various jobs I never understood. We were a 1-vehicle household. The in-law apartment was rented to supplement the mortgage

They sold the house in 2017 shortly after finishing the mortgage note for ~$600K.



I don't think a family in a similar situation could pull that off today.

Nope, they probably couldn't.


The folks who rented the in-law apartment probably couldn't afford it either. One of my best friends is currently living in a basement in-law apartment in Revere paying $2000 a month... and she's a lawyer for a bank (paying down law school debt, but still).

[matrix5k]

In 1988 my dad worked while my mom stayed at home with 3 kids. Just about every family in the neighborhood was like this. He bought our childhood home brand new in 1977 for around 80k which is about 391k in today's dollars. The street is very safe for kids to play and ride their bikes. Zillow says the house is worth 642k today.

You can't even buy a house for 391k today much less a new construction. The cheapest starter home costs like 500k, is 40+ years old, needs at least 50k in improvements, and is located on a less desirable street with lots of traffic. Millennials simply don't have the same opportunities as boomers.

Other observations:
At work, I tell my boomer coworkers about my student loans and they go "you had to take out loans for school?"

Every boomer on my street bought their house for less than asking price. They also own at least one vacation home in Maine, NH, on the Cape etc.

Boomers had it good.

[msRB311]

I’m guessing there were less corporate jobs in 1988 than today as well. But then again lots of lower level corporate jobs have been cut so who knows.

[matrix5k]

There was a lot more expansion back then. Cities like San Diego exploded in growth. Now we see contraction.

[lrfox]

Originally Posted by matrix5k

In 1988 my dad worked while my mom stayed at home with 3 kids. Just about every family in the neighborhood was like this. He bought our childhood home brand new in 1977 for around 80k which is about 391k in today's dollars. The street is very safe for kids to play and ride their bikes. Zillow says the house is worth 642k today.

You can't even buy a house for 391k today much less a new construction. The cheapest starter home costs like 500k, is 40+ years old, needs at least 50k in improvements, and is located on a less desirable street with lots of traffic. Millennials simply don't have the same opportunities as boomers.

Other observations:
At work, I tell my boomer coworkers about my student loans and they go "you had to take out loans for school?"

Every boomer on my street bought their house for less than asking price. They also own at least one vacation home in Maine, NH, on the Cape etc.

Boomers had it good.

Yeah, in terms of real estate, they did. My family and my neighborhoods were similar. Median home prices have increased at 4 times the rate of median household incomes since 1960. That's particularly jarring when you consider that only 25% of households were dual income in 1960 and nearly 60% are today.

I think of the challenges my fiancee and I faced becoming homeowners and I'm not sure how many millennials and younger generations are going to do it without substantial changes. We're DINKs, neither of us have student loan debt, we were able to save for a significant down payment over time, and while we're not one percenters by any stretch, we have a combined household income that places us comfortably in the top 20% for the metro Boston area. It was still really hard to get what we wanted and we did end up compromising a bit. We were entirely priced out of Somerville or Cambridge (which were our first choices). And there was zero chance that we could have afforded something similar to my childhood home in the exurbs which my father bought on a single income with 2 kids (and #3 on the way) in the early 90s.

Granted, this is one of the most competitive real estate markets in the country. We'd have an easier time in many other markets (assuming we were able to keep our salaries or close to them). But I don't know how most families in Eastern Massachusetts are going to be able to buy their first homes going forward without drastic changes.

[BostonMike7]

I have to give credit to the '08 crash and recession that followed as the only reason i'm a homeowner today. I feel bad saying that because so many lost homes and wealth during that time.

Had the market not dipped heavily, and RE kept going up like it has since 2010, I don't know if i would be a home owner right now.

[charolastra00]

Older folks scoff when I say I've been saving for a downpayment for almost a decade. But every year, rent and other increases mean that I need to save more in my emergency fund and that just chips away at my downpayment. Before I gave notice at my job, I told my current boss that I was considering buying a small place in Worcester just so I could get on the property ladder. He couldn't believe that I would consider a 2 bed/1 bath condo in Worcester at my salary. I never pulled the trigger because it was so hard to justify putting such a significant amount of my monthly income into a home that would be so far out of the way of my current and likely future jobs.



With my luck, I'll finally be able to buy a house at 36 or 37 just in time for a crash that brings me totally underwater. But my other option is continuing to rent dark and dingy 1 bedroom apartments at $2200+ a month and rising every year.

It's a mess. And again, I am super well aware that even now before I take my new job I make in the 76th percentile for Massachusetts incomes. People with my profile should be able to comfortably afford a home, not be competing with investment companies for small condos very far from work. I feel entitled for saying this, but it feels strange to feel entitled when working my tuches off to get half of what my parents had for far less at the same age.

[bricka]

Originally Posted by charolastra00

It's a mess. And again, I am super well aware that even now before I take my new job I make in the 76th percentile for Massachusetts incomes. People with my profile should be able to comfortably afford a home, not be competing with investment companies for small condos very far from work. I feel entitled for saying this, but it feels strange to feel entitled when working my tuches off to get half of what my parents had for far less at the same age.

we certainly felt this way before we bought. it's a real dynamic.

i think the white collar class coming of age today is experiencing with housing what the blue collar class experienced decades ago when we shipped their jobs overseas.

in both scenarios the classes were not used to competing with a much larger pool of (probably hungrier) people.

"why can't i have the factory job like my dad did?" = "why can't i live in the same prime real estate that my parents did"

the answer: because someone is working harder than you

[massnative71]

Originally Posted by BostonMike7

I have to give credit to the '08 crash and recession that followed as the only reason i'm a homeowner today. I feel bad saying that because so many lost homes and wealth during that time.

Had the market not dipped heavily, and RE kept going up like it has since 2010, I don't know if i would be a home owner right now.

I bought then as well, and likewise credit that crash to getting on the property ladder. However, unlike you I do not feel sorry for (most) of those who lost their shirt during that time. In fact, I think many of them got off way too easy (short sales, etc.) in not having to pay the full consequences of the poor and irresponsible decisions they had made. They got there largely due to greed, which is the same thing causing this current disaster we are in. Hopefully with the tightened lending standards, the rest of us won't be stuck holding the bag this time and bailing these A holes out of their recklessness and stupidity.