2023 Real Estate Observations (Boston, Waltham, Chicopee: 2013, foreclosure, mortgage)

[newenglandgal123]

Originally Posted by lrfox

Same here. It doesn't seem "easily" affordable to me, and we don't have kids or any significant debt beyond our current mortgage and a single car payment.

You're also not imagining anything. I know a couple who closed on a $650k home in May with 5% down. Single income, about $130k, and no help from families. He's in his early 30s and has saved well and lived modestly so there's a rainy day fund, but that nets them around $3k/mo after the housing payment. He is entirely convinced that rates will drop steeply in the next year or so and that he can drop that mortgage from nearly $5k to about $3,000.

I think there are a lot of buyers over the past several years in the same boat. There may be a lot of $250k+ households in Eastern, MA but there are also a lot of households under that stretching to the max (beyond, I'm sure) to afford homes right now. And not all of those $250k+ households are devoid of student loans, credit card debts, bloated car payments, childcare costs, and other expenses that would make $5k/month easy, even for them. I just can't imagine living that way.

So they only put $32.5K down and are able to afford PITI plus PMI (for putting less than 20% down) on only $130K per year income and they are still able to pay for all of life's other expenses as well? Doesn't seem plausible.

[AtkinsonDan]

Originally Posted by newenglandgal123

No, that's just the mortgage. That would be insane if I could get mortgage, taxes, insurance all for $1K! Mine is more like $1400-1500 after taxes and insurance. I don't think this is going to be the 'forever' house though so I'm sure I'll be paying thru the nose if/when I do move!

My mortgage alone is $640. Taxes and insurance bring the monthly amount up to nearly $1,200.

[msRB311]

That's a good point that maybe some people are betting on being able to refinance to get a lower payment.

[redplum33]

Also keep in mind that you can deduct mortgage interest. And in some cases, that could put you in a lower tax bracket.

[newenglandgal123]

Originally Posted by AtkinsonDan

My mortgage alone is $640. Taxes and insurance bring the monthly amount up to nearly $1,200.

That's incredible! I usually don't hear of too many who say they have a mortgage that low....whenever I tell someone about mine they are in awe....they'd really be in awe about yours! Next best thing to a paid off house.

[newenglandgal123]

Originally Posted by msRB311

That's a good point that maybe some people are betting on being able to refinance to get a lower payment.

That's pretty risky though. Will they come down....sure...probably to 5-6%. I hope people aren't buying and stretching it with the expectation they'll be back down to 2-3% next year.

[StuartM1]

Originally Posted by newenglandgal123

So they only put $32.5K down and are able to afford PITI plus PMI (for putting less than 20% down) on only $130K per year income and they are still able to pay for all of life's other expenses as well? Doesn't seem plausible.

I agree. Yikes.

Originally Posted by redplum33

Also keep in mind that you can deduct mortgage interest. And in some cases, that could put you in a lower tax bracket.

This has been overhyped imo. The standard deduction is now usually more than enough to avoid itemizing and claiming mort interest.

[lrfox]

Originally Posted by newenglandgal123

So they only put $32.5K down and are able to afford PITI plus PMI (for putting less than 20% down) on only $130K per year income and they are still able to pay for all of life's other expenses as well? Doesn't seem plausible.

Based on what he's told me, yeah. We're fairly close and we've had several fairly in-depth discussions about the process. He did a very good job of saving in his 20s. Lived with the parents for a while, lived (and still lives) quite modestly (cheap, really), and didn't take on any debt. He drives a 10 year old Corolla and paid off his student loans by 24 or 25. They rarely go out to eat or on vacations. So I could see "life's other expenses" being far lower than average. It's a new construction condo so there's a warranty on all of the appliances and the construction itself which takes some pressure off.

There are variables I'm not clear on. His girlfriend has been sporadically employed (she's an artist) and I don't know what she has in the bank, nor do I know what her contributions are. His parents have money, so I'm not sure if they help (though they didn't with the down payment). My math still puts the income after PITI/PMI at levels I definitely wouldn't feel comfortable with, so I suppose there's more going on than I know. But I know how much he makes, he told me how much he put down, and I've been to the place. So I'm not sure what I'm missing. Regardless, I wouldn't do it even if I could.

[newenglandgal123]

Originally Posted by lrfox

Based on what he's told me, yeah. We're fairly close and we've had several fairly in-depth discussions about the process. He did a very good job of saving in his 20s. Lived with the parents for a while, lived (and still lives) quite modestly (cheap, really), and didn't take on any debt. He drives a 10 year old Corolla and paid off his student loans by 24 or 25. They rarely go out to eat or on vacations. So I could see "life's other expenses" being far lower than average. It's a new construction condo so there's a warranty on all of the appliances and the construction itself which takes some pressure off.

There are variables I'm not clear on. His girlfriend has been sporadically employed (she's an artist) and I don't know what she has in the bank, nor do I know what her contributions are. His parents have money, so I'm not sure if they help (though they didn't with the down payment). My math still puts the income after PITI/PMI at levels I definitely wouldn't feel comfortable with, so I suppose there's more going on than I know. But I know how much he makes, he told me how much he put down, and I've been to the place. So I'm not sure what I'm missing. Regardless, I wouldn't do it even if I could.

Does he contribute to 401k or retirement too? Seems like that would be real tight. Having no car payment is nice but I fear for anyone's safety who is driving a 10 yr old corolla...they just aren't safe with all the crazy drivers on the roads today who are in much bigger and newer cars (advanced safety tech).

[redplum33]

Originally Posted by redplum33

Also keep in mind that you can deduct mortgage interest. And in some cases, that could put you in a lower tax bracket.

Originally Posted by StuartM1

This has been overhyped imo. The standard deduction is now usually more than enough to avoid itemizing and claiming mort interest.

With an 8% interest rate, it will be well worth itemizing in most cases.


"The 2023 standard deduction is $13,850 for single filers, $27,700 for joint filers or $20,800 for heads of household."