2021 Real Estate Observations (Boston: school districts, zip codes, airport)

[msRB311]

This is interesting and something that I didn't realize was happening:

https://www.wsj.com/articles/if-you-...gJPXdd-bqsyJjQ

Those damn corporation again...

[Shrewsburried]

This happened en masse post ‘Great Recession’. Hedge and pension funds buying residential RE, along with Fed action, was a great tell circa 2012 to get in while the gettin’ was good on residential RE.

I know a few small time investors who loaded up on debt during this period to buy multi-fans in Worcester. People thought they were reckless idiots at the time, but now these ‘investors’ are semi-retired in their early 40’s. It was a bit of a gamble, but it was one of the few moments in economic cycles where the value was obvious. Unfortunately for me, I had just graduated uni and could not seize the moment like my slightly more established peers.

This moment does not feel like that moment. Feels more like an inflation hedge and a deleveraging off bonds.

[masssachoicetts]

I feel like now is a terrible time to buy…

[GeoffD]

Originally Posted by masssachoicetts

I feel like now is a terrible time to buy…

Depends on how desirable and scarce the property is. A generic house in the suburbs or a condo conversion of a multi family in the less desirable parts of the city? Run!

[jayrandom]

Originally Posted by masssachoicetts

I feel like now is a terrible time to buy…

There's a joke that "economists have correctly predicted nine of the last five recessions".

You'll always find someone with a deeply negative assessment of housing prices (or the economy in general). I was told, in 2014, to wait it out because a correction was coming. You will also always find someone who has an unrealistically positive outlook of housing prices.

The real answer is that it is difficult to time any market. You probably shouldn't try. You just have to make decisions that make sense for you given all the information you have available to you, keeping in mind that predictions, no matter how widespread, aren't information. It's fun to speculate, but only the most sophisticated investors should try to time the market (and many of those don't even try).

[msRB311]

This market seems particularly bad. Prices have gone up like 100k over the past year in most places.

[masssachoicetts]

Originally Posted by jayrandom

There's a joke that "economists have correctly predicted nine of the last five recessions".

You'll always find someone with a deeply negative assessment of housing prices (or the economy in general). I was told, in 2014, to wait it out because a correction was coming. You will also always find someone who has an unrealistically positive outlook of housing prices.

The real answer is that it is difficult to time any market. You probably shouldn't try. You just have to make decisions that make sense for you given all the information you have available to you, keeping in mind that predictions, no matter how widespread, aren't information. It's fun to speculate, but only the most sophisticated investors should try to time the market (and many of those don't even try).

Well, see, this market is literally up 15-27% YOY and then an additional 20-50k over that.

When incomes stay flat but housing costs are up 40% in two years… that screams 2006-2007. I mean its just not feasible or realistic to buy.

[id77]

Originally Posted by masssachoicetts

Well, see, this market is literally up 15-27% YOY and then an additional 20-50k over that.

When incomes stay flat but housing costs are up 40% in two years… that screams 2006-2007. I mean its just not feasible or realistic to buy.

The variable here is that incomes aren't flat across the board. Rather, the high-income people who were confined to very high COL areas have been released to move into lower COL areas nationwide, and they're driving prices up. I read an article about housing in TX where a remote worker in SF moved there and, in order to win a bidding war, actually offered to buy the seller's next house for them as part of their offer. The SF remote worker's agent stated that buying an extra house for an extra $400k, plus the original home for another $400k, was still cheaper than buying a smaller home in SF and was seen as a relative bargain for the buyer.

Imagine walking into a restaurant where a sandwich normally costs $3. It only has two sandwiches left and there's 7 people who want one. Someone from out of town walks in, and they come from a town where sandwiches normally cost $10. They see the other people offering $4 and $5 for the sandwich, think "that's still a really cheap price for a sandwich!", and offers $7. The out of town dude then texts his friends that there's some cheap sandwiches for sale and they should come get one. Another out of towner shows up and offers $7. They're still eating for $3 less than they normally do, but the locals who are used to $3 don't understand why people are willing to pay $7.

[simplexsimon]

Originally Posted by masssachoicetts

Well, see, this market is literally up 15-27% YOY and then an additional 20-50k over that.

When incomes stay flat but housing costs are up 40% in two years… that screams 2006-2007. I mean its just not feasible or realistic to buy.

Don't forget about interest rates, which I would attribute most of the rise in prices to. The rest...shifting demand as WFH seems here to stay at least in the short to medium term. WFH enables these workers to afford a little bit more since the price of commuting is lower.

[Lampert]

Originally Posted by id77

The variable here is that incomes aren't flat across the board. Rather, the high-income people who were confined to very high COL areas have been released to move into lower COL areas nationwide, and they're driving prices up. I read an article about housing in TX where a remote worker in SF moved there and, in order to win a bidding war, actually offered to buy the seller's next house for them as part of their offer. The SF remote worker's agent stated that buying an extra house for an extra $400k, plus the original home for another $400k, was still cheaper than buying a smaller home in SF and was seen as a relative bargain for the buyer.

Imagine walking into a restaurant where a sandwich normally costs $3. It only has two sandwiches left and there's 7 people who want one. Someone from out of town walks in, and they come from a town where sandwiches normally cost $10. They see the other people offering $4 and $5 for the sandwich, think "that's still a really cheap price for a sandwich!", and offers $7. The out of town dude then texts his friends that there's some cheap sandwiches for sale and they should come get one. Another out of towner shows up and offers $7. They're still eating for $3 less than they normally do, but the locals who are used to $3 don't understand why people are willing to pay $7.

So, gentrification.