2023 Real Estate Observations (Westwood: estimates, percent, closest)

[matrix5k]

Okay here's an example. My buddy owns an auto shop. People think he's just a dumb mechanic but he owns a lot of rental properties. He has over 40 tenants. He still wears clothes from high school, dresses like a teenager. He told me recently that he was offered 22mil for his commercial property. I didn't know he owned a commercial property until he mentioned it recently, I've known him over 20 years. His primary home was around 2million a couple years ago. So there is one example of someone you wouldn't suspect can afford a 2 million dollar home. He doesn't have a 250k salary or college degree. He's just a dumb mechanic.

[MikePRU]

Originally Posted by matrix5k

Okay here's an example. My buddy owns an auto shop. People think he's just a dumb mechanic but he owns a lot of rental properties. He has over 40 tenants. He still wears clothes from high school, dresses like a teenager. He told me recently that he was offered 22mil for his commercial property. I didn't know he owned a commercial property until he mentioned it recently, I've known him over 20 years. His primary home was around 2million a couple years ago. So there is one example of someone you wouldn't suspect can afford a 2 million dollar home. He doesn't have a 250k salary or college degree. He's just a dumb mechanic.

I have an uncle that owned a successful retail store and his wife was always very successful in her multiple careers. They never had kids and live fairly modestly so they have plenty of money. He's always walking around in old denim shorts and a tye dye t-shirt. Every time he walks into a luxury car dealership all the salesman ignore him because of the way he's dressed. They all think he can't afford a car and he's just a looky-loo.

[BostonMike7]

I have a buddy of mine in a similar scenario. Been an electrician since right out of HS. Started his own company and grew it. Dresses like he’s homeless and drives around a beater so you’d never know he was doing very well. Married but no kids. I went with him once to a Benz dealer to purchase an Brabus SL convertible and that was a fun experience. Same assumptions were made about being looky-loos

[massnative71]

Originally Posted by Moh1988

"why go for the $2M home"!!! You do you man! You go and buy whatever you want, and let other people do what they do. What's the point of growing up in careers, and not spending money? Believe me, you not taking that money with you to the grave.
Again, for a family that makes $500k a year, $2M is not outrageous at all. It's basic math that we don't need to go over.
And no I'm not out of touch,,, you seem to be!

If one is mortgaging most of the cost of that $2.2m home, that is still a LOT of money even at a $500K salary. It's considerably beyond "comfortable" to borrow 4 X your income, at 6.5% rates. They better be bringing some previous equity into the equation.

[msRB311]

I get that if you have a very high salary you might want a luxurious home. I think what some of us are saying is that life throws other expenses at your besides a 2M home that you are renovating and putting in an outdoor kitchen, etc. It is sometimes hard to imagine having that kind of money (clearly I dont, lol) I'm also weird in that I get some pleasure out of seeing my money invested and in the bank. I get that some people can do everything, that's however not my situation and I know there are others like me out there. You're kidding yourselves if you think some people don't spend everything on homes and material items and have very little to nothing saved or in retirement...and maybe they'll never need it. But you're right they won't be taking their money to the grave with them, perhaps they do want to spent it all while they are alive.

[matrix5k]

Originally Posted by MikePRU

I have an uncle that owned a successful retail store and his wife was always very successful in her multiple careers. They never had kids and live fairly modestly so they have plenty of money. He's always walking around in old denim shorts and a tye dye t-shirt. Every time he walks into a luxury car dealership all the salesman ignore him because of the way he's dressed. They all think he can't afford a car and he's just a looky-loo.

Originally Posted by BostonMike7

I have a buddy of mine in a similar scenario. Been an electrician since right out of HS. Started his own company and grew it. Dresses like he’s homeless and drives around a beater so you’d never know he was doing very well. Married but no kids. I went with him once to a Benz dealer to purchase an Brabus SL convertible and that was a fun experience. Same assumptions were made about being looky-loos

Reminds me of this scene LoL

https://youtu.be/ldrlY5XClUg

[UNC4Me]

Originally Posted by newenglandgal123

That profile certainly works but how many folks out there actually fit that profile and have two earners w ~250K+ /yr comp? Do any of them actually think about what happens if one loses their job? Would it be that easy to get another $250K/yr job? Would you really want to be locked in that much to corporate America knowing you each have to maintain those high salary jobs for the term of your mortgage or time living in that expensive $2M+ home to support that lifestyle? I guess that's the part that always gets me. Yay, we bring in $500K/year, so let's go buy that $2.2M colonial we always wanted in Hingham, along with the Porsche Cayenne and oh yes, the two annual European vacations too. Then after 3 years....cue the husband or wife dreading the daily commute into Cambridge/Boston and the 50+ hr work weeks.

Maybe they just buy the house? No Porsche or European vacations. Maybe they have equity from a previous home. Maybe they have no student debt and are good savers.

You presume anyone buying a high dollar home lives a high dollar lifestyle as well. Maybe not doing so is how they afford that high dollar house. Food for thought.

[msRB311]

The prices will never go down if people just continue to buy and put in 50-100K over asking every time they are up.

The people with the sky high salaries have made it more difficult for others without the huge salaries. It might not bother YOU but it has affected many people in the state and continues to.

[UNC4Me]

Originally Posted by msRB311

The prices will never go down if people just continue to buy and put in 50-100K over asking every time they are up.

The people with the sky high salaries have made it more difficult for others without the huge salaries. It might not bother YOU but it has affected many people in the state and continues to.

So what do you suggest someone do if they are constantly outbid? Spending 3 years bidding at or below asking in a misguided attempt to lower prices? That isn’t going to work. In fact for most buyers in a competitive area, paying 50K over ask now is smarter than letting houses appreciate in price for a couple more years since 50K isn’t as much as the appreciation will be.

[msRB311]

Originally Posted by UNC4Me

So what do you suggest someone do if they are constantly outbid? Spending 3 years bidding at or below asking in a misguided attempt to lower prices? That isn’t going to work. In fact for most buyers in a competitive area, paying 50K over ask now is smarter than letting houses appreciate in price for a couple more years since 50K isn’t as much as the appreciation will be.

I don't have the answers and I'm glad I didn't have to deal with it. It just feels like a problem even if it isn't my problem.