2023 Real Estate Observations (Boston, Cambridge, Waltham: dinner, island, social security)

[r_p]

Originally Posted by newenglandgal123

Congrats to the soon to be, proud new owners of the biggest and most expensive home in the neighborhood!

Just a matter of time until newer tear downs make it look small and old.

[simplexsimon]

Originally Posted by ca1337

Lots of serious questions today huh? That's kind of a code word for "I'm preparing ammo for my retort" but whatever.

I visit a very large amount of homes in the markets I'm interested in, and I pay attention to the selling price of these homes. I then adjust for the tangible and intangible elements that differentiate these homes and that are important to me. I only judge a home in relation to others have seen. It's not about "fair value", which implies universality, it's about what I personally feel. everyone is going to values different features differently.

Say I saw an awesome house in Lexington that sold for 2.2M which I couldn't have afforded. And then a turd pops up for 1.85M. Even if I can afford the turd, the $ delta is not commensurate with how much worse the second one is. So that's a pass for me, because being able to afford it isn't enough to make me want to buy it. I'm not buying any turd just because I can.

This stuff becomes automatic as time goes on.

I asked because I thought you were doing harder quantitative analysis based on the language you used (trying to detect a downturn in prices, data, trends) and was curious.

[msRB311]

Originally Posted by ca1337

Lots of serious questions today huh? That's kind of a code word for "I'm preparing ammo for my retort" but whatever.

I visit a very large amount of homes in the markets I'm interested in, and I pay attention to the selling price of these homes. I then adjust for the tangible and intangible elements that differentiate these homes and that are important to me. I only judge a home in relation to others have seen. It's not about "fair value", which implies universality, it's about what I personally feel. everyone is going to values different features differently.

Say I saw an awesome house in Lexington that sold for 2.2M which I couldn't have afforded. And then a turd pops up for 1.85M. Even if I can afford the turd, the $ delta is not commensurate with how much worse the second one is. So that's a pass for me, because being able to afford it isn't enough to make me want to buy it. I'm not buying any turd just because I can.

This stuff becomes automatic as time goes on.

I get what you're saying. I could afford my house but I still didn't want to pay what I paid for it. I would have loved to have paid much less. That's not how this works though and there are many others in line who will pay over asking.

[r_p]

Originally Posted by newenglandgal123

Nope, I'm not jealous of anyone who's putting 5-10% and taking out a jumbo mortgage! Not saying that's the case here but it has been on some of these others.

It all depends. One of my neighbors paid significantly over asking last year and I thought he was outright crazy. Turns out the house he sold (out of state in CA) before moving here went for even more.

[msRB311]

Originally Posted by r_p

It all depends. One of my neighbors paid significantly over asking last year and I thought he was outright crazy. Turns out the house he sold (out of state in CA) before moving here went for even more.

She said she wasn't sure that was the case here. We get it that some people are paying cash for these homes. But many aren't.

[simplexsimon]

Steep increases in home prices and mortgage rates have set buyers on divergent financial trajectories—even when they bought only a year or two apart.

https://www.wsj.com/articles/in-toda...d=hp_lead_pos5


The significant rate hikes of 2022 really created this unprecedented aberration. Typically you'd expect prices to decline with an increase in rates, but few people could've predicted the environment we're in today.

I do find this line in the article interesting: "Americans continue to have more faith in real estate than any other investment. 34% of Americans rated it the best long-term investment in a recent Gallup survey, down from 41% in 2021 and 45% in 2022."

While the proportion of people declined, still 34% view that an asset that tracks inflation is considered the best long term investment. Real estate is like religion in this country.

[MikePRU]

Originally Posted by msRB311

People don't always have full control over their life circumstances. Many also get divorced and that affects their finances as well.

Prices have increased dramatically over the years, it's something to be addressed and gets old hearing welp this is the new normal, just how it is. It seems like people here don't want to hear it and just think others need to move.

I think many people also entered professions like teaching, social work, nursing etc in the 2000's knowing they wouldn't be rich but had it in their head they'd still be able to afford rent or a home.

I spend more on my mortgage than I ever thought I would.

Its easier to say, yeah i can't afford that LV bag or that brand new bathroom than it is to say, wow I can't afford to live in the state (let alone town/city) I'm from because so many wealthy people from all over the world are offering 200k over asking on basic homes. It's kind of scary.

Who said these people can't afford a home? My sister-in-law is a public school teacher and her husband doesn't have a high paying job either. They live in Medfield. Their house is certainly not the newest or the largest house in town but they're fine with it. I've also had many people with lower paying jobs as clients from people who are chefs to public school teachers to whatever. I've worked with people from all walks of life. They have to live where they can afford to live just like everyone else and sometimes that means a longer commute than expected. Not everyone can afford to have a 10 minute commute just like not everyone can afford an LV bag or to renovate their bathroom. All of these things are luxuries.

I actually just worked with executive chef from Trillium in Canton to help him find a home. Originally he wanted a commute of X but based on his budget he ended up needing to have a commute of roughly 2X in order to stay within his budget.

It seems every time we have a run up in values like this people always shout "how can anyone afford this???" but people seem to make it work somehow and those that can't make it work seem to come up with a solution that works for them.

Originally Posted by simplexsimon

Steep increases in home prices and mortgage rates have set buyers on divergent financial trajectories—even when they bought only a year or two apart.

https://www.wsj.com/articles/in-toda...d=hp_lead_pos5


The significant rate hikes of 2022 really created this unprecedented aberration. Typically you'd expect prices to decline with an increase in rates, but few people could've predicted the environment we're in today.

I do find this line in the article interesting: "Americans continue to have more faith in real estate than any other investment. 34% of Americans rated it the best long-term investment in a recent Gallup survey, down from 41% in 2021 and 45% in 2022."

While the proportion of people declined, still 34% view that an asset that tracks inflation is considered the best long term investment. Real estate is like religion in this country.

Yes. It's quite counter-intuitive that rates would rise so sharply and prices would continue to rise at the current rate. I never would have expected that. I was REALLY looking forward to a slower market.

It's also a bit of an odd market we find ourselves in. I'm calling it a "hurry up and wait" market because transaction volume is down MASSIVELY but demand still far outpaces supply. So not much comes on but when something does hit the market it moves at the speed of light.

[msRB311]

Originally Posted by MikePRU

Who said these people can't afford a home? My sister-in-law is a public school teacher and her husband doesn't have a high paying job either. They live in Medfield. Their house is certainly not the newest or the largest house in town but they're fine with it. I've also had many people with lower paying jobs as clients from people who are chefs to public school teachers to whatever. I've worked with people from all walks of life. They have to live where they can afford to live just like everyone else and sometimes that means a longer commute than expected. Not everyone can afford to have a 10 minute commute just like not everyone can afford an LV bag or to renovate their bathroom. All of these things are luxuries.

I actually just worked with executive chef from Trillium in Canton to help him find a home. Originally he wanted a commute of X but based on his budget he ended up needing to have a commute of roughly 2X in order to stay within his budget.

It seems every time we have a run up in values like this people always shout "how can anyone afford this???" but people seem to make it work somehow and those that can't make it work seem to come up with a solution that works for them.



Yes. It's quite counter-intuitive that rates would rise so sharply and prices would continue to rise at the current rate. I never would have expected that. I was REALLY looking forward to a slower market.

It's also a bit of an odd market we find ourselves in. I'm calling it a "hurry up and wait" market because transaction volume is down MASSIVELY but demand still far outpaces supply. So not much comes on but when something does hit the market it moves at the speed of light.

Not sure when your sister moved to medfield but I'm guessing they wouldn't be able to afford to live there now. If they can afford it they make more than you think

[newenglandgal123]

Originally Posted by msRB311

Not sure when your sister moved to medfield but I'm guessing they wouldn't be able to afford to live there now. If they can afford it they make more than you think

Exactly, you pretty much need to have a min $1M budget to get into Medfield. I have a colleague who bought there in 2020 and he got a gorgeous colonial for $900K that's probably worth $1.3 today.

[msRB311]

Medfield has excellent schools so the cats been out of the bag on that one for a while. It's right next to Medway which is the 'cheaper' option.