2023 Real Estate Observations (refinance, severance, company)

[yesmaybe]

https://www.redfin.com/MA/Sudbury/10...home/184783554

Here's a new construction condo for (only?) 400k in Sudbury. That's still ~$2500 a month with 20% down. Redfin seems to think the price is attracting enough clicks to make it a "hot home" but I imagine people lose interest quickly when they realize it's a condo and also 55+.

[newenglandgal123]

Originally Posted by yesmaybe

https://www.redfin.com/MA/Sudbury/10...home/184783554

Here's a new construction condo for (only?) 400k in Sudbury. That's still ~$2500 a month with 20% down. Redfin seems to think the price is attracting enough clicks to make it a "hot home" but I imagine people lose interest quickly when they realize it's a condo and also 55+.

Lose interest quick because it's a condo?? Huh, there are plenty of folks out there who would prefer the ease of condo living vs a maintenance intensive SFH. As far as it being 55+ well you either qualify as being that or you don't. Plenty of other non age restrictive units in other developments.

[masssachoicetts]

Originally Posted by yesmaybe

https://www.redfin.com/MA/Sudbury/10...home/184783554

Here's a new construction condo for (only?) 400k in Sudbury. That's still ~$2500 a month with 20% down. Redfin seems to think the price is attracting enough clicks to make it a "hot home" but I imagine people lose interest quickly when they realize it's a condo and also 55+.

condos are arguably more desirable for a good amount of demographics.

[redplum33]

Originally Posted by yesmaybe

https://www.redfin.com/MA/Sudbury/10...home/184783554

Here's a new construction condo for (only?) 400k in Sudbury. That's still ~$2500 a month with 20% down.

At current interest rates, you end up paying over a million dollars.

Save your money and pay cash if you can.

[jayrandom]

Originally Posted by masssachoicetts

condos are arguably more desirable for a good amount of demographics.

Condos sell at a discount compared to SFH, so I think it’s a stretch to say they’re more describable. Given that they sell at a discount I think makes more people consider them.

Originally Posted by redplum33

At current interest rates, you end up paying over a million dollars.

Save your money and pay cash if you can.

I’m not sure “pay cash if you can” is particularly good or even actionable advice. Very few people are in a position to pay cash and those that are typically do better with a mortgage.

[robr2]

Originally Posted by redplum33

At current interest rates, you end up paying over a million dollars.

Save your money and pay cash if you can.

With it being an over 55 in Sudbury for $395K, I'm going to say the vast majority (think empty nesters with a $1 million paid for house) will simply walk in and pay cash.

[redplum33]

Originally Posted by jayrandom

I’m not sure “pay cash if you can” is particularly good or even actionable advice. Very few people are in a position to pay cash and those that are typically do better with a mortgage.

You seem to be suggesting that by keeping the cash on hand, you can work with it and do better than the interest you're paying. If that were true, why would banks loan out the money? Banks have more knowledge.

[redplum33]

Originally Posted by robr2

With it being an over 55 in Sudbury for $395K, I'm going to say the vast majority (think empty nesters with a $1 million paid for house) will simply walk in and pay cash.

I agree.

[jayrandom]

Originally Posted by redplum33

You seem to be suggesting that by keeping the cash on hand, you can work with it and do better than the interest you're paying. If that were true, why would banks loan out the money? Banks have more knowledge.

It’s not my idea.

https://www.investopedia.com/article...-next-home.asp
https://www.bankrate.com/real-estate...h/#pros-v-cons

The general idea is that putting too much money in a single investment class (ie your house), it becomes difficult to diversify your holdings correctly. Add that real returns in equity markets over long-enough horizons typically outperform mortgage rates.

As to why banks loan people money at all, it’s because banks and individuals have different goals, assessors, risk tolerances, and time horizons. For the most part banks just originate the loans and bundle them anyway, allowing them to diversify.

I’m not saying buying a house for cash is always a bad idea, just that as blanket advice it is not that helpful.

[simplexsimon]

Originally Posted by redplum33

You seem to be suggesting that by keeping the cash on hand, you can work with it and do better than the interest you're paying. If that were true, why would banks loan out the money? Banks have more knowledge.

I don't think "banks have more knowledge" is the right argument against not paying cash. Banks, which are leveraged 10-12:1, can't invest in risky securities. Even Silicon Valley Bank's longer duration U.S. Treasuries were too risky for them.

The argument I would make is that an investor may make out better investing their cash in risky assets, but they may not. It's a gamble with a result that can only be known in hindsight.