How much further can sales fall?

Well, I wouldn't precisely say I'm rethinking plans to buy - I'll buy in at market bottom, as I've often said.

When will that be? I'll know it when I see it. I'm much more comfortable being a bit late than early - takes a lot of the risk out, without removing much of the reward.

I had thought tentatively that bottom would be after the spring market in 2009, say late summer. I'm now rethinking that, due partially to the bailout, and more to the opinions I see on this blog and hear in discussion - there is still way too much real estate optimism out there, you don't see bottom until that optimism is gone. And too many people calling bottom is a very optimistic thing.

I think prices have around 15% more to fall in Mass at least. As many have noted, prices have yet to fall in many upper income areas. To some this means prices won't fall there - to me it just means those areas are going to fall, they just haven't started yet.

Prices will go down to 3x income, and rent/own ratios have to come back in line. Its been months since I last posted this, but I'll repeat - It's still math.

Prices will come down until the math makes sense. And probably will overshoot, frankly.

I think sales will fall until (1) housing prices are about 3.5 times the average salary of buyers in the market, assuming historically average interest rates on loans, and (2) the cost to own is about the same, or maybe a little higher, than the cost to rent - so that tha average family spends no more than about 25% of their income on housing. If salaries go up a lot in 2009, or house prices come down a lot in 2009, sales will stop falling in 2009. If both happen tomorrow, it will end tomorrow. If it takes until 2015, sales will stop falling then.

Of course, if unemployment goes up dramatically, or a bail-out induced devaluation of the dollar raises the cost of non-housing expenses, then the average salary will go down and housing will have to drop farther to to meet the 3.5 mark. Now, the ratio might have to drop to 2.0 ir 2.5 in rural areas and 4.0 in Boston, but just generally speaking.

I know these benchmarks are what I've been waiting for. Or rather not waiting, but haven't yet found. And with my job perhaps more at risk, and my savings diminishing in my 401k and other investments, and my cash savings about to have much less buying power due to devaluation, I will probably wait for an even better house price - income ratio until things settle. I hope the option will not be available any longer, but if I can get a zero % down or very little amount down loan, I will be a raging moral hazard and will leap to buy at no down-side risk. to me.

My first prediction is that this post will get about 8 million responses, and most will be along the lines of: "As a mature, financially responsible person -- unlike my wasteful and childish fellow citizens -- I plan to laugh loudly as prices drop by another 50% so I can swoop in and buy a single family home in Weston for $250,000!"

Without being any kind of expert, it seems to me that sales will increase when prices stop falling. When buyers think prices will start going up again (even slowly), they'll come back into the market. So the questions are, how far will prices drop and when will they stop?

I said in a previous post that I thought Boston prices would drop another 8%. My reasoning went: Boston has fallen 12% so far, and Boston futures are predicting 20% total fall, which would leave 8%. Goldman Sachs predicts national housing decline of another 10%, and since Boston has been slightly less worse than the nation as a whole, these numbers make sense to me. Also, Calculated Risk is predicting that, unlike past housing crashes that were V-shaped and rose immediately after hitting bottom, this one will hit and bounce along a bottom for perhaps several years, meaning prices will essentially remain flat.

When prices will bottom is a complete mystery, but gosh, I really hope it's no later than next year.

Now, I own a condo that I might like to sell in the near term, and hopefully not at a loss. So I leave open the possibility that I could be cherry picking some indicators and predictions and willfully ignoring other, worse indicators and predictions. Fair enough. But in a world in which NO ONE KNOWS my reasoning seems (as charles put it) at least defensible. Beyond this we all must resign ourselves to watching and waiting.

As to my own housing situation I started out hand-wringing and hoping to sell next spring. That hope has gradually eroded to where I'm thinking seriously about replacing the boiler and pushing my selling plans out until 2010. Perhaps even - dare I say it - landlording for the long-term, say 5 to 10 years and trying to make a profit.

The problem with these plans is cash flow on the investment. I have two adjustable mortgages on the place, and while rent currently equals housing costs, I cannot expect that situation to continue. Committing to renting for a longer period means sweating for the next few year as the adjustment time approaches, closely watching the indices to which my mortgages are tied, and hoping they don't drastically raise my monthly costs. In my particular situation, for reasons I won't go into, if I could survive through 2010 without any sort of nightmare (eviction, boiler exploding, tree falling on the house, etc), then my problems would shrink considerably and I could hold the place until the LTV is good for refinancing. At that point I can either sell it and ditch the headache, or hold for the long term.

No matter what happens I've mellowed and become more philosophical about the whole thing. I may be whistling past the graveyard to some extent, but I'm learning a lot, and what good are regrets?

Recent uncertainty in the financial markets have definitely frozen our plans to buy our first home. Initially, we were thinking sometime by mid/late-November, but now, we've tabled that for at least another qtr or 2.

We're not house-flippers, but at the same time, there's no reason we should lock-in a home value & 30-yr mortgage when instincts (and experts) say that patience will be rewarded with an ease in payments, rates, etc.

5 years ago when we were living close to Washington DC near the housing boom-times, people our age had to move way out of the city to afford something with a decent yard, etc...now that we're in the Boston-metro area, why not wait a little & move closer IN to the city?

Also, sellers who have the luxury of not needing to sell are probably not actively listed & are waiting for a more opportune time to sell. From our experience, those that ARE on the market have unrealistic asking prices of their homes...not understanding that buyers are fools like they were 2+ years ago.

Like cheetahs on the serengeti, we are waiting for the quantity & quality of the herd to improve & we're READY to pounce when they get a little closer...

I am certain sales will fall further in Mass. I follow real estate like a hobby. I am delaying my buying for a while. I had a house in JP from 1994-98 and sold it and have been boxed out of the market ever since. I am champing at the bit to buy, but there is no way I would buy now.

As ever, these articles paint far far far too broad a brush about the Massachusetts real estate market.

As has been noted here on this blog and elsewhere many times, price increases and bidding wars are becoming increasingly common in many towns. Places such as Arlington, Wellesley, the Back Bay and South End are seeing huge huge gains in prices due to their highly desireable locations.

My supposition is that the falling numbers detailed in the monthly reports is more a factor of foreclosures in undesireable areas such as Central Mass, Dorchester/Roxbury and Lowell/Lawrence. If we factored those areas out, I'd dare say that the boom has never stopped! If anything, it's growing by the day!

Desireable areas are immune from this crisis, so three cheers to the owners in these fortunate nabes! Your investments are safe. Sleep well! LOL

End of housing decline near?
Drops in price and sales moderate, hinting market may be starting to stabilize
By Kimberly Blanton, Globe Staff | November 29, 2006

Price drops and declining sales in the Massachusetts housing market moderated in October, two housing reports showed yesterday, suggesting that the months long slump in the real estate market may be nearing its end.

By Kimberly Blanton, Globe Staff | October 23, 2007
Meanwhile in Boston's chic downtown neighborhoods, sales and prices rose. According to Listing Information Network, sales in 12 downtown neighborhoods, including the North End, the Back Bay, and the South End, increased 5.4 percent, to 1,023 condo sales in the July-September period. The median price went up 4.55 percent, to $439,000.

"We're insulated," Link president Debra Taylor Blair said about downtown. "It's a tighter market, and we have a lot of cash buyers, and it's a market that's still relatively low in inventory. We're not getting the glut of foreclosures."

Realtors and analysts said prices are not dropping in line with sale totals because there are fewer and fewer homes on the market. Rather than selling for much lower prices, homeowners are simply not listing properties or are waiting out the downturn.

We're pulling our house from the market and renting it out. (We're relocating for a job down south.) We're going to wait two or three years and then sell. It's not worth taking the hit when things are so uncertain.

Here's an idea....if you bought a house STAY IN IT and stop trying to keep up with the Jones'

sunshine and lollipops, I just can't tell if you are being consciously ironic or not, so I'm a bit perplexed on how to respond. The arlington does point to irony, as its almost become a trope on this blog.

Its not just that prices will drop, people. Its also that they won't go up again much after they drop - instead we'll go back to normal rates of housing appreciation.

Enormous numbers of people seem to think that once this is done house prices will take off like a rocket again. This is absurdly unlikely.

We just had a real estate bubble. Those price increases were not normal. We will not have a real estate bubble again soon. Its really quite simple.

This is probably the bottom! Maybe not! I have sold real estate for the past 10 years and I own mutiple homes. One thing for sure is that confidence is at the bottom and this is very important. I see some great deals on foreclosed properties if you are willing to do some renovations. I see some of these properties selling for 60% of what they sold for 2 years ago. These properties were overvalued then due to how easy it was to get a mortgage and the hype that was in the market. The math is starting to make sense again and if rents start going up, and they are going to go up because we are going to see insurance and taxes go up, due to the huge inflation that will happen when we start devalueing our dollar to bail everyone out and the tax payer is going to pay for this. If this is not the bottom or close to it then this country is in big trouble!!

It's all about the financial crisis now. How willing will foreigners be to buy our debt in the future?; How willling will lenders be to extend loans to homebuyers?; How much money will the FED pump into the system?; How far will Wall Street drop?; How far will the dollar plunge?

All these issues and their outcomes have HUGE implications for home prices. My bet is that the only possible way for home prices to stop dropping and start rising again anytime in the near future is for the FED to pump so much liquidity into the system that we get massive inflation causing the bear markets in housing and Wall Street to reverse course. Of course, rising home prices in a highly inflationary environment are meaningless and amount to nothing more than nominal gains. In real terms, home prices will still be falling.

So much doom and gloom! I don't think there are any simple answers, but I think we are at the bottom in some locations. New construction will not get much lower, because all the costs of construction have increased - even if materials are not being used in the US, they are shipping them overseas. Oil prices have also increase vinyl windows, siding, plastics, and shipping costs. Overall, the inventory of unsold homes on the market has stabilized. And, if you take out most of the bank owned properties that are selling very cheaply, the prices of the homes have slowed their decline. I have been looking at bank owned properties for over 9 months to purchase a few bargains, but most of them are in such poor shape they are "tear -downs" and the land value is not worth what they are asking for. Good locations and good products still sell, though slowly.

Ever check out houses in other, warmer climates? Try Charlotte - twice the house for half the money.

If anyone thinks house prices are going to rebound quickly and resume their upward trajectory, they have zero understanding of what's going on right now in credit markets. This is going to be a long and painful recession. The only people who will be able to buy real estate in the next year or two at least are those with large amounts of $$$ in the bank and the ability to show lenders a rock solid income stream. Ever increasing inventory competing for a rapidly shrinking pool of buyers, hmm...I wonder what that means?

Ok so we are buyers who think things still have a ways to go. The thing is that we figured what we could afford and what we wanted. then we evalutated whether or not that house would possibly make it to our price range in the area we are looking. Last year it looked like it wouldn't, but this year we are pretty close.

Am I waiting for the bottom? NO. I am simply waiting for the house we need and want to be at the price we can work with. I just don't think I want to plop 500 k on a shack. Most people who are financially responsible just don't make choices like that.

I don't see any evidence confidence is gone - look at the posts on this blog.

I also haven't seen any properties where the numbers make sense Vinny - love to hear about any.

New Construction is certainly declining. Inventory, which is what really matters, is not really doing so however. Yes, there was a minor decline from massive oversupply of inventory to massive oversupply of inventory minus a little. Its still massive oversupply of inventory relative to buyers out looking, which is what counts.

Taking your house off the market now, or keeping your house off the market, actually makes no sense unless you think there will be noticeable price rises coming. And that really makes no sense

Down, Down, Down... Without 1st time homebuyers (which there are none, i am one of them make 120k with my wife, 27 yrs old) We arent buying because its gonna be worth 10% less by spring and another 10% by 2010... Also I just hope I keep my Job right now. We will pay our $1,200/mo rent gladly and keep saving in case the banking system really does melt.

A home is a long-term investment. Get in when you can comfortably afford a place that is reasonably priced. It's better to build equity than to pay someone else's mortgage renting. In the short-term, pre-bailout talk, the bottom would be nearing but now it's tough to tell. Mortgage rates will only go up from where they are now so that favors sooner rather than later. However, it remains, even if we dip after the bailout or if one doesn't go through, in the longer term it's smart to own and build equity IF you find something that you can comfortably afford and that's reasonably priced!

Brian must be a realtor or have some vested interest in real estate because it completely boggles my mind that someone could still hold those views in light of what has happened in the last 10 years between the real estate bubble, bust and the credit crisis.

How many times does it have to be said that, historically home values appreciate at a rate at or slightly above the rate of inflation. So even if you want to argue that a home is an investment (it's actually a liability up until the point that you can sell it for more than you spent to own it) the only claim you can make is that is in an inflation hedge. That's it. End of story. But, you have people like Brian that have short term views and all they see is the last 10 years (of course he must have had his eyes closed the last 3 years, because home values have been dropping).

As for the old renting is throwing money away argument, why don't people actually run the numbers (use one of the buy vs. rent calculators online)? Oh, I know, if they actually ran the numbers they would see that their argument is utter nonsense.

And if interest rates go up, than home prices must fall accordingly. That should be abundantly clear to anyone with a basic understanding of finance.

We have 12-18 months before thing bottom out, and that all depends on the bailout plan, the election and the War in Iraq.

With the instability of the capital markets, increasing unemployment, weak retail sales figures, poor housing numbers and the uncertainty in the marketplace, both Buyers and Sellers are very very unsure.

Keep in mind that even if you are able to secure a Buyer for your house right now, the Buyers financing needs to be secured by strong credit scores (720+) and a strong down payment (20%+)...then the house needs to pass a home inspection which is just another way in todays marketplace for the Buyer to closely scrutinize your property and renegotiate the sales price (again)...then the property needs to appraise out for the financing and that is also a challenge as appraisers estimating values in a declining market will certainly lean toward the side of caution...then you pray that the bank financing the acquisition will actually be there for you with a huge check at the time of closing...and all this and more needs to take place, in some cases, before the Seller loses the property to foreclosure because they were in an adjustable mortage that reset on top off a job loss that ultimately put this family closae to homelessness.

Just my observations from within the marketplace...looking out!

It all starts with the 1st time homebuyers! Don't you all get it. When 1st timers could get 0% financing and spend up to 45% of income on mortgages... Those days are over now you need 10% to 20%+... We are a nation of spenders not savers... No one between the ages of 25-30 has $75,000 for a downpayment to buy a house, even here in Mass the wages are not enough to support these prices. 1st timers fueled the boom and now they are nowhere to be found at these still extremely inflated prices. Its all been a house of cards and its strting to come tumbling down.

Come on, you can't be serious! there is no way that anyone can effort buying a home now. Well unless you just got promoted to be CEO of your company. In that case, you do not have to worry about the price. Your company probably paid for your house.
Price still to high compare to most everyone salary, gas price is up, food price is up, unemployment is up...etc...and you people telling me that next year housing market is alive again. What are you people smoking? can i have some?

Lou, I think you're missing Brian's very important points, points which many others missed over the housing bubble - 1) a home (not real estate, but a home) is a 2) long term investment so buy when you 3)comfortably can at a 4)reasonable price. Those four points *always* make for good home-buying choices. The problem is that those very points were tossed out the window the past few years with people buying real estate for short-term gain, buying properties they couldn't afford in hopes that the prices would rise, and buying homes with inflated values, hoping those values would continue to rise.

People will always need places to live and it is unreasonable to rule out home-buying. If it makes sense in your particular case and your particular location, go ahead. The difference is that right now, homebuying just doesn't make sense for an increasing pool of people and that will drive the market down until.....well, until it does make sense for more people. I for one am hunkering down, keeping my rental property and my home and making no big moves for a while. But that's a luxury that many people don't have. Even in a depression, life goes on.

Hi, I usually don't comment on Stacey's pieces, but her line about real estate agents got to me.
It's 11 PM and I just got in after a day that included a home inspection after an accepted offer, having another offer accepted, having yet another offer rejected, and preparing a third offer for presentation tomorrow.
Also, I have been tucking money away in anticipation of this slowdown. So have most successful and smart agents. I hate the commission system, but not all real estate agents are starving. Some brokers are losing their business, but others are doing just fine.

Nancyzoo, I think missed Lou's point. A home is not necesarily the good long term investment people think it is. They tend to think so because of recent history, but recent history was unusual.

Historically, homes have not been a great investment for those who have merely owned, rather than improved them. Economics 101, you get basic economic "rent" in such a situation, and over the last 100 years home prices have barely returned more than inflation - 50 bps or so.

As long as people are still saying "homes are a great investment" we haven't had real capitulation in this market, despite the headlines screaming crisis of confidence.

Despite what the above may imply, I do think home ownership is a good thing, that most people should try very hard to achieve. But for a myriad of other reasons, not investment.

I agree with Matt 100%. I can afford to pay about 4 to 5K a month in a mortgage. I am waiting to buy a home. The homes I have been looking at are in the 800K range. That means I need about 170K in cash to put down, with closing costs. That is not going to happen. In addition, the prices of homes have been inflated dramatically in the last 10 years because of non existent lending standards. Since ANYONE could get a loan, the sellers could keep upping the prices again and again, due to increased competition. Suddenly, there is no competition. Housing prices should be about 25%-30% less than what they are. No one wants to hear it, but it is true. Some might tell me, "Get a cheaper house." I would rather rent a house I actually want to live in with no risk, than buy a cheap house that can lose money.

To those on the blog who say that prices are rising in the back bay/south end...

I saw three properties last week--price drops on all three in the last couple months
and when I checked sales records, one was now listed for what it was bought for two years ago and the other now listed for about 5% over it's 2002/3 purchase price. The third never sold before and is through a developer.

...and two of them (i was the lone open house attendee, even though one place is quite nice. I don't think these places will sell for what their asking is currently and it's simply because as so many have said, the market went up way to quickly. If stuff that's currently listed for $1M fell to 800K, there might be more buyers in the market immediately.

To sunshine and lollipops - NOTHING IS IMMUNE! We've heard that before. Arlington is not seeing huge gains.

What goes up must come down....

Thank you Rona for chiming in at last.

As you can see, people are still buying houses, as Rona's extremely busy schedule can attest!

While the financial markets might be broiling in far off New York, here in Boston things are going just fine. Unemployment is still extremely low, people are shopping, things are going well. I was at The Franklin Cafe in Boston's South End the other night and it was filled with young, fresh smiling faces, faces of those who are still basking in the glow of a strong economy. Wine was flowing, people were laughing and enjoying life.

Massachusetts is filled with doctors, lawyers, engineers and others whose livelihoods are not tied to the vicissitudes of Wall Street. Do you people *really* think that home prices in a town like Brookline are ever going to fall? Trust me, they aren't! We're now what, two years into this so-called real estate bust and if anything, prices there and in many towns continue to RISE!

So my advice to buyers out there is this: get in NOW because in a couple of years you'll look back on today's prices and cry at the lost opportunity. As I'm sure Rona can relate, as a broker, I spend a huge amount of my time counseling disappointed buyers. Time and time again their hopes for snagging that cozy Back Bay condo have been dashed, outbid by someone more eager and with greater resources. Their dismay is palpable and disheartening to me. Fortunately it's balanced by the joy I see on sellers faces when they realize that the profits they've made from just two years of ownership will allow them and their growing family to afford that manse in Weston.

Good luck though to the buyers out there! I know it's not easy!!

Joe - Ummm, my wife and I just scored an awesome home in Southborough this year. Plenty of people can afford buying a home. Home sales are not zero. Perhaps you cant afford to or simply dont want to, but your statement simply isnt true.

Sunshine and Lollipops - what's in those Lollipops?? far-off New York, you say?? Where are you from?? Who's Rona??

Doctors, lawyers, engineers - oh no they don't have any of those in CA do they! Or NY! Or anywhere else! Those people, like the vast majority of all professionals, are invested in the stock market for their retirement funds. Yes, the Wall Street mess affects us all and it all boils down to the housing bust.

It's funny how people just don't get it right. Prices won't fall to 3/3.5X income just because it's historical norm. Prices will fall to match monthly payment of 30%. If interest rate is low, prices may be 4/5X income, if interest rate is high, prices maybe 2/3X income. With the excessive money in the global system, low interest rate is here to stay for the next 20 years.

S&L (short for sunshine and lollipops - funny!) - are you serious?! Maybe i'm too simple and am mistaking your sarcastic comments for your true beliefs. How is someone who can only afford a back bay condo going to buy a mansion in Weston (unless the "condo" is similarly priced to the mansion in weston)? Assuming real estate always goes, up, wouldn't the masion in Weston have increased at a rate similar to that of the back bay condo? If so, the Weston mansion will remain just out of reach for the condo buyer (assuming the condo buyer didn't pay cash for the place or bought well below their means ) as it was when they bought their condo. Or did the buyers income suddenly increase to the 700k/year or so necessary to buy a 2mm house during the 2 years they resided in the condo? And do you really think that the economy at large is not subject to the "vicissitudes of wall st"? When the notional value of credit default swaps floating around "out there" is larger than the global GDP, then yes, main st is definitely subject to wall st's whims. I agree that doctors are less impacted by the goings on of wall st, but engineers and lawyers? And this isn't about which sectors will be impacted when it comes to home buying - they all will. This massive deleveraging process will absolutely impact peoples' abilities to borrow large sums of money.

After living in MA for 10 years and struggling with the idea of buying a 400K fixer upper in Natick, with its associated Metro West tolls and fees, I moved our family to Cincinnati, OH and bought a 3000 sq foot brick home in the best school district in the state for 250K (Ranks higher than any in MA nationally)

The home has a custom kitchen, bath with sunken jacuzzi and separate spa shower and one whole bedroom has been turned into a custom closet, with a direct path from the Master Bedroom.

My daughter will walk accross the street to her first school and learn how to ride her bike near quiet and safe streets.

My wife and I can afford now to have her home with our daughter. The payoff there has been incalculable. I work from home in the finished basement and can't beat the lack of commute.

So, Boston folks, stop the debate altogether and just relocate. Yes, there are a ton of possible objections, but take a look at your total daily hassles and worries. I had them too while we live in MA. They're gone now.... any we still go to the theater, home expos, MLB and NFL games (right in town!), and have great restaurants and nightlife.

Look past Springfield and replace the sign that says "Beware, there be dragons ahead!" with the Jefferson's "Movin' on Up!"

P.S.

In Ohio, except for the turnpike, no tolls!
No excise tax
Lower property tax
Less entrenched government beaurocracy
Buy twice the home at half the price
People actually smile as you pass them on the street!

People should really think monthly payment when buying a house for long term. I live in Newton and my monthly payment is about $3000. Here is how a justify the price:

1) Renting a 2-bed apartment in Boston: $1700
2) Premium for better school (I have 2 kids): $500
3) Tax benefits: $600
4) Better commute for me and my wife: $200
5) Boring suburb life: -$200
6) More space/yard, safer neighborhood: $300

So it's at least a break even situation for me on a monthly basis.

I am in the process of closing right now on a just built 3500' sq. ft home that was listed for just under $900K. I am buying it in the mid-600's. Your silly if you are in the market for a house today and dont jump on one. People are dying to get out, to the point of they'd rather give it away and get out from under it than to hold onto it. Finally, don't listen to your realtor when they say, 'don't insult the seller'. You are the buyer in a buyers market...dont forget that! Take advantage while the opportunity exists!!!

I love these animated discussions. Folks, Sunshine & Lollipops is clearly being sarcastic (as if the name wasn't a give away). As far Arlington goes, it is unique, and its prices are somewhat understandable. Simply put, it's transitioning from a working class neighborhood to a Yuppie one. So, Arlington not only saw a fictional bump in prices from the bubble, it also experienced a very legitimate one from this change in demographics. That's not to say Arlington will be immune from price corrections. It’s harder to predict where things will end up.

For most communities, though, you can predict that prices will end up pretty much where they were before the boom, following historical price trends. Locally prices are now up about 80%-100% from where they were 10 years ago. This is a bit high; historically the rate is closer to 50%. (I'm just guessing on this, and I'd welcome better numbers if you have them). Don’t feel bad, though. I checked my home town in NJ, and they are up 140% from 10 years ago.

Some of this difference is do to interest rates. (10 years ago they were about 7%, now they are around 6%). Still, there are definitely more corrections coming. The only question is whether these corrections will occur rapidly, or whether prices will instead stagnate (with inflation eventually causing things to catch up). In the past, I thought certain desirable markets with tight inventory will stagnate, while most markets will drop. With the current crisis, though, I think everyone is going to be in trouble. Even so, the more expensive communities saw less of a boom, and therefore will probably see less of a bust. Regardless, prices aren’t going to start going up again for a long time.

Now, all of this analysis is bunk if the economy collapses, or if banks don’t start lending money (but only to the people who can actually afford the loans this time, please). I think if banks strictly require 20% down, it’s really going to hurt things, particularly in expensive markets like Boston. This is just too much money for most people buying their first home. 10-15% down is probably more realistic.

Sunshine and Lollipops, I still can't tell if your joking, I'm afraid. But if you compare the situation at the Franklin to a few years ago, you'll see a huge difference. Try talking to the owners about how much they are making now comparively - its a bit ugly.

Are all the condos on columbus and in the Savings Bank still sold? The developers remained confused about that last time I checked... and how's 700 Harrison selling?

Saying that Boston, which at one point recently was the worlds third biggest financial center, is discorrelated from the markets is just laughable. 2 of less and 20 of nothing isn't going to buy much real estate.

Yawn & PG & charles - Trust me, I'm not being ironic or joking at all.

Check out my colleague John Keith's blog where he has just recently and graciously posted the August sales numbers for South End condominiums.

While sales might be off just a smidge, prices have gone UP on a YOY basis. And the only reason sales are slightly off is that sellers have been unnecessarily cowed by the scare stories in the media about a "meltdown" or "crash" in the real estate market. Did you see that? Prices are UP.

They don't realize that in my market of the Back Bay, South End and Beacon Hill, an area which I call (for obvious reasons) The Golden Triangle, it's a SELLERS market. I don't think there's ever been a better time to be selling a condo in the downtown city center market of Boston Proper. You can pretty much name your price around here. There are SO many wealthy buyers, many of whom don't need mortgages. Yet the supply is constrained due to history and geography. Not only are we protected due to our highly skilled, highly paid residents, but we're also protected physically! No more room to expand here in Boomtown Boston!

Boston is not Miami. Foreclosures here are non-existent. There is no glut, no supply overhang. If anything there's a massive shortage considering the colossal unquenchable demand. So, while I can sympathize with my compatriots toiling with tough markets in undesireable towns such as Worcester, Lawrence, Brockton, etc., I feel it my duty to combat this dreary news with the facts.

And the facts are that things are going great here in town. So once again I raise a glass of the finest champagne to the lucky owners here in Boston Proper. You've made a wise choice to locate here and your wisdom is paying off each day. Congratulations!!

Stacey,

It is better to keep quiet and have people think you are an idiot rather than open your mouth and prove it.

In you case writing

The guy from Ohio (#35) really drives me crazy. I am so envious. Ever since I came to Massachusetts from my native country of Belarus, I have been wondering what it is that people see here that warrants these insane prices. The climate is bad. A lot of people from my immigrant circles with dormant allergies have had their allergies become worse here. My wife and my mother are good examples. Potholes are everywhere. The state seems to be broke all the time and hell bent on raising tolls (despite 5.95% tax). Everything seems so small, old and cramped. I concede that it is pretty good place to be a student. But when you are done with your studies I just don't see it.

So why am I still here? Family. We are immigrants who were coming here in packs. Now we have to stick together. Life is short. Otherwise I would have moved long time ago.

Real Estate prices are STILL too high by almost every measure

Percentage increases (still about 7% over last 10 years, WAY above income)
Relative to Rents
Relative to Income (compare median income to house prices)

As long as I can pay $1400 to rent a place that costs $400,000 to buy, I'm staying on the sideline.

To those who are apparently slow on the uptake, Sunshine & Lollipops is being sarcastic. Wow, didn't hit you with that sledgehammer hard enough? I could see the first post going over some peoples' heads, but the second??

Charles.

i agree with you generally, but I think you've missed my point. One should not treat one's home as an investment. It is primarily a place to live. Thinking of one's home as an investment is part of the problem. Yeah, it's great if your home appreciates in value, but as long as it houses you at a price you can afford, you've done well. There is a difference between buying a home and investing in real estate, and conflating the two has caused us much of the problem we see now.

Umm chris at 36, You forgot the two biggest numbers in your balance sheet.
7. Income tax deduction of mortgage interest ( for me about 16 to 18k a year) Renters dont get it, you only get a little off of your state tax. Sorry.
Mortgage insurance, which is included in my mortgage payment, but if you want renters insurance, you pay extra. and if you dont, one accident and you lose everything. byebye.
and the biggest number of all.

8. No landlord and having your own home, that no one can just walk into, no one can evict you from, no one can make you turn down the music or not tango at 2am.
Priceless.

sunshine and lollipops - if you're not joking then you are tripping on something. The facts simply don't live up to your claims.

JP - i would've clearly seen it as sarcasm if it hadn't been something i've heard verbatim from dozens of real estate professionals in the past. Yes, it sounds - and is - completely ridiculous, but people do say things like S&L...and they MEAN it!

What took 10 years to rise is not going to fall overnight. To the buyers: Keep saving your pennies. Another year or two in that apartment is going to benefit you in ways you can't imagine. For my wife and I, it means another 12-18 months of saving to have a mortgage that isn't going to force you into maintaining a certain income and being a slave to a certain job...think long and hard about the stress that will put on you and your families. The bailout is going to do little to improve the immediate credit situation and we're going to be facing a recession through 2009 (some say we've been in one...and I don't argue against that). It is NOT a good time to buy. We're in a financial crisis and you should be as prudent with your personal balance sheet as the banks are being with theirs. It's survival mode. For the average buyer, buying a home will completely change their capital structure to a highly leveraged one. Too tough a time to roll the dice. Prices will not react that quickly to an economic upturn. Like it takes a while to slow a train! I am sitting on a nice nest egg for a 20%+ down payment (in an insured money market) and I'd love to be in my own place right now but I will continue to rent until I can see a clearer direction for the market and re-evaluate in 6 mos. I suggest others do the same.

A sad time for this country...we haven't hit bottom. We Americans are serial optimists but it would be best to put that aside this time around.
Housing prices? For all but the elite properties expect more correction. Why? Well, play the same game that happened for so many of these past years and go to the bank to ask for a $700K mortgage....or $400K for that matter. Answer is simple- 20% in cash please. And who has it? Hmm...not too many people. Oh, and that credit score...750 minimum. You have 740? Sorry we can't help you.

Most worrisome is that the rest of the world that financed this bonanza is now looking at the US scratching their heads...free market? I'm taking my money elsewhere. Welcome to grand scale devaluation the way other countries have experienced many times in their histories. Maybe we aren't as special as we've been told-and thought- we are.

Is your house a home or an investment? Too many people looked at it as an investment and thanks to packages such as ARM's, interest only no or low downpayments people bought. Many of them had no business owning a home because aside from rent that silly thing called property tax and the water bill come due.
Our friends in Washington believed that everyone has the right to own a home. No, they have a right to shelter. Make $40,000 a year...you can afford a $400,000. home. Sorry that your tenant decides they can't/ won't pay the rent this month but your mortgage is still due. Wall Street packaged these toxic products so people could make more than a reasonable return on investment.
While I'm sorry that people are upside down on the primary home...how many people are upside down on their investment property? I lost $14,000 the last two weeks in the stock market. Who is bailing out my investment? Somone is being foreclosed and oh, I should bail them out.
It's too bad we are coming to the point that people need to be responsible. If you thought the subprime was bad wait until the credit card mess hits the fan,

#46 you might look at rent/own numbers, and ponder the people getting evicted from houses they "own"

Sunshine & Lollipops - Golden Triangle of course has a meaning in Boston real estate, but not the one you gave it. Amazing how many of the high producing brokers I know in the South End don't share your opinion on downtown fundamentals.

Of course there are no problems in real estate! Silly of me to think so.

oh, and the problem was NOT too many people looking at their "home" as an investment.

The problem was too many people looking at their home as a lottery ticket.

If you actually look at something as an investment, you spend some time analyzing it, and understanding the various risks. Clearly people did not do that.

Treating your "home" as a casino is NOT the same thing as treating it as an investment, which is why many of us who owned real estate as an investment sold it years ago.

#51 makes a good point. Millions of Americans are losing money in this volatile stock market. My wife's 401k is down something like 20% YTD. Anybody wants to advocate a bailout for us? I think if there is inequality in this country this is it. Subprime borrower gets help, while a saver gets the short end of the stick. All because we need to put the floor to the housing market? Another great "free market" idea!

Charles, I am convinced you are lost. How are you still not getting that Sunshine and Lollipops is being sarcastic at this point? Personally, I think S&L is Marcus tweaking his "Magical Blue Ponies that pay for everything" shtick.

Lollipops, I think you've had one too many glasses of that champagne you're always raising!

But you speak the truth, that's for sure.

Sunshine is always saying he/she would like more listings. There are 495 listings in the south end alone per MLS - how many more does she want for one neighborhood?

In Ohio, except for the turnpike, no tolls!
No excise tax

Not quite. I have relatives in Cleveland, Cincinnati, and Dayton. The county charges a yearly tax, which is added to the vehicle registration fee.

I have nothing against relocation; I'm actually trying to relocate to the mid-west. However, every city has its problems. My father grew up in Cincinnati. It's very "old South", which is not a good thing if you aren't white (and he isn't).