Stormy weather, are you getting soaked?

Please keep a list of anyone who calls you to buy a home this week. We'll want to make sure these people are excluded from the next $700 billion bailout when financial ruin descends on them.

My God, I mean really. What kind of idiot picks right now--when the two senior finance officials of the United States warn of another Great Depression beginning in the next three weeks--to take on 300, 400, or 500K in debt?

I don't care what your "unique circumstances" or "personal needs" might be. October 1, 1929 was not a good time to go all-in on the stock market for anybody.

Rona, it's a weird time, huh. I have had a surge in activity, as well. I expect it to be a very short fall market. Like, last week and next week!

I was holding open houses last week. The other condos for sale on the block were all in the $900k-plus range. The traffic in and out of the buildings were unbelievable.

I kept saying, "Where are all these people coming from???"

Those who worry that these people are fools don't realize (or are unwilling to accept) that plenty of people are doing quite well, these days and that there are plenty of people who have the good credit and financial means to make purchases of $300,000, $600,000 or $900,000, with significant amounts of their own money invested. Yes, it amazes me, too.

You can say, "It's a bad time to buy," but that's in general. People are buying now, people bought on 9/11, people bought on December 7 and people bought on October 29. Life goes on and what happens "out there" just doesn't matter to a lot of people, "right here".

Just to be clear:
I am not minimizing the level of chaos in the economy. We are in very uncertain times. It is also not clear whether we are headed into recession, depression, inflation, stagflation, or some series of these and other conditions. But buying now is not like buying stocks in 1929 -- you don't live in your stock certificates. It is like buying real estate in 1971. (If you are too young to remember the wage and price freeze, read this.)

I am observing what my clients and other buyers are doing this week. Then I report back to you. There is more activity than I would expect: busy open houses last week, properties that sold right after the open house, and my buyers facing the buying conditions that I described above.

In previous crises like the first Gulf War (remember that January 15th deadline?), 9/11, Hurricane Katrina, the confusing election of 2000, there was a marked slowing of activity for a couple of weeks. Then the buying and selling resumed at a clip that made the season about normal, overall. So far, I am not seeing that freezing reaction. I expected it; but I am not seeing it. I, personally, am seeing its opposite.

Curious...Is there an increased need to settle your personal life into a home of your choice this time? Has something changed or am I seeing a set of coincidences? What makes you preserve as a buyer, if you are?

Careful John - If you speak the truth around here you'll get people like J.P. etc coming out from the woodwork and saying you're being ironic and sarcastic! :-)

But thank you for confirming what I was trying to get across in a previous thread. Things here in Boston Proper are going just fine. New York is New York. Hundreds of miles away. They may have their own problems, but around here, we've got a well-monied class of people who are not affected by whatever crises might be rocking other distant cities.

Could it be our educational infrastructure? Could it be our diverse and varied high tech slash biotech job market? Could it be the large numbers of wealth management firms in the glass towers that shine in our skyline?

What matters here are jobs. We have them. And they pay well. And they are by-and-large recession-proof. When was the last time you heard of a neurosurgeon being laid off from his job? Right! Me neither! And *these*, my friends, are the ones buying the $1m+ condos here in the South End/Back Bay/Beacon Hill golden triangle.

Speaking of which, I recently opened the provider directory for my health plan. It's breathtaking how many doctors we have in this town. Pages and pages and pages of them!! Tens of thousands! All located in this area! Well educated and extremely well paid and needing housing. This is why our housing market isn't going to falter.

If anything, we need MORE housing! MORE! I am aching for listings. I have a client list a mile long, desperate to live the chic urban lifestyle that only our downtown nabes can offer. So I beg of the potential sellers out there.... please, don't listen to the news media. If you are even slightly on the fence about whether or not this is the right time to put your place on the market, let me assure you that you will be commanding TOP dollar.

There you have it folks! Encouraging news from 3 folks deep in the trenches!!! Thanks everyone and three cheers for another blockbuster season! If 2009 continues as 2008 has been so far, I think we'll have nothing to worry about.

I think people are buying because they believe that we are getting a deal and they believe the hype that this is the bottom of the market. We still have a long way to go! Prices are still unreasonably high in metro Boston for the average person to afford. I agree with Marcus that this is a terrible time to buy. With so much uncertainty why take on this debt? People have foolishly borrowed money, driving up the price of homes to absurd values and now we are paying the price.

Hi Rona,
I am seeing activity in my market too. I do think that there is some thought amoung buyers that they should buy now while they can still get good interest rates. I have quite a few first-time buyers whose parents are saying, "when I was your age, we bought our house with an 18% mortgage." I think there is some fear that rates will increase and it will wipe out any price advantage that we have seen recently.

Sunshine and Lollipops,

I am seeing lots of activity, but I still think there's lots to worry about. There is a ways to go before we see the end of the financial upheaval and the housing market is dropping.

However, my fellow agents on this blog are seeing the same thing that I am seeing: there are a significant number of people who want to hunker down in their own home while American weathers the storm.

Even in the Great Depression, there were lots of people who maintained their standard of living. We are all hoping to be in that crowd during whatever lies ahead.

Amazing when I started warning people about a coming housing crash back in 2005 how many people talked just like Sunshine and Lollipops does.

Many fewer of them now.

It'll be interesting to see how many there are next year.

Do I think there are buyers out there? Sure. Do I think that's particularly wise of them? No, to say the least...

Are the fundamentals for the medical profession and finance getting pretty ugly in this state? Yep, sure are. Lehman, Bear, and Wamu are certainly all unlikely to be paying good bonuses. Merill people are in fear of their jobs, and sure are a lot of hedge funds going under... While doctors get paid less here than they do just about anywhere else, for a much higher cost of living.

I posted this elsewhere, but it seems relevant here as well.

There are 540 (mistyped earlier) listings in the south end right now, Sunshine and Lollipops, which is as much as I can remember in 10 years of living there. There are 420 in Back Bay, and 192 in Beacon Hill. How many more could you possibly want?

Charles, your information is incorrect. Where are you pulling it from???

There are 223 properties (single-family, multi-family and condominiums) listed as available for sale in the South End, according to MLSPIN, and 236 properties (single-family, multi-family and condominiums) listed as available for sale in the South End, according to LINK. You have made a mistake of over 100%.

There are 214 condos for sale in the Back Bay, and 96 on Beacon Hill.

Could it be that your assumptions about the market have been wrong, the entire time???

the current turmoil in the financials focuses us on a tenet of financial theory: the risk/reward tradeoff. we've discussed our housing goals and we are more entrenched than before in our stance that we demand a substantial (ie 20%) discount off cmv to accept the risk of our apparent financial doom. clearly not everyone is taking the same approach.

Marcus, to be fair, the warnings of a depression from senior finance officials are IF the bailout doesn't get passed. Let's say it is passed and some measure of calm returns to the market. How much will you moderate your condemnation of buyers?

Sunshine and Lollipops, I live in Beacon Hill and have been following the pricing for a certain segment of the market for some time. In my observation, prices for a ~1000 square foot 2-bedroom have been flat for two to three years. So while it is true some sellers won't take a paper loss, in real terms they would have been better off selling in 2006 and investing the proceeds in Treasury Bills. And in some instances sellers are taking a nominal loss as well. Have you followed 48 Beacon Street Unit 1R?

I don't necessarily think that everyone purchasing a home right now is idiot.

Anyone that is trying to purchase a home they can't afford with exotic financing, little to no cash down and a price more than 2.5 - 3 times their annual income *is* an idiot.

Lots of other people are buying properties they feel are reasonably priced, well within their affordability range, and have secure jobs.

I'm one of those folks.. My wife and I are currently waiting to close on a 2 br condo. The unit has been fully rehabbed with nice upgrades, the price was recently reduced by 14% and comps in the area were around $30k-$40k higher. We're benefiting from a developer looking to close out their last few units. Financially, rates are great! We're looking at a 5.25% w/ 0 points rate for a 30-year fixed (no PMI). The sales price is only 1.67 times our income and our condo budget lets us put 20% of our net income away in savings/investments.

From our perspective, this is a really good time for us and this particular deal. In 5 years, we'll see where we stand.

hmm, data I just pulled off ziprealty.com, feel free to check it out. Even if they were wrong - I could see different numbers depending on what was included - 236 is still not too small a number though!

As for whether I've been wrong the entire time - sure, prices are up, no bailout is necessary, Lehman, Bear, and Merill weren't brought down by the housing market.

It sure is sunny where you are. Been raining where I am.

Despite all of the uncertainty, and the possibility of entering a massive Depression (I said possibility not likelihood), my family still bought a home this past year.

First, as bad as a Depression might be, history shows they always end. Even the Great Depression - it was a few miserable years, then back to normal. Look at it for what it is. Most people (3 out of 4) still had jobs, cars were still bought, music was still made. Its not like everyone just sat around and starved in a tin box under a bridge. Not to mention, it builds a little character, and our spoiled youth sure could use some.

Second, if my family cant pay the bills in our home, nobody else could. If our assets fall in value, so will everybody elses. If the bank siezed our home, I can guarantee there will be nobody else who could afford it anyway. So Im confident that no matter what, the bank would rather have us just stay and give them whatever we can, than have somebody else pay even less.

Hi all,

I have to say that as a licensed home inspector in MA, I have had the busiest summer in 5 years. Sure its been up and down and a little inconsistent, but all in all, its been a good summer.

I'd love to get some more work from any of the buyer agents out there, especially if they would like a complete home inspection for their clientsI .

Charles - Ziprealty always lists Golden Triangle properties twice, once from the listing agent and once from LINK. Your numbers are 2x too high. I recommend changing your search criteria such that you only get listings with a sqft number that is non-zero. Zip's LINK listings always have a sqft value of "N/A".

So as you can see, there's a absolute DEARTH of listings here in Boston Proper. I wish it weren't so! I have a buyer's list a mile long of people desperate to get into our storied market. I would absolutely LOVE to have ten thousand more condos on gaslit tree lined charming brick-sidewalked streets to be able to offer them, but alas, our market is constrained.

Bad news for buyers, but fabulous for sellers since their investment is protected from the real estate problems that might be happening in other, less attractive markets. I'm not complaining!

Wow. Sounds like a lot of people need to catch up on what financial panics really look like.

"A few miserable years?" The great depression started in 1929, worsened in the early '30s and lasted until war economy of the 1940s! More than an entire decade lost, and it could have lasted longer had WWII not forced a massive ramp-up in industrial production and government spending.

I don't think the Paulson plan will do a thing to stave off a panic. It doesn't do much to recapitalize the banks, except by the backdoor method of forcing taxpayers to overpay for toxic waste.

You can't compare a financial panic to mere temporary crises of market confidence, such as those that followed 9-11 and Katrina. None of those had anything to do with the fundamental soundness of the financial system. By contrast, today the financial system is insolvent.

Those who worry that these people are fools don't realize (or are unwilling to accept) that plenty of people are doing quite well, these days and that there are plenty of people who have the good credit and financial means to make purchases of $300,000, $600,000 or $900,000, with significant amounts of their own money invested.

That category includes me, for now, knock on wood. However, I am also not as dumb as a bag of hammers. I understand full well what could happen to my income in the near future. Today's buyers do not.

Middle, you may well be able to ride it out, but that is not to say you wouldn't be financially much better off if you had stuck your money in treasuries and bought after prices fell.

Of course, if its a "home" and nothing to do with money, everyone should just skip analyzing it as John K and Sunshine and Lollipops seem to be advising - all is well, buy the pretty things.

Wachovia went down last night over home prices crashing. They might disagree with "all is wonderful"....

Of course, maybe downtown boston is a special planet all its own... After living there for 12 odd years, I do sometimes think so! I used to argue with friends who described Boston as unbelievably parochial, but I lost that one I fear.

Charles, please ask Marcus for confirmation about what I'm saying. He came to the conclusion (speaking for him) that the ZipRealty numbers are inaccurate. Basically, wrong!

You don't have access to MLSPIN? Well, get it! I'm sure any local real estate agent would sign you up, no obligation. Get the data from the source.

Over the past 30 days, 40 homes have sold in the South End.

There are 205 single-family and condominiums for sale in the South End. I can't vouch for the other parts of MA. It's not a good time to take risks, we all know that!

@Sunshines & Lollipops: Not everyone is a neurosurgeon! Your post sounds like an ad.

I roll my eyes on whose parents are saying this:
I have quite a few first-time buyers whose parents are saying, "when I was your age, we bought our house with an 18% mortgage."

I will buy a house for $100,000 @18% any day compares to $350,000 @5%
What are these parents thinking?

I've no problem believing ziprealty is wrong. Good to know for the future. But even at half the enormous numbers I listed, that's still a pretty large amount of places for sale in some small neighborhoods.

I've actually been focused on Cambridge real estate lately, not because I don't like the south end as a place to live - I think its nicer, but I think there is more money to be made in cambridge currently. If I were looking seriously for south end info I'd call Paul Whaley, or Michael Moran, or John Neal, all of whom I know and have a lot of respect for, but for a random blog posting I just typed it into google. Which was clearly wrong, which I'm glad I didn't learn with money at stake - thank you, in all seriousness.

I also believe in the fall market, and that things are selling now. I just don't think the buyers are particularly wise. Lots of dead cat bounces in this one, they've made me a lot of money in the markets so far selling the rallies.

As per marcus, I'm one of those people who live downtown and could go write a check for a place. I didn't get there by wasting my money, which is true for many of the downtown buyers I know. I do know some people who have so much money they think now is a stupid time to buy, but are buying anyway, because loosing half a million is meaningless to them. Losing half a million is rather painful for me, however.

well, the bailout blew up. Things just got a lot uglier. Much uglier than I want to see, frankly.

I'm guessing this will take a lot of buyers out of the market. And a lot of credit out as well. LIBORS got to be going through the roof.

S&L, LOL!

No one should be buying a home now... No One! Just wait till next year when we are in the throws of a recession. If you still have a job and your money is in an FDIC insured account... then buy for around 20% off from where prices are right now!

The south end is one of the most amazing places to live in Boston if not the United States...its very unique...and very aesthetically appealing. I need to move to the burbs because my family is getting too large. I put my condo on the market and had an offer at asking price the next day. Granted my place was in good condition and in an great location. I don't see many for sale signs around the neighborhood. I read somewhere that 80% of the national housing market is tanking but 20% is actually doing quite well. Must be location location location. I am really going to miss the south end.

There are 207 properties for sale in the South End right now. Perhaps you're not looking hard enough.

I like the South End. I've lived there from the time back in the 90s I had to explain it wasn't the same thing as southie. I still like it.

But most amazing place in the united states? Lets not push it to insanity. Its a pleasant neighborhood with some strengths and flaws.

And why is no one responding to my and marcus pointing out that there are hundreds of places on the market in a reasonably small neighborhood? Not precisely nothing...

Charles, let me shine light on your inventory comment. I'm a South End house-hunter. I'm looking for a traditional, renovated parlor-street-garden 3+ bed triplex with 2000+sf and parking for my family. I have a generous budget.

When I look at the South End inventory, I don't see 207 listings. I only see 1 or 2 relevant units, one of which is listed at an absurd > $1,000psf. Ask John Neale how many quality triplexes he has available.

I work at an investment firm poised to benefit from the turmoil in the credit markets. In my small circle of friends who work in the business, there are at least 5 young couples or families actively looking for the same product, with budgets up to $2mm+. Obviously, those are just the people I know... We're not empty nesters looking to drop $6mm at 100 Beacon. We're educated, professional, affluent 30-somethings looking to start our lives. We're all making the effort to remain in the city b/c we work long hours, and prefer to cut the commute as short as possible. We all bemoan the lack of quality housing available in Boston.

That's supply and demand in action.

shining - in some groups, that's true. I know people in similar situations. In fact, I bet we know some of the same people - we may even have met. I've got a very good friend who is a partner at Bain who was in the same situation.

But what you are missing is that you are top of the market. That group does have limited choices. But it it is in no way reflective of anything except itself. 2m for a triplex, or 14m at the Mandarin - there's really no difference, you are in the same tranche. But its pretty much a tranche that is limited to certain firms, and certain people. As you say, I bet you know 5 people looking for something similar. I'd bet further thats around 75% of the market for that segment.

Though your data is true, I don't think its that relevant- there simply aren't that many people at say Sankaty, Bain or TH Lee in the market, even though their particular market may be undersupplied.