First-time home buyers to the rescue

As a first time buyer, I'll wait until YOY prices have flattened, rather than plummeting 10-15%. Right now, each year I wait is like finding another "10% off your first home" coupon in my wallet, and all economic indicators point to accelerated drops in the future. I have no desire to catch a falling knife, nor do I have any desire to reward others for their poor judgement.

I'll wait.

Scott, let me in on my situation. I'm late 20s, pulling in around 70k. I am single. How can I buy a house. I don't care about all of these commercials from the NAR telling me that houses are more affordable, because in reality they aren't.

So step back into my shoes, and try to buy a reasonable house like you could in the early 90s... you will find nothing on the market. All thats left is garbage, or overprices sub 1000 sqft shacks. So in short, i dont think ill be buying anytime soon, unless i get a great deal.

I see the Globe thoughtfully deleted all the comments to that linked article, most of which pointed out the "study" was a puff-piece by a real estate agency polling its own agents about their off-the-cuff recollections and opinions. And it only showed a higher proportion of first time buyers (for $200K houses in AZ), but also reported longer DOM and falling prices. Deleting the comments would've worked, too, if us pesky readers hadn't come along and spoiled everything. Curses! Foiled again!

More baseless hype from Realtors... The collapse has only just begun in the Boston area. Fundamentals are still way out of whack and prices have at least another 30% to go before they bottom. Buy at your own risk.

During market crashes, you will often see a phenomenon called a “bull trap”. The scenario goes something like this: Group A buys at the top of the market and is highly-leveraged. When prices start to fall, they are forced to sell and get wiped out. Group B then buys from Group A thinking they're getting a great deal because prices have fallen from their highs and a “return to normal” is inevitable. But when the return to normal never happens, they also get burned. Then Group C comes along. Group C buys at the real market bottom and makes a lot of money.

The reasoning behind this is simple. Groups A and B are price speculators. Group C are value investors. Right now, the arguments I see people making that this is a good time to buy fall squarely in to the “Group B” category. Prices have come down, so they must go back up!!! Interest rates are low so it's a great time to buy!!! All of this is nonsense. Buyers who ignore fundamentals get crushed during market crashes.

But go ahead and buy now if you like... In a few years myself and the rest of the vultures in “Group C” will be glad to take your bad investment off your hands at 50 cents on the dollar. Just don't say we didn't warn you.

From the article: ""The $8,000 credit is definitely huge," said Jamerson, who sells plumbing supplies. "We are looking to buy cheap and in four to five years make a nice profit."

Ok, there's a difference between, "We wanted a house and bought one we could afford, and we don't mind if values drop some more short-term" and the guy above looking to PROFIT IN FIVE YEARS!

The first sounds reasonable to me, the second delusional. I'm with the crowd who thinks prices will drop some more then remain flat for several years. In any case, the hopeful fellow above sounds like a guy poker players love to have at the table.

Go first-time home buyers. You are the key to getting us out of this housing mess.

No, the key is for prices to fall. They are still unsustainably high.

"I have no desire to catch a falling knife, nor do I have any desire to reward others for their poor judgement. I'll wait."

I love market timers and their naive belief that they can get it just right.

Marcus,

Thank you for pointing out the weakness of and/or the lack of in the supporting data. Nobody wants to hear more propaganda from biased parties.

Buying a house in the burbs (Central MA - Blackstone Area). Bought brand new (built in 2007 but sat cause of the economy). I will say we are planning on living there for a long time so that's our motivation for moving. Best house for the money we are spending - all told its down about 90k from what it was first listed as a couple years back.

I still feel its all about your situation. Buying a house to turn a profit just seems like a huge gamble right now but I am sure people might know things I don't

I can understand why investors don't want to buy now. They may be right; prices may continue to decline--or the may stabilize and then go up. I don't have a crystal ball. But a family who can afford today's prices, who want a yard for pets, and a stable town and school system for their children I think would be foolish to pass up this window.

I listed a rental yesterday (deleaded, took pets) and had two families wanting to sign a lease hours after the listing went up. The difficulty of finding decent, long-term family rentals is something else that should be considered in the decision of whether or not to buy.

Let me try and sum this up pretty simply -

Of those who don't currently own homes (potential first-time home buyers) there are two cagetories. One group did not buy a house because they could not (a pool that is growing bigger as lending standards are tightened). The other group (of which I am one) did not buy a house by CHOICE. They did not buy a house when prices were going up, even though everyone around them was screaming "Buy! Look how much theoretical equity we're building." They did not buy when prices were already ridiculous, even though they were offered mortgages for vastly more than we thought we could afford. They did not buy at the peak of the market even though we were guaranteed "House prices have always gone up, therefore they always will."

Without assigning any value judgements, I think we can safely say that this group was represents people who were more "cautious" than the ones who ultimately bought. They know what they can afford and what they are willing to pay. They didn't go against these self-imposed standards before, despite great outside pressure, and they sure aren't going to do it now. Anyone who is waiting for this wave of first-time home buyers to come and "save the market" better get comfortable. We sure are, and we're in no hurry.

I have a guess, that there are actually three classes of people. Class A bought a house already, for right or for wrong. They live in their house and are satisfied enough. Class B will buy a house some day, when circumstances are right. And Class C will NEVER buy a house but will complain about it for the next 30 years and be very bitter until the very end. They warn of impending doom of biblical proportions if you buy a house. I think we have a lot of Class A and Class C on this web site and very few Class B.

Of course I omitted the "investor" Class who will buy and sell like traders selling pork futures.

I'm having trouble getting over the fact that there are still people out there today who are more then happy to fork over $320,000 for a condo in Mattapan. And the best part is these people actually think they're getting some kind of deal. It's kind of sad really.

Kelly, #10 is an interesting post, because it made me think of a point that doesn't get made very often. Many people who bought during the boom actually knew what they could afford and bought in that range. They didn't buy because they caved to marketing or peer pressures, they just wanted a house to live in. And no one -- NO ONE -- could have predicted the unprecedented scale of the price drops we're seeing. So these people are caught in the great deflation with everyone else. Despite getting the basics right (buy a house to live in and can afford) they're underwater or close to it.

What's my point? There is a population out there who deserve their moment of sympathy.

some folks just want a nicer place to live than their crappy rental...you can't blame them for that...also 92% of people are employeed in MA...so there are folks that are comfortable with their employment....as a first time buyer, the $8K cash back from the GOVT provides some cushion if prices fall (4% on 200K, 2.6% on 300K and 2% on 400K)...4.8% fixed rate doesn't hurt either...if a buyer has a solid 5 yr plan and comparable net of tax rental (if that is truely possible) prices make sense to buy, then why not...in 5yrs time ~7% principal is paid...if the market is down 10% from where it is today, after the GOVT's $8K hand-out, the first time buyer is not out much and probably lives in a nicer place than they rent today...who's to blame first timers....best deal going in the last 9 yrs...

accidental landlord (#13):

“And no one -- NO ONE -- could have predicted the unprecedented scale of the price drops we're seeing.”

This assertion is just plain wrong. There were many housing bears out there in 2004-2005 predicting the collapse in prices we are now seeing. The list is long, but some names that spring to mind are Barry Ritholtz (who hit the nail on the head with housing and even called the massive government bailouts of financial services companies), Nouriel Roubini, The Economist, and numerous blog authors (calculatedrisk, minyanville, housingdoom, bostonhousingbubble, etc.) I encourage you to go back to the old posts about housing from the 2004-2005 era and see just how right all these guys were with their calls.

by will (#14):

“if a buyer has a solid 5 yr plan and comparable net of tax rental (if that is truely possible) prices make sense to buy, then why not...in 5yrs time ~7% principal is paid...if the market is down 10% from where it is today, after the GOVT's $8K hand-out, the first time buyer is not out much and probably lives in a nicer place than they rent today.”

First, it's unlikely you will find many cases of breakeven rent/own costs when you consider all the hidden costs like closing costs, commissions, taxes, repairs, etc. Prices need to come down much more for that to happen. Second, prices will likely be MUCH lower than 10% below where they are now in 5 years. In the Boston area, another 30% drop is needed to get back in line with historic fundamentals. Boston is seeing its price declines much later than other parts of the country... This means we can expect prices here to continue falling here long after they hit bottom in CA, FL, AZ, NV and other places where prices are already down 50%. It could be these areas are in the 7th inning stretch. But here in Boston, we're still in the 3rd inning...

I totally agree with kelly and bv. As a young first time home-buyer I fall into group "B." I will buy a house within the next few years, but it will be a house that I can easily afford and feel comfortable buying. When I go out looking at houses now, I still get an uneasy feeling about paying some of these prices; they still don't feel right.
I am an avid reader of housing blogs and some of the posters are outlandishly bearish. Now every time I go look for a house I am finding every reason not to buy it! (I am basically calculating what is was worth in 1997 and adjusting it for inflation to get to my price.) Oh well, I will buy a house sometime, when the time is right.

I suppose I should clarify. I hold no enmity against those who bought. Heck, some of my best friends bought homes in the past 5 years. They also knew what they could afford and bought accordingly. They might have gotten more for their money at a different time, and they might even be underwater. There's no shame in being underwater if you can afford to make your payments, and continue to do so.

What bothers me is the widespread intentional "guilt trip" being directed toward those of us who can afford to buy but choose not to. Like we're being selfish and unamerican by not jumping into the housing market and helping to sustain the high real estate prices that our bretheren paid. That's not my problem.

My point is that people who thought real esate was too inflated to buy in 2002, are still going to think it's too inflated at 2002 prices in 2009. We will buy when the time is right for us, not before.

Not yet.

ah yes, a first-time homebuyer thread. The realtors and financiers foam at the mouth when they hear "first-time home-buyer". They anticipate naive, unsophisticated, people who actually believe all the bs being thrown at them. "Buy now, real estate only goes up (easy to convince to make a full-price offer)" "Rates are low, buy now (easy to make 2-3 points on for the mortgage brokers)". As I have said many times before they represent the latest round of falling knife-catchers, who will regret buying a home for the rest of their lives. We will start to see bank failures in the Boston area in the next few quarters, previously "shadow inventory" will overwhelm an already over-supplied market. There is at LEAST another 30% drop to go...

Lol I think there are lot of realtors commenting about the best deal going. 10 years ago I bought a condo for $172K, now that same condo will fetch 390K. My salary is the same now as it was then, but my prospects back then were much better. Borrowing rates were definitely higher, but the overrall mortgage payment considering todays rates would be much higher. As a contrarian I believe it's far better to buy when interest rates are high as housing prices are lower and there's the potential to refinance at a lower rate later. There's very little opportunity for that right now.. A 2% cushion from falling prices is hardly worth the risk when prices are dropping at 10% annually. In a healthy housing market, you can expect to break even on buying versus renting at around 5 - 7 yrs, but that assumes price appreciation of 5% a year (the costs people don't think about when buying, selling the house, legal fees, maintenance, insurance, etc). When the house price to rental ratio is near an all time high, renting is the best deal going.

"And no one -- NO ONE -- could have predicted the unprecedented scale of the price drops we're seeing."

Funny, I did. I owned three properties and sold them all in 2006. To date, all are down now by at least 10 to 15%. I was so certain the housing market was going to collapse on a grand scale that I sold ALL THREE properties. I didn't hedge and sell one or two. I went all in and sold everything, including my primary residence. People told me I was crazy. Now they think I'm a genius. I now rent, waiting for the job market to recover, at which point I will buy again.

We forget that we do not live in Arizona or Nevada, where there are true, big housing bubbles. House prices here will not continue to fall year after year after year, simply because in the long run, there is a housing shortage with few places left to build. Once the economy starts picking up and people feel more secure with their finances, beware because the market will take off again with all the pent up demand. I am not in the business, but we are thinking of buying at some point in the next few years.

remember "equity" can be transient, while debt will always be there....

The prices are still way too high, and the inventory is junk. The current market is out of wack for this economy. THE HOUSING BUBBLE IS OVER!!!!

House prices here will not continue to fall year after year after year, simply because in the long run, there is a housing shortage with few places left to build.

From what dark crevice do people pull this nonsense? The US housing market is vastly overbuilt for current and future population trends. MA is losing population, not gaining it. And did you ever hear of a country called Japan?

Price are still high. But I've had 11 different bedrooms in the past 11 years. I'm tired of moving and because of this I'll be buying a home. I don't know where exactly I'll live, but as long as supply is greater than demand, I can find a deal.

I agree with #24 the prices are still way too high, the market has a way to go, that would be downward, remember when you could buy a 4 bdrm. house for 140,000
and that was in 1999-2000.
Economy ?

In response to Sue, I would agree that we are not AZ or NV here. We dont have the same wide open huge tracts of land for overbuilding. Here in MA we have small self serving town governments that act to try to stop growth and infrastructure build out in towns. (Water lines? Side walks? Street lights? Are you crazy?)
That said, what we do have in Mass is hard working self sacrificing young families. These are the people who bid up the median home prices to the ridiculous levels they are at now. We are seeing a slow correction in many towns now. It is slower to come to some school districts, like the W towns, but it will reach these sooner or later. This is why you see the lack of inventory and the slow decline in pricing. No need to panic, none of these processes are going to be quick (down or up).

"House prices here will not continue to fall year after year after year, simply because in the long run, there is a housing shortage with few places left to build. "

Very true, within 128 for sure!

Implode!!!!!!!!!!!!!!!

San Francisco Area Home Prices Fall Record 46 Percent (Update2)
By Dan Levy
April 16 (Bloomberg) — San Francisco Bay Area home prices fell a record 46 percent in March from a year earlier as foreclosures drove more than half the sales in the region.
The median home price fell to $290,000, 56 percent below its mid-2007 peak, San Diego-based MDA DataQuick said today. A total of 6,325 new and existing houses and condominiums sold in the nine-county area, 29 percent more than in March 2008.
Prices have fallen for 16 straight months and March’s drop tied with January and February as the biggest year-over-year decline in MDA records dating to 1988. The scarce availability of jumbo loans, which aren’t sold to home loan buyers Fannie Mae and Freddie Mac, reduced sales in the most expensive area including San Francisco and San Mateo counties, MDA said.
“Many of those areas are essentially in hibernation, with scant sales,” John Walsh, MDA DataQuick’s president, said in a statement.

Let me understand the logic of the Obama administration. We got into this mess because of sub-prime borrowers. They were subsidized by low balloon mortgages, and no money down, which on marginal income, they could barely afford. The manipulation of oil prices drove them to foreclosure. Now the brilliant seers believe that only first time home buyers should receive a subsidy, which almost by definition singles out this same profile of people to receive a tax credit. Responsible home buyers who have the means and ability to move up and therefore really move the market are excluded. Democrats are all about special privileges for special folks. Whose going to pay for all this? Why the taxpayer who can afford to buy a home, of course. This is sure going to be one learning experiencee in inexperience and false logic.

Post #2 is where my husband & I are. We earn over $140K a year but when we calculate school loans and daycare costs (talk about inflated prices!!) houses listed for what they are saying is a "low price" of $400K to $500K - we live between 128 & 495 belt - are still more than we can swing if we want to have cash to replace cars when we need to and save for retirement.

Who can afford these prices???

{From what dark crevice do people pull this nonsense? The US housing market is vastly overbuilt for current and future population trends. MA is losing population, not gaining it. And did you ever hear of a country called Japan?}

The US housing market is, but the poster wasn't talking about the US. S/he was talking about MA, where there is little building room left east of I-495. As for MA losing population, sure we are, but where? In the 413 area code and central MA. The Boston Metro area is NOT losing population, we are gaining in this area through immigration. Re Japan: so what? Clarify what their particular situation has to do with the MA housing market.

i agree with you michael; i'm tired of renting too and now is the time to buy; with a credit score in the high 800's, no car payment, no student loans, no wife or kids and a 401k in the $150K range, 30K in savings, and a bunch of tax credits and interest deductions, now i think is the time to buy. im shopping in the 400 to 500 range as well and getting the house of my dreams and staying there for good.
for all those struggling, i feel sorry for you. just remember, the fat cats on wall street stole youre hard earned money and left u for broke.i went off to house in the middle of nowhere, went a little mad, started writing songs to myself, and at the time this is the probably the most personal song that was ever written, it is called life for rent...i went off to house in the middle of nowhere, went a little mad, started writing songs to myself, and at the time this is the probably the most personal song that was ever written, it is called life for rent...i went off to house in the middle of nowhere, went a little mad, started writing songs to myself, and at the time this is the probably the most personal song that was ever written, it is called life for rent...i went off to house in the middle of nowhere, went a little mad, started writing songs to myself, and at the time this is the probably the most personal song that was ever written, it is called life for rent...i went off to house in the middle of nowhere, went a little mad, started writing songs to myself, and at the time this is the probably the most personal song that was ever written, it is called life for rent...i went off to house in the middle of nowhere, went a little mad, started writing songs to myself, and at the time this is the probably the most personal song that was ever written, it is called life for rent...i went off to house in the middle of nowhere, went a little mad, started writing songs to myself, and at the time this is the probably the most personal song that was ever written, it is called life for rent...i went off to house in the middle of nowhere, went a little mad, started writing songs to myself, and at the time this is the probably the most personal song that was ever written, it is called life for rent...

Thankfully I am buying the South End. Prices haven't and won't go down there.

Why does everyone get so verbally abusive to one another on this topic? Here is the deal; despite what each "class" of people want what, the decision to buy a home is strickly a personal and individual one. It is not bad on homeowners for wanting more money for a home than it is worth, or bad on buyers for wanting to spend less than a house is currently worth; because it doesn't matter what you want. The market is going to do whatever it is doing despite your threads of wishing and whining. And on a personal note, I am not buying today because I think it is a big mistake. And every single realtor and even some friends I talk to are telling me I am making a mistake by not to buy NOW. But ultimately, my frineds have no friggen idea what I should be doing with my money, and realtors only want to take a chunk of my money for themselves. So I say who cares what they think. I am not buying because deep down in my gut I KNOW it is a big mistake. I could care less what someone who will profit from my decision to buy thinks, or someone who knows nothing about my financial situation thinks.

Today, I save over 2000k a month by not buying....yes....2000k goes straight into the savings account every month. That is not because I am unamerican or less of a human for not owning property. I have NO ego about that. I love where I live. I am not interested in sizing someone up based on whether they own property. I just happen to think that my money is better off in my account rather than in repairs, taxes, insurance etc.... I have made a decision NOT to buy because it doesn't make financial sense to blow that extra money on a crappy house that I don't NEED to own when I could save it up and wait patiently until prices make freakin sense. Then have some serious cash to put down only bettering my financial stability in the future. And anyone who wants to tell me I am wrong is free to do so...but I am not stupid enough to care.

Post #34, I too have been looking in the South End. I rent there now and have been watching the area gentrify at a rapid pace. Tremont street is undergoing a huge transformation. As soon as those newly renovated storefronts fill with businesses I believe property prices in the area will shoot up in value.

Just renewed my apt. lease for another year. Prices are now coming into my range in crappy neighborhoods. Hopefully they will come into my price range next year in nicer neighborhoods.

Main reason? Unemployment is a lagging indicator. It will get worse before it gets better. Kerry is a buffoon for pushing all those shovel ready Kennedy projects. Yes things will get better but not within the next year. The $8K tax credit is interesting, but nothing more. If it were 10% of the cost with no upper limits, then there would be major stimulus of the housing market. 10% up to 80K is relatively meaningless out here.

I would just like to point out that just because a particular person cannot afford a particular house in a particular neighborhood doesn't mean that prices are too high.

Also, those people who believe that median home prices will decline further are correct. They are correct because there is a lot of homes in need of MAJOR upgrades/repairs/maintenance, and these homes will continue to decline in price because most first-time home buyers don't have the cash to fix them up. On the other, in some towns in some price ranges there isn't many updated/well-maintained homes on the market.

So if you're interested in a major fixer-upper, you probably can wait a while for a better deal (be sure to be pre-approved for a rehab loan). The more worked needed the more potential for return on investment.

If you want something in move-in condition, you're going to be disappointed if you are expecting much more in the way of median price declines.

Finally, national, regional and statewide housing data may be useful for economists, but it is close to meaningless to the individual home buyer. Sales and median price on the local level are what is relevant to the individual home buyer.

this blog is full of people from class C. They will never own a home. If I had listened to these naysayers back in early 1998 My net would be 400k less today.

Don't fool yourselves, the South End will crash as hard as anywhere. No place is immune, not Bermuda, Hawaii, Monaco, and sure as hell not the South End.

Hersh & Meg - Smart move!!!

The South End has proven itself to be absolutely bulletproof in this market. Totally immune!

Prices in the South End continue to escalate. Buyer in the know realize that it's all about location location location. And right now, the South End is the "It" neighborhood. Everyone wants to live there. With its high-end shops, restaurants, charming brick sidewalks and beautiful Victorian rowhouse architecture, who wouldn't want to call the nabe their home? It's one of the most highly prized tracts of land in the whole United States, if not the entirety of the western world.

So if you're looking for a safe place for your money, and/or are considering a can't-miss investment opportunity, the South End is the place to be.

Great time to buy!?!? People are losing jobs left and right, and the federal government has the housing market on life support by giving easy credit to first time buyers. The prices are still ridiculous. Once the first time buyer market dries up we will see real market correction.

Interesting new data from Warren group. I selected for some high end and some middle of the road and some low end towns within 128.

Median Price: Jan - Mar (year over year)
Arlington: 450 (equal to 2006, up from 2007 and 2008)
Cambridge: 435 (down from 2008 and 2007 and 2006, back to 2005 levels)
Winchester: 560 (down from 2008, up from 2007)
Downtown Boston: 552 (flat from last year, down from 2007, up from 2006)
Somerville: 405 ( down from 2004/2005, up from 2006, 7, 8)
Wellesley: 687 (_way_ down from all years back to 2003)
Medford: 326 (down from high of 417, back to 2003 prices)
Stoneham: 330 (flat from last year, down from high in 2005)

Conclusion: Some places prices are up, some down, many are flat. Maybe not enough data in some locals. What will happen in the future not enough data. However for some of you looking for price reductions to hit 0 % year over year, that has happened in many locations!

What is happening in the housing market is a massive re-pricing/correction of way out whack housing prices. Home prices are not going to recover to anything close to what they were at their peak over the next decade. In fact, ones prices stabalize (another 20% or so to go at least) they may hover around those levels for years, especially if the economy does not improve. People are going to buy what they can comfortable afford, most likely having to put down 20%. Do the math, we have a long way to go before housing bottoms.

#36 Sarah’s comments are a great example of clear thinking before making a life changing purchase. She is not making the mistake so many of us have made during the housing or dot com bubbles. From what I’ve read on these blogs and then checked out online, all the foreclosures that had been bottled up during the recent moratorium will be coming onto the market now. That being the case and as a consumer looking to make such a large and expensive purchase of a home, I want to see over the next 6 months how this will affect pricing, let alone how these properties.

I have both family members and friends who live in several high end and expensive towns with great school systems and many of them used their homes as piggy banks to keep up with the Jones’. For the past 2 years, some of them have been living on the edge and are now in pre-foreclosure. It pays for me to take a wait and see attitude, for my ignoring all the optimists shouting that now is the time to buy, another 6 months is not going to cost me anything and I can afford to do so. There is no way that the housing market is going to rebound again – as it once did – during the next 12 months. We will always have unrealistic sellers and Realtors taking a listing whether or not it will sell for free publicity. We will always have buyers who always pay too much for a home in any market, but I need to see how this hidden inventory of foreclosures will effect my purchase decision.

Great time to buy, people are losing jobs left and right but thats no problem, someone will bail you out. Someone forgot to tell some of these sellers that the housing bubble is over and we are in a deep recession. The only thing keeping prices high are the first time buyer FHA loans. The government needs to pull the plug and stop propping house prices.

My basic rule of thumb for determining whether a home is a good deal is simple....would it cost you less money per month if you buy than if you rent you should buy the place! We also need to bring back the old equation of taking your gross income and multiplying it by three.....this amount is what you can afford to buy....simple isn't it!

Please notify President Barry Obama that Nick has a crustal ball and can predict the future

I highly recommend a book "Sell Now!"by John Talbott, Lecturer in Real Estate at UCLA, written in early 2006. Talbott predicted everything that has happened and more to come. Prices must fall to the levels of 1997-98 in order the housing bubble created by the banks' Ponzi schemes has fully deflated. Low income buyers had nothing to do with this, sorry right-wingers...try not to have your Type-A personalities heart attacks over reading the truth. Alt-A mortgages are now defaulting as predicted. These are not sub-prime, these are prime borrowers. Ask your narrow-minded selves why THEY are defaulting? Maybe Rush can explain it to you, or Howie Carr, or Sean Hannity. They know everthing.

seems to me that people are still not making the mental adjustment to the fact that owning a home is just that -- owning a home. not an investment. not a way to make big bucks. not a way to destroy families. not a way to stick it to sellers. not a way for buyers to make out on a "great deal". a HOME.

get prorities straight -- and STOP SCREAMING AT EACH OTHER. if you want to own a home, then own it -- the value will go up and down, it is not a bank account or credit card. if you don't want to own your own home, then don't -- sometimes renting is the right choice. but stop passing judgment. these blog posts are getting sickening.

Well duh. Of course it's the first time home buyer that is going to "rescue" the market. A transaction requires a buyer and seller. First time home buyers (and those buying a second home, rental property, etc.) are the only real demand. They are the only ones who effect the supply/demand dynamic. Otherwise, it's just homes trading hands between current homeowners.

First time home buyers played a huge role in creating the real estate bubble and the market will not see any type of a rebound until first time home buyers come back to the market. The problem is, we will not see nearly the amount of first time home buyers coming into the post bubble market. Remember all those renters making $20K that decided to buy because anyone with a pulse could get a loan? Those buyers are all but extinct.

"House prices here will not continue to fall year after year after year, simply because in the long run, there is a housing shortage with few places left to build. "

Really? Than why did places such as Arizona and Nevada, with their vast tracts of land see larger price appreciation then Massachusetts, with our lack of land?

I've said it before and I'll keep saying it: lack of land in Japan has not prevented the country from experiencing 20+ years of real estate price deflation.

#40, What naysayers are you referring to? In 1998, the bubble was in its infancy. In most cases, buying in 1998 probably made sense financially. Back then it didn't cost much more to rent than it did to buy. And 1998 or earlier is where prices are headed.

You must sleep well at night knowing that your $400K in net worth is tied up in a single asset class. An asset class that is going through what will wind up being a collapse. Might as well go out and buy a stock portfolio consisting of a single stock.

I sympathize with you Chloe. I really do because I think the personal angle is mostly ignored by the investors on this blog and it was big part in our personal decisions these past months.

I bought in Feb. 2009 and got a great price buying in my first choice neighborhood, Brookline. If I look at today's prices and imagined them dropping 30-50% I'd still be priced out in most cases--we really couldn't go above $375K, get a minimum of 1500 feet in our neighborhood, and still be able to be comfortable financially. For my P&I, taxes (and I don't have the residential exemption--yet), PMI, HOA fees, and parking rental, I pay $2800 a month for almost 1600 square feet in a duplex condo in Brookline. I can anticipate that dropping further when I finally get my residential exemption in 2010, since we moved into a vacant property--even so, we afford it fine now. We have student loans, but not much, and no car payments, although a new car is in our future in the next year.

To rent a similar home I'd pay the same or slightly more in my neighborhood depending on the build year and condition ($2500-3000). I know this because I am now working as a rental agent part-time and am getting my license. It is extra income to fill our savings account again and a possible job transition for me when we start our family as the flexible schedule would be a huge help with childcare costs. When the market is improved and I'm more experienced maybe I'll get into sales, but right now, I'm happy with rentals which are very, very busy.

This past weekend I took pics of an apartment in the North End that was in a basement, 3 beds, 1 bath, and 1000 square feet and the rent was $3100 a month. No parking, although it had heat and hot water. That's more than I pay to own and for less space, less modern, etc. And that price isn't exactly out of the ballpark for what's offered now. I see plenty of places in the good school districts going for very high rents and people are renting them.

Lastly, in the few short weeks I've been working I see firsthand how problematic it is to find de-leaded apartments in good locations. I see a lot of people who tell me they want to buy in a year or two, but they need a suitable apartment in Newton or Brookline in the meantime. Easier said than done for space, condition, etc!

Since I want to get pregnant in August/September, the last, last thing I want to be doing is dealing with all that--possible hostile landlord, raised rent to get us to leave, more moving after that. So when the right deal came along, we took it. And so far, no regrets.

#49 No Jay, none of us have a crystal ball, we just have a basic understanding of economics and a whole lot of common sense. It's that basic understanding and common sense that allowed us to realize back in 2002-2003 that real estate was a bubble and to know now that even after home prices have dropped, they still have much further to fall.

I just bought. In my case the total monthly cost (mortgage/real estate tax/condo fee) will be $110 more per month than my rent. That's before any mortgage interest deduction savings on my taxes. The little condo is in good shape (needs cosmetics). The neighborhood is not the area of my city I imagined I'd buy, but it's still decent. I did not feel comfortable spending what I was approved to spend. Sure, I think my job is safe, but I'll bet a lot of people who got laid off thought the same thing. My mortgage guy told me he thought I did the right thing by being cautious in my purchase price. And if I do lose my job, I'll rent out the second bedroom to one of my laid-off friends looking to cut their own housing costs.

Median housing prices are already going up in most areas of Greater Boston and the suburbs. Those of you who are/were waiting for them to go down even more have already waited to long but I suspect you never really had any intention of buying in the first place or you would have done the proper research through the proper channels. Better luck in another 10 or so years for you!

Every one is commenting on the $8000 from the feds it is not $8000 ITs 10% OF The purchase price up to $8000.Check it out