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Now for the envelope: Spring market poll results are in

Posted by Scott Van Voorhis March 23, 2011 07:47 AM

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"What's your spring market verdict: Disaster or buying opportunity?"

That was the informal poll I took here last week on the outlook for the spring market.

I spent this morning tallying up the votes, following United Nations best practices.

Let's get the easy stuff out of the way first. And with one predictable exception, no one argued that it is a great time to buy. Shocker!

Basically, the comments broke down into two camps. The are the embittered hopeful, who are looking, but remain frustrated by home prices that still seem too high, and the perpetually wary who are awaiting another 10 to 20 percent drop in prices.


Here's what wary buyers, who are out there looking to one degree or another, had to say:

MarkCCC: "When a 3 bedroom 1 bath ranch in Natick with 1500 sq feet sells for $375k last week - I get very discouraged.

I am a 1st time home buyer, looking in the metro west area and I am not liking what I am seeing. Overall houses are coming down in price but I am not holding my breath for another 10-20% decline in this area.

I think things are being exaggerated on this blog. Fannie Mae and Freddie Mac are not going anywhere anytime soon. Banks may become more strict but 20% isnt gonna become a requirement. 10% down could happen, but that isnt going to send the housing market into free fall.

I'm thinking 5% decline in price, is more realistic.

The fact is 92-odd something percent of people have jobs in Massachusetts. There will be buyers and the bubble has burst. I'm on the - rocky bottom bandwagon, not the watch out below bandwagon."


BostonTenter: "We are still looking, but not hopeful for the "Spring".

It seems to bring out too many of the stupid FTHB's.

I know what I am willing to pay for a 3rd bedroom (we are currently in a 2BR/2B Luxury condo), and I am not budging from that number.

Its great that we WANT to buy, but dont NEED to buy, now.

IF we find a bargain, we will bite, but till then, we RENT."

semg: "I haven't seen the spring market show up yet, but the decision to buy or wait will depend on the prices of the houses up for sale. Anybody buying this year should expect prices to drop locally at least 10-20% over the next few years and factor that into offers accordingly.

We're still open to relocating to a better part of the country where housing quality is better, standards of living are higher, and prices have returned to be more in line with incomes, and we're keeping our networks and discussions active for that possibility too."

Now for the wary side liners, who held a big numerical advantage by voting early and often. Plus, they offered the best macro takes.

Lance: "House prices are falling 1% per month. Inventory levels (both real and shadow) are still very high. Mortgage interest rates are headed up, and political pressure is mounting to institute meaningful reforms in lending (e.g. requiring 20% down payments, eliminating or reducing the mortgage interest tax deduction, curtailing support for the GSE's, etc.) There is virtual consensus among analysts that house prices will drop 5-10% this year alone.

For buyers who plan to hold for 15-20 years, now is probably not a bad time to get into the market. For buyers in it for the shorter term, save your money and rent.

Fasten your seatbelt. It's going to be a rough ride."


kiop2003: "I don't think the spring market will be a disaster for sellers, nor a great buying opportunity. Every day it appears that we are moving further away from the eye of the financial hurricane and back into the path of destruction. The summer/fall time period through next year could get very interesting and bring about a new level of pain for the real estate market."

jamesincambridge: "I'm planning to wait another year, at least. In addition to the national factors Lance pointed out (still-high real and shadow inventories, rates that can only go up, diminishing political support for freddie/fannie/FHA and the mortgage interest deduction, increasing political support for 20% down payments), on a local level, in most towns, price/income ratios are still at unsustainable levels: it's a stretch for the median income to pay the median housing payment. Stretching was possible during the bubble, when people would divert their investment and savings into their housing purchase, but not so much anymore."


Finally, now it's time to recognize our distinguished award winners.

The lone voice of optimism award goes to JohnAKeith: "Two investor clients I'm working with have had differing opinions. One is happy with his monthly income off a studio apt in the Fenway. The other owns a two-bedroom on Comm Ave and is selling now, even though it gets a good monthly rent.

The one holding off feels prices will increase over the next year, making it worth waiting. The fear is, will interest rates go up before then, making the holding costs increase to a point it's not making any money.

For people buying in Boston, I can't think of a reason not to buy, if your timeframe is open-ended or long-term. We bought in 2006 and have never regretted it, even as the market slowed and the economy blew up.

There is a low inventory in most price ranges in Boston, so a seller may have an opportunity here. But, most owners are probably like, "Why bother?" They have a home they can afford, the city is still a prime place to live, so they'll stay put until life changes prompt them to sell."


And the thinking outside the box award goes to artiefufkin:

"Some of the very un-trendy areas inside 128 like E. Boston, Revere, Everett, Lynn, Malden, etc. have really corrected, and may be near bottom... Your mortgage payment + taxes on properties in these areas is lower than what you could rent them for (and I think it's fairly safe to say that rents will generally increase in the next 5-10 years). So if you really want to be a landlord, this might be a good buying opportunity. If the Gen-Y and younger crowd begins to defect from the Gen-X-trified areas due to their high prices, some of these areas may even fundamentally improve a bit.

For everyone else (from an investment perspective, anyway), I can't see any reason to hurry."


This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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