5 Responses to “Moving to a new city: own or rent?” »»

1. Chris
   Comment by Chris | 06/27/06 at 9:18 am

   John-

   My wife and I just

   moved here from CT a few months ago, and we completely agree that renting is the way to go, at

   least for a while. We are currently familiarizing ourselves with the different neighborhoods in

   the city, because we’d like to buy this fall/winter. I can’t imagine having bought something

   right away, (1) because we were still in process of selling our house in CT, and (2) we didn’t

   want to get stuck in a neighborhood or building that we would end up hating.

   On that note,

   I’m an avid reader of your blog, and I find your posts to be very helpful in explaining the

   different neighborhoods and the new projects going up around the city. Keep up the good work!

2. Tom
   Comment by Tom | 06/27/06 at 11:38 am

   The Wall Street

   Journal has a story about moving into a new city, and whether to rent or buy, and the reporter says

   you should rent, because the market is too unstable.

   That’s

   ridiculous.

   But today’s Boston Globe says that the market is

   unstable, with prices and sales falling, and foreclosures doubling: “Mass. home prices drop 4% as sales fall: Agents say sellers are lowering

   expectations.”

   Isn’t this the strongest argument to rent now? Will prices stop falling

   as interest rates continue to rise?

3. Tom_v
   Comment by Tom_v | 06/27/06 at 4:13 pm

   John:

   I second your opinion on Renting! Absolutely, get to know the area first,

   and scout out which neighborhoods you like. It’s just like when you visit somewhere you just know

   if you can see yourself living there or not.

   Tom:

   I believe that the home market will

   stable off, not immediately but within the next couple of years. You should also

   consider:

   - that historically the rise in home ownership has gone up, and i believe it will

   still climb as house prices go lower.
   - that when this survey was taken the housing market in

   the region was becoming saturated; too many buyers and not enough listings for those particular

   buyers. Especially in the south end where there were a surge of condo sales in 2003-2004; when

   they were still somewhat affordable at the time for the location.
   - Rates were still under 6% at

   the time and value of homes were still rising but slowing down.

   You will see that in a

   couple of years the real estate market will pick itself up again once the market

   stabilizes.

   Foreclosures are usually the end result of bad financial advisement to those

   seeking an immediate home but couldn’t actually afford to live in one. IE:

   -People who put

   down 0-5% on their downpayments.
   -People who did non-disclosure mortgages.
   -People who went

   with an Option Arm (1% deferred payments) and other variable rates, but now can’t afford to make

   the payments on their refinanced rate.

   You’ll see that a lot of people who forclose were

   the ones who re-financed about 3 years ago when the rates were “historically” low.

4. Anon
   Comment by Anon | 06/27/06 at 9:20 pm

   Foreclosures are usually the end result of bad financial advisement to

   those seeking an immediate home but couldn’t actually afford to live in one. IE:

   -People

   who put down 0-5% on their downpayments.
   -People who did non-disclosure mortgages.
   -People

   who went with an Option Arm (1% deferred payments) and other variable rates, but now can’t afford

   to make the payments on their refinanced rate.

   You’ll see that a lot of people who

   forclose were the ones who re-financed about 3 years ago when the rates were “historically�

   low.

   The Boston Globe reported that 75% of all Boston buyers in

   this 2002-05 period fall into your “foreclosure” category, i.e., ARM and IO loans to purchase, so I

   hope that they all don’t end up in foreclosure before the market stabilizes!

5. Tom_V
   Comment by Tom_V | 06/29/06 at 2:59 pm

   Anon:

   I really don’t hope so either. But from my past experience as a

   consultant, I found that a large percentage of people who decided to go with an Option Arm or any

   sort of Variable Rate type loan was because they couldn’t afford the monthly expenses of a regular

   Conventional loan. Now the time has come where their Fixed period is up, the rates are higher and

   they can’t afford their monthly expenses.

   If every mortgage broker were doing their jobs

   properly, of course more than half of those brokers are no longer in the business, during the

   “historically” low rate periods, you would see a much less percentage of people in the “foreclosed”

   category.

Leave a Reply »»