Housing bubble?

The Globe notes the re-emergence of escalation clauses, in which people desperate for a given property agree to pay whatever the highest bid is plus a bonus.

Neighborhoods: 

Topics: 

Free tagging: 

Comments

$597,000

They paid $597,000 for that crapbox of a house? And people are worried about building more housing? Yeah, worried about not immorally taking advantage of everyone trying to buy a home and lining their own pockets.

up
20

It may be a result of a kind of hedge fund play.

By on

Large institutional investors were chowing a lot of stressed and shadow inventory in the past two years.

It's under deployed capital looking for a way to squeeze a few more percentage points.

As trends go it has been more prevalent in the various sun belt states hit hardest by the 2007 implosion.

It'll be interesting to see how the play pans out as this sort of bundled small property speculation is a relatively new thing. But banks are thrilled to clear all this crap off of their balance sheets.

It seems like the early adopters are already beginning to exit, which suggests that it may become another sucker trap.

up
15

Vegas Maybe

By on

Arizona, Florida - sure. But I don't think they were buying much/any real estate around here. We never saw the bubble or the crash those places did. I do know a lot of small investors that scooped up properties the last few years - but haven't heard about much institutional investment. Has anyone seen Black Rock or the other big players in this segment buying Boston area housing?

up
16

I can't say with any certainty..

By on

But there was a fair amount of localized stressed inventory in borderline markets along the Merrimack Valley and other candidate areas for crap loans where the numbers are right.

The immediate Boston area was insulated to some degree but the margins and the rest of the commonwealth, Fitchburg, Pittsfield, etc were closer to the Arizona/Florida model.

It's all about moving the bundled financial instruments that blew up off of bank portfolios where the distress deal involves large buckets of properties.

It was clearly happening in Southern NH last year and is somewhat scale-able.

As long as the back of napkin numbers work, it can happen anywhere.

If you check stats and see a lot of purchase activity without a lot of the correlating loan origination you'd see for single home buyers, then it's a good sign of an investment play.

up
16

How do you know its a crapbox?

4 bedroom split ranch with what looks like a finished basement in a decent town should go for at least 500K.

No one is forcing anyone to buy houses at prices like that.

up
35

Maybe

Maybe around here it should go for that, for the simple fact there's not enough housing. But taking one look at that and considering where it is, I really don't see that much value in it, in and of itself.

up
21

You must know a lot about

You must know a lot about this house to assess it as a "crapbox". And what exactly is the "immorality" of accepting an offer made by a willing buyer? Should the seller have said "Oh, no, that's too much, give me 500k and we'll call it square"?

up
31

Reread

When did I say it was immoral to sell a house? I think it is immoral to block someone from building a home on their land out of your own self-interest.

up
21

Try writing more clearly,

Try writing more clearly, then. This article isn't about blocking anyone from building anything; it's about one couple buying one house.

up
28

Yes, but

I realize that, but I just am not seeing the value in this house. I'm imagining what the interior must be like. And I just can't tally up such a price tag. Part of the reason one reaches such values is because of property owners trying to stifle development at every opportunity. I just think it all seems insane.

up
12

I recently sold my house in

I recently sold my house in Middlesex County and got six offers on the first weekend. So this doesn't really surprise me. Yes, prices are out of control but there's nothing outrageous about this particular price IMO.

Promoting higher-density housing is an interesting idea. A lot of people would feel that it would hurt the "feel" of a town like Reading. It would probably hurt people's property values. And since it would probably result in a lot of young families moving in who need spots in the public schools for their kids. So it's not merely as simple (by a long shot) as just saying "Let's build more housing."

up
21

About this price??

By on

I think the problem is that $597,000 should get you a lot more house...or maybe we're talking about two different frames of reference.

In the middle of the Baltimore/DC/Annapolis corridor, for 10% LESS, you can buy a 5-bedroom, 4-bath, 4500 sq ft house on a half-acre lot that was built only 8 years ago.

http://www.zillow.com/homedetails/1006-Seacrest-Ct-Glen-Burnie-MD-21060/...

EDIT: BTW, the only thing in Reading even remotely close in size is $900,000 and was built 20 years earlier (it does also come with about 0.75 acre more land too, but that doesn't justify doubling the price).

Maybe that doesn't match reality here or in Reading, but I think that's the point. The reality for a lot more people is that housing shouldn't cost $500,000+ for a 30 year old house with 4 bedrooms and no land. That should be the MIDDLE option, not the half-million dollar option. If that is the case because there isn't enough housing here, then build more housing or higher densities in more places.

Central Maryland isn't exactly wide open prairie land...yet they seem to be much more reasonable with their price tags than the Metro Boston area.

up
19

Commuting time matters

That house you noted is in the middle of a lot, but not particularly close to much of anything. You could move someplace like Clinton, MA and get the same effect.

It really isn't comparable to Reading, which is near two interstates and has a commuter rail line into Boston.

If you look at the places that are currently booming, they are where people can get to a lot of jobs in 30-40 minutes in a variety of ways. They also, until recently, topped the "oldest cities and towns" lists for their large proportion of elderly.

I could find you someplace in our own exurban areas with comparable prices to what you found here - but that wouldn't make it a convenient place to live.

up
21

Not accurate

By on

From the linked house, it would be a 20 minute drive to Baltimore, 20 minute drive to Annapolis, and about a 30 minute drive to DC Metro in Greenbelt. From Reading, it's about a 20 minute drive to Boston.

If you're allowing for 30-40 minutes, that entire part of Anne Arundel County can reach pretty much any major area of work in 40 minutes. And there's the MARC train for commuter rail, the Light Rail for Baltimore access and the DC Metro to get into DC if you don't want to drive the whole way.

The state highways in central Maryland do a better job at staying uncongested and at higher speed limits than around here, too. So, you don't have to be under 15 miles away to get there in 20 minutes.

up
21

And 20 minutes later

You're in Baltimore.

Now what?

You want a house 20 minutes from lovely downtown Worcester, you can get that cheap too.

It doesn't matter how cheap the house is if it isn't near a job that can pay for it. And it doesn't matter how expensive the house is if it is near a job that can pay for it.

I agree the house looks crappy for near 600K and I wouldn't want to live there, but there are probably plenty of high-paying jobs a short commute away.

up
23

that, and ...

You won't be able to drive that fast into the DC area at rush hour.

No way, no how. It is rated at 50-60 minutes off hours ... probably 2 in DC commuter traffic.

The public transit? You have to go nearly into Baltimore and back out to get to DC, taking 2-3 hours.

Baltimore is close, granted ... but where are the jobs?

up
19

Not even close

By on

You have no idea how to get around the Baltimore-Washington metro area. None of that requires 2 hours. Even driving to Tyson's Corner (on the other side of DC) doesn't take 2 hours from Glen Burnie during rush hour.

up
15

Exactly. This is not an apples to apples comparison.

By on

Baltimore and Boston are not comparable in that respect. That's pretty far away from DC and anybody who makes that commute will tell you it's a bear to get to the district from that direction. If you're going to make that comparison start with outer Arlington/Fairfax counties.

up
19

Hahahaha ...Reading.

By on

I grew up there. Awful.. banality of evil meets Blue Velvet.

In 1972 or so it was the heroin capital of the North shore. People would drive down from Lawrence.

And that was when it was good.

My family was there going back to the 20s.

It had wonderful nature aspects before mass mcmansion building flattened everything.

I watched its small town gov transition from old waspy burghers to crooked developer shills that are as common here as starlings.

I stop there now and then when I run the Haverhill lne down from Andover to get a bus at the Depot, the 1972 scene of muscle cars and 125 dollar 25 sack bundles of dope sold in such profusion the ground was littered with the little rubber bands.

Now it's another dolled up mall culture pit full of sad chumps.

up
17

Middle class housing/two income households

By on

Around here a cop and a nurse - not picking on anyone in particular - just using an example of two traditionally middle class jobs that can afford that kind of housing - can easily make a combined $250k.

You can qualify for about 30% of your income - or $75k in housing payments annually if you don't have significant other debt. Take out $1000 a month for taxes and $3k for insurance and that means you can get a mortgage close to $1 million if you have good credit and can come up with the down payment.

So around here - a cop and a nurse or a teacher or a firefighter or a plumber or an electrician or (fill in the blank) - who might traditionally live in a home like that - can bid it up to over $1 million and still not max out. Any surprise middle class housing goes for this kind of money?

I know there's been a lot in the press about how badly the middle class has been doing - but when they can afford a million dollar home - not sure that's the case around here.

I think the bigger issue as Patricia points out is the rise of two income homes both making significant salaries. A study (I think from Harvard) came out recently and pointed out more educated people marrying each other and both working/making good money was one of the reasons incomes for the top earners were rising so much faster than those further down the economic chain. used to be rich (usually guy) would marry a non-working spouse. Now two rich people marry each other and household income skyrockets. This could be another manifestation of that.

up
20

You're mad

By on

In what world is a cop making $125k/yr, let alone a nurse?

The highest paid cops in the city barely made that much and most of those were superintendents and the commissioner.

Nurses are averaging around $90k tops based on my web searches. Together, they could make $180k combined.

up
27

OT/Details

By on

those are salaries - you can make a A LOT more than that in both those jobs with OT - plus a lot of nurses have 3 day workweeks (granted 12 hour days) - but leaves them a lot of time to work a second job if they wish.

About 950 people on the BPD payroll pulled down $125k or more last year.

My understanding is you are right - on salary alone - never would have debated that - but add in OT and you can make some very good money at those jobs.

Hey - even if we take your money - you are looking at a $650k mortgage - add in the down payment and we are at a $800k house.

up
21

Have to back Stevil here

Cops routinely make $100K with overtime (don't have the links, but the data is out there). Base salaries in MA are around 60K ... with time and a half and 60 hour weeks that pushes 100K.

In a market like Boston or other large city, registered nurses make at least $60K a year to start - often a lot more with seniority, supervisory duties, union contracts, extra shifts and overtime.

So, yes, a bit exaggerated ... but not much. Top end cops and nurses do make that kind of money. Most such pairs would combine for over $150K, easy.

up
21

Take it from me...

Mortgage underwriters take into account base salaries, but there are plenty of cop/nurse families making around 200k. Oddly enough, none of them have 1 million dollar homes that i know of except for those cops who bought houses in 1980 in Newton or Brookline for 50k at a 12% interest rate. Those houses are worth a million dollars now.

up
20

$250K is a LARGE salary

By on

Even for 2 people.

You have skewed your example. The missus and I both have jobs that require an education, we both work full time, and our combined salary is about $125,000. Mean family income is $116,663 in the Boston MSA. Sure, you used a cop, whose overtime pay can be a lot (though you are overstretching with the nurse.) Why not make it the Huckstables, with a doctor and a lawyer? Or maybe an investment banker and a bigwig at a tech company?

The reality is that the latter 2 couples are the problem for the cop and the nurse, and would be the problem for couples like me and the missus. At the end of the day, income disparity is killing people trying to live here.

up
15

So, Markkk

By on

Why didn't you become a cop or firefighter?

48 hour shifts where they have to be available every minute ...

Bitter and jealous, much?

Probably because if you are a

By on

Probably because if you are a white guy and not a veteran and your dad isn't a cop or a firefighter, there's really no reason to bother applying.

up
12

Not true since about 1992 Dave.

And having a parent has never had anything to do with it unkess that parent died in the line of duty.

Boston has accepted transfers for the first time in the history of the department a few years back because they didnt have enough qualified candidates. A white male can get a 90 on the entry exam (about a 700 SAT score) these days and expect to get a job. Back in 1990 you would have been correct, but more so for the fire test.

up
20

You're aware you're attacking

You're aware you're attacking Markk on a point that other posters including SwirlyGirl seems to be in alignment (and when does Markk and Swirrly ever align) and there's other post below backing with data as well?

up
14

Puzzling

By on

So, what changed between 2012 and 2013? Go to your link, choose the Boston 2012 database (upper right box) and sort the total salaries. Not even close to the same. I'm having a hard time understanding the disparity.

up
13

Look at it again Kaz

Looks like the "total" and "base" salaries are mixed up for 2012. You can also sort it out by just the police department and see the salaries.

up
15

250k two-earner in those fields is the very top of pay scale

By on

and they're likely to be very close to retirement - maybe pushing 60 years old...

in those fields, two-earner household first time buyers are making maybe just barely 6-figures - that puts them in the 400k-500k range (if they have no other debt).

up
19

$250k per family is not a

By on

$250k per family is not a working class salary, friend. The average family income in Lincoln, MA is only $200K and that's one of the wealthiest areas of the country.

up
10

didn't say that

By on

Said that it's pretty easy for two income household with traditional middle class jobs to make $250k in this area. Didn't say everyone makes that or that it's even an average - but a lot do. I know many of them - plus many that EACH make that kind of money, Plus a lot where ONE spouse makes that kind of money.

There is a limited number of single family homes, especially as you get closer to the urban core in the "nicer" towns - however you define that. All those people are bidding for a scarce commodity driving up the price. If you make less than that - there are cheaper towns further afield or with lower rated schools, but there are plenty in that range driving up the price of single family homes - and as Patricia noted - makes it REALLY hard for a single income household making $50-$60k to compete.

Glen Burnie is no Reading Kaz.

Look at housing in Holbrook, Avon, or Weymouth and you might find some 4 bedrooms w/ 3,000 sq. feet similar to Glen Burnie.

Two pretty different towns.

up
17

Two strikes down

By on

Still swinging. He won't give it up. He won't back off.

up
16

I think the problem is that

I think the problem is that $597,000 should get you a lot more house.

What you think doesn't actually matter. If one couple was willing to pay 597k, and another was apparently willing to pay 592k, I'd say that's the market value for this house. Scary, perhaps, but your personal opinion of what that much money "should" buy is worthless.

up
18

Not true

By on

Well, maybe in Reading where I don't live, you are right. But I vote and want $597k to get someone a lot more value. If that means we need to change laws to promote better and more development that provides a greater supply to satisfy demand and reign in costs for housing, then I will vote for politicians with the best plans to do just that.

My personal opinion matters if there are enough others like me that want the same thing.

up
15

Where does this happen exactly?

By on

If it's zoned, you can build any time you like and nobody can stop you

Now if you are arguing that we should rezone to increase density - you have a legit argument.

However, for the most part, that isn't going to get a lot of housing like this built in Metro Boston - simply not enough land unless we decrease lot size - and THAT's not going to happen fast. Targeting increased density will get some apartments/condos/multifamily built - but that may actually increase the price of houses like this. Increase the population in total - if the same percent wants a single family home - you'll probably see prices get bid up even more.

Granted - $600k for a house like this seems high. My parents live in a neighborhood of homes like this just outside of NYC and it would be a stretch to see anything go for $600k in their neighborhood - granted property taxes run about double there what they do up here which tamps down resale values because you spending more on taxes means you have less to spend on your mortgage.

up
18

House and community

By on

You don't just buy the house - you also buy the schools, the community, the commuting amenities.

That's why Reading, Woburn, and Medford are so ridiculous right now - convenient, decent schools, comfortable, and still more affordable than all those upscale W towns.

up
23

Yep.

By on

No one buying in Boston, no sirree!

Have you looked at the MLS recently? Nothing in JP even stays on the market for more than a week.

up
14

Not in this story

Nobody in this here particular story (that I know of, at least). It was a rather stupid comment, but I guess reading it at that moment kind of set me off for a semi-related rant.

up
20

Looks to me like strategy

By on

Looks to me like strategy like this may backfire big time. What if the highest offer bid has put contengencies that seller would not be able to meet OR does not want to? And therefore your second lower offer would be accepted without this clause...but since you do have the clause, you're going to overpay :)

up
15

So...

By on

What makes me, as the seller, not collude with my brother-in-law to make an absurd offer and then split the proceeds with him when the escalation clause tops that by $5K?

I mean, you've basically told the seller "Hi, I'm Desperate and will pay anything, nice to meet you!".

up
27

Illegal?

By on

Shill bidding is illegal on eBay? It may be against the site's rules, but I'm not sure what the law says on the matter.

up
14

Good faith bargining.

A lot of real estate transactions are protected by good faith type agreements and agents are bound by various ethics rules.

It might be harder to investigate the fraud though but I'm betting the clauses have something in there to protect the buyer.

One of the better reasons to find a buyers agent. I've bought real estate without a broker and you can better negotiate (with a good real estate laywer) terms with the seller, even telling them you will get an agent if the price is right ( basically taking a chunk out if the sellers agents profits). I have a good friend who does real estate law though so that obviously helps.

up
18

Sad news for someone like me.

By on

Sad news for someone like me. I've been looking for the past year. It is very difficult trying to find something affordable. I probably don't need to tell anyone how difficult it is to become a homeowner on a single income family. I make too much for any kind of "break" and not enough to keep up with these people.

This is like a kick in the chest to me to know that any offer I make in the true hope of a honest purchase is automatically out priced.

up
36

Then make such an offer yourself

By on

If you REALLY want a place, be ready to win the bidding war.

Supply and demand. Basic capitalism. You'll be outbid anyway.

up
13

Be patient.

By on

I went through this when I bought ten years ago--post-divorce and got outbid again and again by couples with a lot more wherewithal. It was so frustrating. I definitely readjusted certain expectations but also kept an ear to the ground, looked on CL, talked to friends, etc. and eventually found a great place that I loved. Good luck--it will happen eventually!

up
23

You becoming a Warren voter, then?

By on

She's one of the few in Congress who is trying to help people in your situation.

Most Republicans that you adore? They will politely lie to your face about caring, and then continue to make it more and more difficult for you to find something.

Specifics?

By on

I haven't seen her doing anything to lower the cost of housing.

up
11

There's a lot of investor cash chasing the housing market

Both local and foreign, especially Chinese. I got outbid on many homes in my recent stint in the market by people bringing well-above-asking, all-cash, no-contingencies offers with flexible closing dates, which is tough for many ordinary home buyers to compete with. It's very easy to sell (my old home sold in a day), very tough to buy at the moment.

up
21

Not necessarily investors

By on

I rolled money from my parent's estate into a cash purchase of a condo.

Why have a mortgage when you don't need to?

up
12

Not exactly true

I've noticed immigrant families saving up the cash and also rolling over gains from other properties.

Cash sales are more common now, even for owner occupied properties: http://www.marketwatch.com/story/nearly-half-of-all-homes-are-purchased-...

A fair number of these buyers are cashing out their equity gain on a larger house they no longer need - baby boomers with full equity buying smaller properties (not dying in them so their kids can buy a condo for cash).

up
16

The number of cash purchases vs. mortgage-backed

purchases was on average only 15% of all home sales, at least for most of the last 20 years. That figure has doubled very recently (last two years) and both the raw number (20% of all purchases) and the increase in cash sales (to 30% of all purchases) is largely attributed to investors, not home buyers intending to live in those properties.

up
14

mortgage

By on

Same argument for having a credit card. The answer is the same. C R E D I T

Having a loan and paying on it increases your credit score. Anyone who is a first time home buyer can tell you the wonders of what a home mortgage can do to your credit rating. You'll buy a home and the "Pre approved" credit card and HELOC offers come rolling in by the truck load.

Sure I agree why have something that you don't need but in the long run it may bite you in the ass, credit wise.

up
12

"Why have a mortgage when you

By on

"Why have a mortgage when you don't need to?"

This is a pretty stupid question. Everyone with enough money to not need a mortgage would probably pay cash. Unfortunately most of us don't have that luxury.

up
12

That's what I've been describing.

By on

And foreign investment is another element. The money we ship overseas for cheap Walmart crap comes back here to buy Harvard Square.

I wonder how historians will look back on this absurd abrogation of what once was self interest?

If you step away from your personal microcosm and think about it, what factors would drive lots of individual family home purchases?

Are loan terms easy and favorable following 2007?

Has there been some significant uptick in biz sector growth with people pouring in to buy stuff up with the ton of new 70k plus jobs?

If no, then you look elsewhere for the answer.

up
14

Not investor cash - Investment MANAGER cash.

By on

I can speak only about Brookline and some of the affluent W-towns, but here is my anecdotal observation from looking and from talking to lots of agents: in these admittedly high-end markets, every house is having a bidding war and most are being won by people in finance. This, of course, makes sense to me because when you're talking about bonuses in the hundreds of thousands or millions per year, what's another $100K?

I have asked, "what about doctors and lawyers?" One agent's reply: "Ha! They're so last century!"

Side note - friends in Westie just sold their house in less than a week (with only 1 open house) for ~$60K over ask. So yeah, so far as I am concerned, it's officially worse than at the height of the "bubble" a few years ago. The only hope of bringing things back to Earth are quickly rising interest rates and/or a big hit in the equity markets (each, of course, brining with them their own problems).

Grand Theft Portfolio

By on

Title of the book I'm writing. The money people make in finance for adding little or no value is sickening. In the end - you pay so much to the industry you end up spending 5-10 years of your life just paying for financial services. And people think medicine is expensive - SHEESH...

There's No Bubble Forming

By on

I don't think there is much to worry about. The logic is simple. The house that costs $597,000 is not a poor man's house. It is bought by the high middle class people. In fact, in the worst economic scenarios too these people didn't get the pink slip. During economic downturn they simply stopped utilizing their money to buy houses as they expected further slide in price. However, using 'escalation clause' signifies that this upper middle class section of the populace is not on the back feet anymore and are expecting a rising real estate market. That's why they are not afraid to park their money in real estate. There is no bubble in the market I think.

More housing news , don't

By on

More housing news , don't understand why they aren't going from Lansdowne to Comm Ave as well.....

Boston mayor seeks tax breaks for Fenway project

BOSTON — Mayor Martin J. Walsh proposed $4.6 million in tax breaks to spark construction of a $550 million retail and residential development that would straddle the Massachusetts Turnpike near Fenway Park.

A Boston Redevelopment Authority board vote on the financing is scheduled for Thursday.

The project known as Fenway Center has languished for years due to legal and permitting challenges, and the developer has struggled to generate enough funding to move forward.

"This is a positive partnership that's going to help to spur growth," Walsh told The Boston Globe (http://b.globe.com/1hAEaNs ). "The city is open for business, and we're going to work with developers on good solid projects that can be supported by the community."

Fenway Center would have residential and commercial space in five buildings between Brookline Avenue and Beacon Street. It would include 420 apartments, space for stores, restaurants and offices, and nearly 1,000 parking spaces. Plans also call for a farmers market and a bike-sharing station.

The project is particularly costly and complex because it requires construction of a $35 million deck over the Mass Pike to support its main parking garage and a 27-story tower with offices, apartments and stores.

"We are going to cover up the highway and build a new neighborhood out of thin air," said John Rosenthal, president of developer Meredith Management Corp.

The tax relief would be structured to help fund construction of the project's retail spaces, not its apartments, Rosenthal and city officials said. The deal would reduce the project's taxes over a six-year period during its construction and early years of operation. After its completion, Fenway Center is expected to generate about $5 million a year in taxes.

Currently, the property generates about $152,000 a year.

The tax deal needs approval from the City Council and state economic officials, in addition to the redevelopment authority board.

http://bostonherald.com/business/real_estate/2014/04/boston_mayor_seeks_...

up
11

Tax break

By on

yaya another tax break for a developer so he'll 'develop' property that already has a high value. /sarcasm

Corporate welfare at its best. Folks, if they want to build they will do so without the tax break, if they don't. fuck'em, someone else will come along and develop the property on their own. Its not like empty land isn't at premium in boston and we have all this open space to build stuff.

Tired of the corporate welfare. While we (Uhubbers) complain about cuts to schools, transit, local aid, fire department raises, etc etc... behind closed doors a 4.6 Million Dollar tax breaks will be given. That 4.6 million could be used elsewhere...

I'm sure I'll be flamed for this comment, I just don't care anymore. Tired of watching city services get cut while in the same breath we give mega corporations tax breaks to BEG them to build here. When as soon as the break ends, they bolt. (i.e. Fidelity, Evergreen, and the list goes on..)

up
24

more fuel

Considering this is coming from Walsh, don't forget that this kind of development is the bread and butter of the construction unions who strongly backed Walsh. It's an unholy alliance of developer money backed by financial instruments coupled with politically connected unions looking for projects to generate work.

up
10

agree

By on

Agreed. 100%

So essentially it is 'more of the same' when it comes to 'sweetheart deals' and 'tax breaks' for development.

Nice to know that whoever we vote for, it's just more of the same. Sigh

up
11

It's also the fuel for the city

By on

Not that I support this (just shot a note to my city councilor saying no tax breaks without proof it won't get built without the break - I used to ask councilors why the developer needed a break the answer was literally because the developer - including Liberty Mutual - said so....shakes head...face palm...head bangs on nearest wall...)

However, like it or not - this city moves on property taxes. State aid - flat or declining. All the other stuff like the little orange love letters the city leaves on your windshield or the permits everybody is SUPPOSED to get before doing construction - only about 15-20% of the budget and we are LUCKY if it goes up about the rate of inflation.

The city needs property taxes to grow about 5% a year to make ends meet. Many fixed costs going up faster than that and we still have to come up with 4% raises annually for most city workers.

The only way we do that is to build, build, build - if that gravy train ever stops - the city will literally grind to a halt as fixed costs and collective bargaining agreements swamp us. Not a criticism - it's arithmetic.

Like it or not - we have to build to survive - and it doesn't get said frequently enough - but one of the reasons we don't build middle class housing is because it generates about $3500 in taxes and if they have kids - $20k or more in education costs.

It's a pretty pickle we've got ourselves in...

up
12

Window

By on

Your whole argument goes out the window with one statement

However, like it or not - this city moves on property taxes.

So why GIVE tax breaks on property taxes when we need them to 'move'. We need them, and not to be giving them away.

See? Now my comment below makes total sense.. its total political BS that everyone is being spoon fed that this is WHY we need to do this. Because it just isn't true and will be proven time and time again.

Here's my comment again.

And for those who want to say "Well if it wasn't for the tax breaks nothing would get built". Did you ever stop to think about WHY this is?

Why develop land without a tax break when if you wait long enough the city will just give you a tax break to development. Corporations know this, it's the fools at City Hall that have yet to figure out this charade and why tax breaks for development just never work in the long hall (see comment above Fidelity and Evergreen and the ever growing list of companies that left MA after their job creation tax breaks ended).

up
10

don't look at me

By on

I agree with you. the exception are the projects that might not get built without the property tax break - granted, I've never seen one, but I'm willing to keep an open mind that some day that might actually happen.

up
11

air tax?

For most of the site, there's nothing there right now. Just air over the pike. That air isn't paying any taxes.

Isn't something better than nothing?

Nope

By on

I agree with that statement but it shouldn't the tax payers a DIME. I'd rather have the property sit empty than to give yet another sweat heart tax deal to some other corporation while the tax payers get the shaft again.

And for those who want to say "Well if it wasn't for the tax breaks nothing would get built". Did you ever stop to think about WHY this is?

Why develop land without a tax break when if you wait long enough the city will just give you a tax break to development. Corporations know this, it's the fools at City Hall that have yet to figure out this charade and why tax breaks for development just never work in the long hall (see comment above Fidelity and Evergreen and the ever growing list of companies that left MA after their job creation tax breaks ended).

up
14

kinda

By on

Yes and no. They sold to a chinese company.. they could have been forced to pay back as apart of their bankruptcy but no, the state doesn't do go after them. So they took the money and ran (or sold it to china)

up
10

Cost

My question is:

Should we consider not collecting part of something we're not collecting any of right now to be a cost?

As a tax payer living in Boston, does it cost me more to have construction in this empty space with lower than normal taxes or to have nothing, paying no taxes, in this empty space?

This is not a job creation tax break. It's a turning nothing into something tax break. By your analogy are you predicting that, once it's built and the construction tax break has expired, that it will empty out and languish empty?

up
10

" It would include 420

By on

" It would include 420 apartments," No one else seems in a rush to supply them. Wait till Lansdowne street connects to Kenmore square when they deck that air , The Red Sox and the Lyons group will own that . an entertainment district, maybe Izz Ott can shoe horn in a strip joint there!

Still....

There aren't a whole lot of empty new condos sitting around boston are there?

I'm with sock puppet. If there was enough interest from developers, there wouldn't be just air there right now. By putting something there (regardless of developement tax breaks), future retail, property, and income taxes should benefit the city more than an empty lot.

The only people that are getting shafted are the developers who didnt hold out for tax breaks on previous projects. I dont feel too sorry for those people.

up
12

Pete

By on

You just proved my point I keep making...

The only people that are getting shafted are the developers who didnt hold out for tax breaks on previous projects. I dont feel too sorry for those people.

Like I said, if corporations wait long enough, the city'll give you a tax break to build.

As far as the open space not being attractive. See my point above because maybe thats why nothing has been built yet. Corps are waiting for the tax breaks now rather than building without it. Why buy the cow when you can get the milk for free?

I think if we stopped all tax breaks, sure development would slow down to halt, but it would eventually start up again. Why? because We're a world class city, with industry, and a highly educated workforce, we're everything we would want to be to attract development (sans tax breaks).

up
10

LMGTFY is blocked....

... on the computer I'm using. ;~}

I googled "Does a brotha need a medical disability to get one" manually -- and came up with nothing.

Sorry

I don't get out of work until 6 or so...

(and it's a long way to San Rafael).

But that only relates to the 420 reference -- and it was the medical disability reference that was objectionable.

up
10

Strictly a pot reference

The dooood, brotha as in DudeBro, and medical disability as in medical pot + unlikely combination of being a pothead and affording such an apartment without some sort of public assistance, since excess pot can get in the way of employment.

I made the comment because the thought of an apartment building of all pot smokers struck me novel and funny, possibly with smoke billowing out like from Snoop Dog's limo.

up
10

It's an interesting market right now.

By on

The market psychology right now is actually kind of fascinating.

There are lots and lots of couples out there who are like us - 30ish, ready to start a family, and finally feeling somewhat financially secure after years of student loan payments & saving. We're old enough and lucky enough to have established careers before the economy collapsed and so are in a position to buy, but too young to have bought before the bubble collapsed and so waited longer than we might have otherwise to buy.

Go to any open house in Melrose, Medford, Arlington, Watertown, Newton, Somerville, or about a dozen other towns and you'll find it crawling with people just like me, plus investors, flippers, and looky-loos.

Meanwhile, most of the people who bought in 2000-2007 are thoroughly convinced they're never going to get what they paid for their home, and so they're just going to hunker down and stay forever, no matter how much it no longer works for them. I have several co-workers like this, and I keep telling them that now's their chance to sell, but they're completely unable to process that the market is back.

I don't know what exactly to do about it, other than to take our time, buy something we'll be happy in for 20 years, and not do something really stupid like use an escalation clause. But meanwhile, lots of people are doing stupid things, and that just makes it harder to be rational.

up
20

yep

By on

My husband and I had been looking for the last year and only just *finally* found a good house at a good price in Waltham, right on the border with Watertown. Didn't even think we were going to look in Waltham, as the list of towns you mentioned was our shortlist, but we couldn't find anything that wasn't way out of our range or in need of serious work. Even in the nadir of house-buying-season (aka dead of winter), all the open houses we went to had huge crowds, including houses that were basically teardowns. It was just brutal. I still think it's basically a miracle we got a house at all.

up
12

Finding a new house is impossible if you own one too

I have several co-workers like this, and I keep telling them that now's their chance to sell, but they're completely unable to process that the market is back.

They're probably in the same boat as I am, where we have a house we like but don't love and would like to buy into the one we're going to live in for many years. While our house price has risen, so has everything else to the point where it's impossible to find anything. They're probably hanging tight for the same reason as everyone else - inventory of houses is too low.

Slightly off-topic question

Slightly off-topic question for you: have you or would you consider Malden? I'm weighing my selling options now, and trying to decide if I need to hold out a few more years. There are good things happening here in terms of redevelopment and righting some of the '70s/'80s wrongs that killed Malden's downtown, but I'm not sure the town has made it back onto new home-buyer's radars yet. Just curious if buyers are even looking here!

up
11

Malden = Next Best Place

Several of my husband's coworkers have bought there in the last six months ... the schools are perhaps iffy ... but not the inbred mess that Everett has going on (contractors for the schools working on administrator's houses, etc.). If anything, the schools reflect the economic and social diversity of the community rather than the quality of education available.

Other than that, it is about like Medford was 15 years ago ... with even better public transit. Just like we and our friends spilled over into Medford when Arlington got too precious, I'm betting Medford will spill into Malden with the same sort of consequences for the community that follow an influx of educated professionals who don't move when they have kids.

up
12

I never really understood it all.

By on

It's a commonwealth thing where the 350+ fiefdoms are more significant than they ever would be in Metro Seattle where the County is the prevailing unit of government outside of established jurisdictions.

I remember towns near Tacoma that are newer than me and I lived near a great hell neighborhood called White Center that strenuously resisted being incorporated into Seattle.

The relative quality from one of these town things here to the next is dynamic to some degree.

Exploited poor and underclass people gotta live somewhere or we aren't getting our dunkies and making them commute from Fall River is a bit cruel.

When I was younger I had a comedy routine with a friend, sort of like fluxus, where we'd just yell

"I'm from Malden..."

"Yeah..I'm from Meffa"

Etc. (repeat 50 times in different cartoon voices).

I basically like all of these places to some extent and spend most of my geezer days trying to find ways to find and extol their compelling qualities.

The school system thing seems to be the big deal but even that stuff is subject to change.

How much longer are schools going to be the primary portals to learning?

up
10

Oh, totally agree with you

When I first came out here, I thought it was rather odd that people would name their little town rather than just say "I'm from Boston".

But that is, unfortunately, how the real estate game works around here. I used that to my advantage: when I bought in '98, people were passing over Medford based on rumors and reputation, not on what information could be found for the asking. Sixteen years later and I'm living in a nice retirement account while the house next door just sold for $55K over the initial asking price, which was already $200K more than the previous owner paid for it in 2002. Completely insane!

up
10

Maybe everyone just assume

Maybe everyone just assume you are a local. The people I know and myself (after learning from experience initially) is if we think each other as a locals. We would go down to telling the town/neighborhood we're from. Meanwhile if the group introducing to each other are heavily from other cites, we just say Boston.

up
10

It depends where you are.

If you are in California and run into someone from MA, they usually say they are from Boston if they dont know where you are from. Thats knid of true for most cities isnt it?

up
10

Real estate game?

If you don't live in Boston, you don't live in Boston. Is that unusually complicated? What makes that a game?

People who live in Cambridge don't say they live in Boston. Why would they? People who live in Somerville don't say they live in Boston (though they might say they live in Cambridge). Why should people from a suburb three towns over from Boston say they live in Boston when they don't?

It's true that the suburbs of Boston are so close to the city itself that, were it another American city, they would likely be in the city. But there are perfectly good historical reasons that Newton and Brookline and Cambridge, etc. didn't get incorporated into Boston (e.g. they seemed a lot farther away in 1630), and it seems silly to want to ignore local history because you find it inconvenient. It adds needless obfuscation to say you live in Boston when you don't.

FWIW, many people who do not live in Boston but in the nearby metro area do say they live in Boston when you meet them traveling elsewhere. In my experience, less than a quarter of people who first say they're from Boston actually live in Boston. Next comes "Where in Boston?" followed by "Topsfield" or "Reading" or some other place nobody has heard of. But most people living in Boston have a vague idea of the direction of Medford, so save saying you live "in Boston" for your next trip outside 495.

up
10

Thanks for the input. I was

Thanks for the input. I was lucky enough to get a house for a song at the end of 2009; a new roof and some cosmetic interior work, and I've had a cozy little home for the last few years. We're just getting a little TOO cozy now that we have a Li'l Modular underfoot, so I've been exploring the possibility of selling sometime soon. I think I would make much more on the sale if we can hold out for a couple of years...

up
12

I grew up in Malden and still

I grew up in Malden and still of the young cohort despite I'm aging into the next age bracket now. I would say it is probably still a few years away as a place to move. A lot of Asians (including my parents years ago) seem to like to move to this place, though Quincy still seems to be ahead that. The new administration under Christenson does seem for more energetic that the Howard administration (to those in Winchester who hired him as their town manager, good luck). Like he manage to make something happen with awful City Hall that Howard failed after 4 terms (or 5? Either way, it's longer than my living memory) of being mayor.

For the schools, the buildings are relatively new and most teachers I had were experienced. Though many were on the older side with many retiring not longer after I went to the next grade so I'm not sure how many are left from my years. The students were mixed. I put it like this for high school. If you were in the Honors class or higher, everyone were disciplined, eager, and generally curious. If you were in "College Preparatory", the teacher is going to spend a good chunk settling the class. I notice half the class wanted to learn, the other half kept strategizing to find another way to kill time.

up
10

This fits pretty exactly with

This fits pretty exactly with what I've gathered living here for the last four years. I'm reasonably sure we'll be here for another two years, but we are outgrowing our little house at a rapid pace, so I've been considering other options. Thanks for weighing in!

up
10

I wish it were a bubble. I

By on

I wish it were a bubble. I think this is just the new reality with real estate around here. It's not like Las Vegas where there's room to build endlessly and people are buying things speculatively to flip. These houses are being bought to live in as a 15+ year investment. The housing stock we have is all there is. They're not making more land. And the greater Boston area is attracting more and more wealthy people who can afford to pay.

up
13