…and Then the Market Hit the Fan
I often hear or read sentiments from consumers who feel real estate agents only like to talk about the positive. Well, this post should do wonders for dispelling that myth!
Last week the Massachusetts Association of Realtors (a.k.a MAR) released their May 2011 sales numbers which highlight a 16.9% drop in single family homes sales and a 20.8% drop in condominium sales as compared to May of last year. Do not panic!!! I truly think this is mostly due to the fact that last year’s numbers were so skewed by the homebuyer tax credit. I was a fan of it, and sure it brought a big boost in sales. But you never really do get the good without the bad and voila, a delayed bottom perhaps while the market corrects itself. The cycle will change like it always does, but then what?
The other issue at hand in the latest MAR release was the Qualified Residential Mortgage (a.k.a. QRM) and this scares me more than the sales numbers. Don’t get me wrong, I’m NOT a supporter of folks getting things they can’t afford and don’t even need for that matter. But Scott Van Voorhis got right to the heart of it on the Boston Real Estate Now Blog when he asked “Is 20% down fair in high priced Greater Boston?”
Poor underwriting and exotic loans and not low downpayments caused our housing meltdown. – Laurie Cadigan
I say no. I was in my early twenties the first time I tried to buy property and the only thing that stopped me was 20% down. Back then property values were nowhere near where they are now, but I just couldn’t pull more than 10% together. (Full disclosure and in a show of sympathy to my buyer agent buddies out there, I could have expanded my search way out into the burbs but who wants to live in the burbs when you can whine about not being able to afford to live near the city?) Even still, with home prices averaging $300k state-wide, the passage of the Qualified Residential Mortgage means the young buyer of today would need to fork over $60,000 as a down payment.
I understand the fear and the underlying logic but I can’t help but think, if I graduated from college this year, and want to buy a home in Massachusetts, am I really going to get a job, pay rent, pay student loans, pay my taxes AND save at least $60K? Not for nothing, have you seen what $300,000 buys you? As noted by MAR President and my boss, Laurie Cadigan, “Poor underwriting and exotic loans and not low downpayments caused our housing meltdown”. Exactly.
Hi, I'm Jake...and that's my dog! By day I'm founder and Chief Geek at MyUntangled Media, LLC and Executive Director of Business Development at Barrett & Company Real Estate . By night I am part struggling musician, frustrated writer, wanna-be chef and obsessed dog owner. I started this site mainly to learn WordPress, work on my design and writing skills, and showcase some folks with all kinds of talents and great stuff to say. (Read the long version if you dare) and please introduce yourself over on my Google+ Profile!
The real estate market, at times, may appear unpredictable. But, considering where are are now, I think it can only get better. The many foreclosures that have taken place over the last few years created many title issues and defects for property owners. There will always be work in the area, I guess you just need to find clients. Best of luck with the anticipated upswing in the market which I predict for 2012.
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