MA Market - Middlesex County

9 Replies | Boston, Massachusetts

Hey all Boston-based BP'ers. 

I was wondering if anyone has any idea of what the outlook on the market is in the Boston area.  I realize that is a broad question, so let me get more specific.

I am a first time home-buyer looking to buy a multi-family property I can house-hack.  I work in Newton so I am looking for a multi in the Middlesex county, or possibly the Norfolk county if there is a deal there and it's closer to Newton.  

I will have about $12,000 saved up around the 1st of the year and thats when I plan on buying a property....hopefully have a P&S signed by March. I have been preapproved for loan by my mortgage lender and am looking to do the FHA 203k loan. I have been tracking houses on the MLS in the Middlesex County, as well has and for a few months now and I am really not seeing a lot of inventory out there.

Does anyone think that there will be more inventory in the March time frame?  Will interest rates stay the same?  I feel like right now everyone is overpaying for everything and it seems to be a heavy "seller's market".

Any insight would be much appreciated as it will help prepare myself for when I buy house early next year.  Once I buy that one I would be looking to Cash out refinance to buy another property.  

You are absolutely correct that it's a seller's market.  I think the general consensus is that a correction is coming but nobody knows exactly when that will be. 

@ShaunReilly had a few good Facebook posts about this topic recently.  

In any case, it's safe to say there will be a dip coming soon; possibly as soon as in the next 6 months.  As far as interest rates, you may see a slight increase next month when the Fed meets again but probably a small one.

You may want to hold on until the dip.  Buying lower is usually not a bad thing.

Ehh, not very helpful I know but these things are never easy to predict.

I agree with Robbie.  It's a CRAZY sellers market due to low inventory.

My personal opinion is that the source of the shortage is the general public's lack of faith in the supposed economic recovery.  I don't see that changing until the next administration takes over the White House - but I reserve the right to be wrong.

I cover Norfolk, Bristol and Plymouth counties and can tell you that any home priced properly is sold in days.  

If you want help finding one in Norfolk County, let me know.

I think that is a pretty good plan Nick.

I will say though that is you only have $12K to work with even with a minimal FHA down payment you are topping out in the $340s which isn't going to go very far any place close to Newton (and in Newton you are talking small 2BR condo not a multifamily at that price level).

How is your commute?  Is getting closer to work one of the major impetuses to move?  If you don't mind the drive now you can get a lot more options up in the Merrimack Valley and still get good rents and good appreciation.  

As Robbie I have been sharing some main stream stuff showing the market isn't as hot as people say.  I honestly think we are going to hit a market correction sooner rather than later.

If you do check out my FB page see the one I posted today from the Globe that says since last year more houses are taking price cuts before selling and more sales are falling through (presumably as buyers realize that paying 10% over list with no contingencies is kinda dumb).  

Then check out one from Zillow at the end of last month, I think like 7/28 maybe, that was actually about how people are underestimating the amount their houses are appreciating.  However the section about Boston says that prices are basically flat since last year and that 64% of people over estimated the level of appreciation.

There is also a video I did the other day discussing the foreclosure stats and what it means for the market.  There is an issue on my site right now so the post isn't working right now if you click on it, but hope that is fixed tomorrow.

Also do a foreclosure report that I should publish tonight but since I have the website issue hope to publish that tomorrow.  But the gist is that petitions in MA have been up for 16 straight months from the previous year.  Since it takes forever to foreclose here the first of those are just getting through the system and we are seeing a big increase in recorded foreclosure deeds the last few months.  Banks might hold back inventory but they can't just sit on all of it so I think more will come to market and it will push the already stagnating prices down a little.

Anyway I have been taking the firm position for a while that the market is not as "hot" as people say.  While in the not to distant past prices were rising fast and inventory was tight enough that people were getting screwed by not going in super strong.  Now that is more just hype and people are doing it based on irrational exuberance rather than the facts.  It might take longer but I could see there getting to be a glut of inventory this winter and that could put a damper on the spring market which could lead to a longer term price correction.  Might take longer, but if rates go up too it is that much more likely.  

As for rate hikes I don't see anything amazing coming.  I guess it comes down to if Yellen is a democrat or republican.  If she is a democrat rates won't go up since the economy is a house of cards mostly being propped up by the unnaturally low rates and any real increase could bomb the economy.  If she is a republican then maybe she will jack them up a bit and kill the economy and keep them a little to high a little to long to make sure there is no chance that it will recover until after the election even if they bring rates back down...

I'm not cynical or anything...  ;p

I am in West Newton and grew up in Dracut and own properties in Lowell so I know the market here and where you are now.  If you would like to meet up and talk sometime at lunch or after work to talk about the market and your options I'd be happy to. 

I am finding that any house on the mls, even if discounted by a good amount, are not cash flowing for me. Ultimately to way to win this game is trying to find off mls deals. Direct mail, wholesalers, ppc campaigns, word of mouth and other ways to find off market properties seem to be the way to go. 

I'm gearing up a new direct mail, ppc campaigns and a few other things since I'm not finding anything on mls. I think this is probably the way to go.

@Robbie Reutzel   Thanks for the advice.  I am hoping the stars will align and as I'm ready to buy a house there will be more/better inventory.

@Charlie MacPherson   Thanks Charlie.  I will let you know if I end up trying to make the leap into the Norfolk county. 

@Shaun Reilly   Thank you for taking the time to respond.  You bring up quite a few valid/interesting points.  You are correct in saying that I am just getting tired of the commute, so I was looking to try to get a little closer to work.  I have come to terms with not being able to be in the "Newton Area".  My areas of concentration have been Billerica and Framingham as the price seems to be fair and I would be getting a little closer to work.  I have been looking at Waltham too, but that can get expensive.  I would be looking in Lowell (I grew up in Chelmsford/Lowell area) but I am having a baby in 2 months and the Mom doesn't want to live in Lowell....can't say I blame her.  Also parking is a big thing for me and Lowell doesn't offer much.  I would definitely entertain the idea of meeting up and picking your brain.  I work in Newton Lower Falls on Washington st. so after work is definitely a possibility.

@Alberto De jesus Finding cash flow properties on the MLS does look like a challenge. However, because this will be my primary residence, I am not looking for it to cashflow at the moment because simply not having a rent/mortgage payment is basically "cashflow" for me. The plan is to cash-out refinance after 5 years and buy some more properties.

Framingham definitely has more potential inventory around your price range.

Should help with the commute as well, though it can get into those situations were it really bogs down at the peak rush hour times.  You do have multiple options though (Pike, 30, 9 etc.).  Not sure how much of a commute upgrade you get just going to Billerica if you are in Chelmsford now.

I have a couple of little ones myself and this is the crazy time of year until school starts so if you would like to find a time to sit down and chat things get infinitely easier for me after labor day to schedule.  :)

Framingham is a great area I have 12 units there all cash flowing nicely ... Not much available now though... I might have an off market 5 Family but it needs lots of work cause the previous owner added illegal bedrooms In theBasement. I'd recommend MA Save over FHA all day long easier to close and no PMI with only 5% down. Send me an email if you want to catch up happy to chat about what I have learned since I started investing [email protected] FYI 12k is tight even for framingham especially if you are trying to do renovations as well i bought my first 3 family 3 years ago with 15k and did some work to it but I bet it would be harder to do that today not impossible though! Hope to connect soon

@Shaun Reilly   Yea, that's exactly why I was looking at Framingham is because there are a couple different options to get to Newton.  I don't mind being in traffic...I'm used to it by now, but I don't want to be in it for 45 mins - 1hr.  However, if dealing with the traffic for another 5 years gets me to where I want to be financially and real estate wise, it's an easy decision.  Even the 10 minutes I save from Billerica would help honestly haha.

Yea I hear ya with the little ones.  I just had another ultrasound yesterday at 33 weeks and he is measuring at 35 weeks so the little guy is trying to make an escape early!  I'm probably looking at the beginning/middle of September.

@Mike Fitzpatrick I have been doing finish carpentry my whole life and I currently work for one of the biggest construction management firms in New England so I am definitely not afraid to get my hands dirty and rehab a house. I recently started looking at the Mass Housing loans; they also have a rehab loan available. They say the work has to be done by "licensed contractors". I am a licensed contractor, I am wondering if the same rules apply as FHA where I wouldn't be able to work on my own house.

Are you saying that the 12k I would have wouldn't be enough for a downpayment...or all together?  What is really making me nervous is the amount of money i need for closing and such.  I am going to try to make the seller eat the closing, but I'm sure I will need more money on hand.  I am ideally looking for 200-250k multi and put 35-50k into it for rehab.  I also have a roommate that currently lives with me now who said he would move into a house that I bought.  So the ideal scenario is living in one of the units, collecting rent from the other units, and ALSO collecting rent from the bedroom I am renting out to my buddy.  House hack-hacking I call it. Lol. 

It is tough to buy Multis at the moment in a good area since the market is so hot. If you find one that you like I suggest paying over the asking if you are going to ask the seller to eat closing costs. For example the list price is 250K and you need 5K in closing costs so you pay 255K. This way you are still making an attractive offer to the seller. It is also difficult with a low down payment because you are competing with cash offers and people with 25% down. If you want to buy a hot property FHA or MA housing you might have to pay considerably more to entice the seller. You always have the appraisal to fall back on. For example I submitted an asking price offer knowing the appraisal wouldn't come in at the contact price and I was able to renegotiate the price. Also most investors are waiving their home inspection clause. Just some food for thought. Finding an off market property might be best.