I think it is also a starting date for families because school starts then in many areas, though 8/1 might be better and is also busy. Yes the academic year is big in Boston but I think people see 9/1 as the start of the year for many reasons.
1 Like
ShawD, who is not a recent graduate, has a 2 BR (and two small studies) apartment for, I believe, $3200. She found a roommate. The apartment could definitely use renovation. Nice neighborhood in walking distance of her work. Access to fenced in backyard (great for her dog).
3 Likes
My kid’s landlord increased the rent dramatically at renewal by requiring them to pay for use of the driveway and a small outbuilding. Interesting ploy for avoiding any tenant protection regulations. They paid up, btw, as they really didn’t want to move (again).
Lol on the use of the driveway. Seems like that would have been included but it’s a way to increase revenue. No one wants to look for street parking.
1 Like
Yes, and they had it before but didn’t pay for it!
One of my son’s roommates assumed she could simply park her car on the driveway next to their house. Am not sure why she thought that since the driveway is not large enough to accommodate one car per apartment. Needless to say, driveway spots had already been rented out.
I should have clarified what I meant by the Boston market being crazy. Much more reasonable than NYC in terms of price and space, but we found the process of looking for a rental to be inefficient. My son found places he liked on two different websites, reached out to the broker who controlled each listing, and then scheduled appointments to view. Each broker only seemed to have one listing. We had both expected that a broker would be able to show a few places.
The process will be easier if he decides to move next year as he can view an apt as soon as it hits the market because he is living there now. It is still tame by NYC standards though.
1 Like
Not sure how it will impact rents or the trend nationwide but there’s a lake house in my neighborhood that just saw a cut from 1.25 to 1.189.
I’m sure a few months ago it would have gone for 1.4 and within a day.
The slowdown is real. Whether that’s a plus or minus for rents I’m not sure.
But if a 600k home becomes 525k, maybe some kids will finally be able to take the plunge.
It’s crazy to say 500k and entry level but I don’t see much at that price point. When I see it it’s 50 miles from the city.
Perhaps if kids can move into home ownership combined with more rentals being built it can be a good thing for rents.
Of course in places like Boston that are land locked that won’t help.
I’m really starting to worry about my ‘studies’ student who wants to work with refugees.
I saw on the news yesterday and my figures might be off.
But on a $300,000 loan, the monthly costs have gone up $700 because of interest rate hikes.
So actually you can afford less house than before. So prices may be dropping to levels that the monthly payment will be similar
6 Likes
Yeah there’s that too.
But at least initial payments would be less but it’s crazy. And sadly I missed the boat to sell and move into an apartment !! My better half wanted nothing to do with that.
An additional problem is that most kids would have the down payment money in the stock market. And we know what happened with that.
1 Like
D1 and her fiance moved into a rental house last March that is 2 bedrooms and 1 bath with a cute fenced yard and a garage for storage and a driveway that fits 3 cars. They also have laundry. The house is a 100 year old craftsman. Rent is $3k a month and they feel it is a great deal in San Diego. They are in a walkable urban area with lots of restaurants and shops along with a big park nearby for their husky.
10 Likes
We have some friends who purchased condo in DC to rent TO their ds. Idk if he is paying a market rate or if his payment covers all of their mortgage payment (or even if they have a mortgage payment on it).
I wonder if this sort of arrangement will become more popular among parents who have the means to do so.
3 Likes
If prices drop significantly in the next year, we would help our adult kids buy. We could make the down payment and charge them rent, then gift them the initial investment over time, eventually signing the property over. I can’t see how they’ll break into the market otherwise. Rents are so high, they would not be able to save up a down payment.
5 Likes
If rates go up and prices drop you are supposed to buy. Because at some point in the future when rates drop, prices will recover some, and separately you can refi the loan – positive on both counts.
My son and his wife made an offer on a house in DC last week, but they didn’t get it. They were told they were the second best of 6 offers! I hope they find something soon because they’re tired of paying high rents in the DC area.
5 Likes
That may work, but there is often a good amount of uncertainty in future mortgage rates, home prices, inflation, state of the economy, legislation changes, etc. For example, the current inflation adjusted 30 year mortgage rate is negative and rapidly rising. The last time we had a similar situation with inflation adjusted 30 year mortgage rate negative and rapidly rising was in 1980. The inflation adjusted rate increased from -2% in early 1980 to +11% in early 1982. The mortgage rate gradually degreased over the following decades, but didn’t reach 1980 type negative levels again until >30 years later, after the mortgage should have been paid off.
Average inflation adjusted home prices continued to decrease for several years following 1980, fitting with the rapidly increasing mortgage rates. Inflation adjusted home prices/value didn’t rapidly take off until the late 90s, for reasons tha more related to changes in mortgage and credit practices combined with dot com bubble, rather than the rates themselves. These changes contributed to the subprime mortgage crisis , with rapidly dropping prices and many people underwater on their mortgage. There are also many individual regions that show very different patterns from these generalizations.
My point is predicting the future is usually complex and uncertain, including predicting how mortgage rates and home prices will change over the course of a long mortgage.
Different persons have different degrees of risk tolerance to this uncertainty. I have a lower risk tolerance than most for assets that are a large portion of my net worth, so I waited to buy until I was capable of paying without a mortgage. I closed the deal on the last day before a short sale became a foreclosure, which contributed to getting what I believe was an excellent deal, in addition to extras, such as including >$100k worth (based on original purchase price) of home theater equipment… a much lower sale price than comparable homes in my neighborhood. After adjusting for inflation, the property is worth more than double what I paid. If I had bought this particular property time at any earlier point during the period since its original building, the net gain wouldn’t have been as positive.
Of course paying in cash without a mortgage isn’t an option for most young persons, particularly ones in a higher cost of living area. In many markets, there can also be issues with limited supply and few/no options for better standard deals. Had I been in this situation, I’d probably have continued to rent for a long time, perhaps until a major life event changed financial situation and advantage/disadvantage of owning home. An example is getting married. Most young persons I have known in my area follow a similar pattern – rent for a long time after graduating, including ones who have a high income. If they buy, it is usually at some point after getting married.
1 Like
Actually, that is what my son has done , rented for many years, now married and looking for a home.
We bought our first home in 1983. 13.5
percent interest rate at the time!
1 Like
We bought our first home in 1999 at an 8.5% interest rate. We lived there 4 years and nearly doubled our money.
3 Likes
We bought in 1984 and were thrilled with 14% interest rate (it was as high as 16%)
2 Likes