Sticker Shock November 21, 2006
Posted by spacemom in : Life...otherwise , trackbackI’ve been taking walks at work lately to handle some of the serotonin issues. It helps the depression to exercise and since the rec center I use to exercise opens this week, walking has been my main source of exercise. So I walk. Around work. In one the the most expensive neighborhoods in Cambridge Mass.
When we first moved here in 1996, we were told to look to buy a house in Newton or Cambridge. Good advice. We would have 2 salaries, no kids, we could do that, right? The median price of a house in the area at the time that we moved here was around $300,000. While our salaries were much higher than the poverty level that we had in grad school, we could not afford either of those areas.
We spent a weekend in April, looking for apartments we could afford. We spent a long time searching and finally ended up in a managed place. We skipped the beautiful Victorian which only had a 5 foot tall shower and the ugly place in Stoneham that looked like a mass murderer could have quietly put his prey in the darkroom. We rented out of a huge townhouse place. And it cost more than DOUBLE what we were paying on Long Island for an entire cottage.
The first year here was crazy. We were simultaneously: a) calibrating the telescope in Alabama (I was there every 2 weeks for 2 weeks), b) planning a wedding (damn, ran out of excuses), and c) planning to buy a house.
We did try Newton. We really did. There is a wonderful Jewish community there. We wanted to be in a Jewish community. The houses were reminiscent of where Jay grew up in the city of gorgeous knockers, Ohio (near Cleveland). But what we could afford and what was available was not acceptable. We hired a buyer broker and ended up in a town called Burlington, MA. A cute little 3 bedroom house, 1.5 bath…. over $200K! Yikes! Where I grew up, it would barely be $100K. But location location, location, this was the place. We lived there for 5 years. I had concerns about it. We were near a power field (although my grandparents had one in their backyard and both lived fine until their 80s), and we were on one of the few "cut through" streets in the area. I worried about kids and cars.
After Soleil was born, we had Jay’s parents over for a week and a half. That was it. We decided right then that we had to move. It was not going to work if we had another child. Taking a small child on housing searches is difficult. But we did. And we discovered that our house had gone UP UP UP in price in those 5 years. We could suddenly afford MORE! But and this was a big but (unlike mine, which is a humongous butt), everything had gone up.
Two months of searching led us to our current house. We almost put in for it, and then stopped. I decided I couldn’t stand the downstairs. But then, a few days later, we decided what the hell. We put in for $25K less than what they were asking and did it.
We got the house. And I almost threw up for 2 weeks thinking about how much money in absolute terms we were spending…
This brings me back to the start. Houses in Cambridge, in the area that I walk run $1-4 MILLION. Yes, you read that right. MILLION. How the HELL does anyone afford these? I know, many people got in years ago, before the boom started in the eighties. And many people in this area made a fortune in the stock market before the crash. I know people who cashed out half of their stock and diversified the rest and bought a million dollar home in cash. Smart people that!
But now the housing market is falling again. Housing sales are off 25% from the third quarter of last year. wow.
We are not planning to move again for a long time. But it makes me wonder how young families can afford to live here. Massachusetts is expensive. Very expensive. To get an apartment in Cambridge, you either have to pony up $1200-$2000 for a 1 BD apartment or get a larger apartment and share with others. Imagine having to raise your family on $42000 a year. And you spend $14,400 on an apartment. That leaves you with $27,000 BEFORE TAXES.
Sure, you don’t HAVE to live in Cambridge. But you DO have to live in Boston to be a police officer or fire fighter. And we all know how great those salaries are.
I watch the market fall, but I know that it won’t bottom out as low as it should. And the poor in the greater Boston area will increase, as more and more people are out of the housing market.
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This isn’t just in Cambridge, it’s everywhere. San Antonio is primarily a blue collar town, the median income is $36,000 for a family of four - yeah, you read that right. BUT there are these ridiculous monstrosity houses being built all over the place and middle class neighborhoods being errected where the propertly value is at about $250 a square foot. I read in the paper yesterday they’re putting up a 27 story condo building where the ground floor 1 bedroom is $440k - WHAT?
Who the hell are buying these things? Certainly no one from San Antonio.
Oh, I know it! Many of the folks I work with have low wages–$7.50 per hour. They *can’t* afford to live here. Even five years ago, we had professors and professionals who, when offered positions at our university, turned it down after looking at the housing market. I can’t imagine how hard it is to do now.
People are “affording” these houses by getting interest-only or adjustable rate mortgages, or by getting two mortgages, one for the down-payment, the other for the rest. When I first heard of these options, I was appalled…but now –>70%<– of all mortgages signed last year in California were interest-only. And a lot of the adjustable rate mortgages are going to reset next year. Imagine your mortgage payment doubling in one month? It’s scary.
And the people making all of this money are the bank CEOs and board members. They take all of the money from this interest only loans and adjustable rate mortgages….sick sick sick
San Francisco is completely out of control with this problem. My Husband makes more money than I really ever thought we would or could make. And we cannot afford to live in a good school district. Those houses are over a million dollars and we just can’t do it. Even if someone could pay the mortgage, what about the taxes? We have a lovely home in a new development, but not a good school. We still have no idea what we will do next year about kindergarten and it stresses me out…
Oh heck, 1 million won’t get much of a house here in Vancouver, either. In fact, you cannot get a house in any liveable condition for under 550k and we are talking a 60 year old bungalow that hasn’t been updated since christ was a child. And we don’t have your interest deductions, or “stated income” mortgages either.
The reality is that single family housing is a luxury only small towns can afford. In places like Manhatten or London nobody even expects to raise their family in a house. Frankly, we are quite comfy in our 960 sq ft apartment with our family of four. I do miss not having a yard, but there are community gardens around.
The house with white picket fence dream needs to get thrown out with the stay-home-mom wearing high heels and dresses in her spotlessly clean home, lol!
I’m in northern NJ and it is the same situation. You can get an older four bedroom coloniol for around $750,000, but it will need a new kitchen and new bathrooms. Want something brand spankin new - then check out the five bedroom, three car garage monstrosities they are building down the street. Only cost you a little over a million on a good day. Heck, my little by-level ain’t cheap either (thank God we bought it when the market was down). It’s just crazy!
I hear ya…..here in Central NJ…I know I could sell my house for a pretty penny but I can’t afford anything bigger. Our house was on the market for 6 months and we were the only people to make an offer. It’s been alot of work and it’s still on going (just look outside my front door). We practically stole the house from the owners. However, 4 bedrooms, 2.5 baths in my area are going for 600 to 700K! Heck!