I say “distortive” for the simple fact that low-income housing loans have been great for families and the economy in many incarnations sinse the end of the second world war.  They bolster real estate markets, provide incentives to rehab derelict properties, and help economically disenfranchised people to live the American dream.  Well, what used to be referred to as the American dream, before we all got so ridiculously greedy and credit-happy.

Here’s how a successful low-income mortgage program works:

First, you limit the program to areas where housing prices are low, or where there are a lot of empty properties clogging the market.  The idea is to provide homes, not convince people to take part in get rich quick schemes.

Second, you reduce the down money requirements from the traditional 20%-30% to 3%-7%.  One of our readers, Max, is going to be mad at me for saying that, but it works.  3% of a house’s purchase price is a lot of money to a poor person.

Third, you cap the hell out of the interest rates, or even deflate them — and this is where the mortgage industry got ugly.  The idea is to help people into their first homes, and make money off of them later, when their real estate investment pays off and they upsize, or retire to a condo, or whatever.  Instead, the banks gouged the hell out of poor people, forced them into foreclosure, and then tanked the economy, making those people into “deadbeats” while wealthy executives looted our economy, creating poverty and unemployment that will surely lead to more foreclosures.

Finally, you make sure that the buyer’s debt-to-income ratio will support the payments — duh!  Homebuyers are optimistic and not entirely rational; those aren’t crimes.  Fraud and misrepresentation — those are crimes.

In Pittsburgh, the city went so far as to offer rehab loans that allow a family to buy a $23,000 house that needs $100,000 worth of work, and finance the repairs along with the purchase price.  And guess what that did?  It turned crack houses into tax revenue streams!  Guess how high the rate of foreclosure was with those well-run programs.  Now guess lower….

In no way do these programs give away money; they make money by creating taxable properties.  Some even offer loans that allow a buyer to buy a house, pay a portion of the total rehab & purchase price as a mortgage, and let a chunk of interest-free priciple sit there until the homeowner re-sells the house, at which time it has to be repaid.  It sounds nuts, but the city makes its tax money, and eventually the taxpayers get their dough back.

These sorts of programs are great for the market and the economy.  Greedy manipulation of them?  Not so much.

Get ready to see more of them.  They’re part of the real solution we so badly need.

Best Prices Per Square Foot In Beverly

Boston Sweet Digs Home

The first one is a “short sale subject to third party approval.”  That third party may be a bank, and if it is, get ready for some fun.  The first time we offered on a house, the “third party” wouldn’t say yes to the sale and left us in limbo for a month.  When we walked away, the bank foreclosed, and ended up auctioning the house for $40,000 less than we offered.

I wouldn’t call those folks the brightest spoons in the drawer.  They have their reasons (which mostly have to do with punishing people for falling on hard times, regardless of the damage they do to their own businesses), but bring a lot of patience and flexibility to the table if you decide to deal with banks.  Banks aren’t supposed to be in the real estate business, after all….

7 Longview Drive
Beverly, MA 01915
Beds: 3/Baths:1.5
SQ.FT.: 2363
$280,000

$/square foot: $118

9 Summer Street
Beverly, MA 01915
Beds: 6/Baths:4
SQ.FT.: 3839
$278,900

$/square foot: $73

54 Hale Street
Beverly, MA 01915
Beds: 3/Baths:  1.5
SQ.FT.: 1670
$199,900

$/square foot: $120

Image links to source.

Open Houses In Beverly, October 12

Boston Sweet Digs Home

And my little corner of this region is way prettier than the others.  Come up and see.  Slumming it and renting your way to this point may have ultimately been a good idea — but now is the time. Sellers and sellers’ agents will never be this desperate again.  Make an insultingly lowball offer and see what happens.

Then hope the banks have money to lend….

100 Northridge Road #100
Beverly, MA 01915
Beds: 3/Baths: 1.5
SQ.FT.: 1300
$79,900
Open House: Sunday, October 12, 2008 1:00 PM – 3:00 PM

423 Essex Street
Beverly, MA 01915
Beds: 4/Baths: 1.5
SQ.FT.:1872
$ 334,900
Open House: Sunday, October 12, 2008 1:00 PM – 3:00 PM

9 Beach Street
Beverly, MA 01915
Beds: 3/Baths: 2.5
SQ.FT.: 2080
$ 650,000
Open House: Sunday, October 12, 2008 12:00 PM – 2:00 PM

Fall: Heater Filters, Wood Stoves, and Duct Cleaning

Boston Sweet Digs Home

Last spring we had a wood stove installed. Honestly, wood isn’t cheaper than gas heat right now ($350+ per cord) unless you truck it in from more rural areas.

And I got burned — 2 guys from the South Shore were supposed to bring me 2 cords for $440.  I’ll be lucky if I get one out of what they dumped in my driveway (a cord is 4′ high, 8′ long, and 4′ wide, stacked).  Worse, I paid cash, so good luck reporting them to the state.

But, once in a while, if you have a chainsaw and a truck, you can score a month’s worth of free heat.  I look for the big orange tree and brush trucks — the guys who run them are always glad to give you the wood they’re supposed to feed into the chipper (apparently it isn’t as fun as it looks), and sometimes you can get a tree removal service to drop a whole tree, in pieces, in your yard.  It doesn’t hurt me that my neighbor lets me use his log splitter (thanks, Mike!).

Remember you can’t burn green wood — it needs to dry out.  And — watch for termites and carpenter ants.  If you get them, you have to get rid of them ASAP.  That means poison, as much as I hate to say it.  You can’t be all vegan about termites unless you live in a yurt.

I think we’re going to get some Biobricks to supplement our cord wood — Biobricks are made from waste wood (sawdust) like pellets. We decided against a pellet stove because we wanted to be able to burn found wood (oak pallets, scrap lumber — anything that isn’t treated or varnished or painted), but they are very clean and very efficient, when the lumberyards don’t run out of the fuel.  Biobricks are the same stuff, but engineered for regular wood burners. And no bugs.

Why not run the gas heater instead?  Well…nobody’s dieing because of Biobrick, and I’d rather spend money burning a waste product than a fossil fuel.  Sawdust, in industrial quantities, can be a pollutant; in Biobrick, it’s a clean fuel.  That matters to me.  And we like sitting by the fire.  I’d have a wood stove if I lived in Georgia.

The chimney was brutal — $2,000 for a stove was okay, especially as the it was a housewarming gift from a very special person, but the chimney ran us almost that much. We had to run 6″ Metalbestos stainless stell chimney pipe up the back of our house, and that’s often cheaper than rehabbing an old masonry chimney.  Pellet stoves cost significantly less to install because they use a shorter, small pipe, and becuase the temperatures of the vented gas are lower than the temperatures inside a woodstove chimney.  Seriously consider going for a pellet stove if you have little space (they’re great for condos) or if you know you’re going to buy your fuel anyway.

One other big issue is air quality. Our VT Castings stove claims to be very environmentally sound, but I know I’m going to get particulate. So, I have a 4 part plan to burn wood and stay healthy.

First, I’m going to run a HEPA air filtration unit in the living room near the stove. I already use one in my bedroom at night when I sleep in a/c or enclosed rooms. This will grab particulate at the source.

Second, I’m going to have my ducts cleaned. Sounds dirty, I know, but they hook vacuums up to the ducts of your heating system and suck all of the nastiness out into a big truck.

Third, I’m putting a HEPA filter on the furnace. I’m thinking of getting them for the grills of the ducts, too, to keep dust out of the ducting from both ends. I will run the blower on the furnace all the time when the wood stove is heating, and hopefully the filter(s) and the furnace will catch most of the particulate in the house, keeping the general level down.

Fourth, I had them put one of those spinning chimney caps on top of the chimney — I’m wasn’t waiting to see if it needed one. I want it to draw perfectly all of the time, even on windy days on the North Shore.

New On The Market This Fall

Boston Sweet Digs Home

Sellers and their agents are wringing their hands and cursing the stock market crash.  The last time this happened, people pulled out of the market and inflated real estate prices, but I don’t see that happening again — although I do think we’re in the cellar as far as prices go.  I guess that will depend on what happens with this bailout, and whether or not the government steps in to stop foreclosures and renegotiate bad loans before they lead to more “illiquid assets.”

That’s something banks could have done on their own, BTW.

Normally, agents would be busy this time of year — now is when you buy if you want to spend the winter holidays in your new home.  It usually takes 60-90 days to close on a house.  So, for those of you giving a big Howard Dean “Whoooooooo!” over the possibility of further price drops, here are some of the newest properties to hit Redfin:

3 Greenwood
Beverly, MA 01915
Beds: 4/Baths: 3.5
SQ.FT.: 4800
$1,250,000

23 Ashton Street
Beverly, MA 01915
Beds: 3/Baths: 1
SQ.FT.:1112
$ 289,900

27 Railroad Street West, #14
Beverly, MA 01915
Beds: 2/Baths: 1.5
SQ.FT.: 1326
$ 335,000

Megalomaniacal  Financial Fantasies…and Open Houses In Salem

Boston Sweet Digs Home

I have lottery tickets that I don’t check, too, because when you check them you know you’ve lost.

It’s been a rough couple of weeks. I realized I had been writing about the bailout as if it had already happened…and maybe for good reason. Knowing how many dishonest folk are losing their shirts is pretty satisfying, but it isn’t all indictments and FBI fraud investigations.

I spoke to a couple of people who have been patiently hunting for condos and houses for the last year and a half. When my friend Rachel told me she was waiting for prices to fall again, I thought she was delirious (but you’re still not getting a 2-bedroom condo in Cambridge for $140,000, sweetie).

This is what really, really, really sucks: a lot of those people had the savings they were waiting to use for a down invested, directly or indirectly, in the market — I mean, bank interest has been terrible for a decade, so of course they did. Their parents did, too, so there goes the little bit of help they were hoping for. A lot of this cash was sitting in very conservative funds, with the backing of the most stalwart of all investments to keep it safe and growing: mortgage backed securities. That’s where most of my 403B losses came from — 15.9% down this year…the last time I dared look….

Student loan funds are considered really, really conservative, too — mainly because you can’t default on them, or you become Sallie Mae’s indentured servant (what IS it with these weird bank names?)

You can still do it. You just have to cut back hard, and you have to find an inexpensive community with great access to workplaces. In Salem, you can do it in style.

Check us out this weekend; Salem is a party for the month of October.

3 West Terrace
Salem, MA 01970
Beds: 3/Baths: 1
SQ.FT.: 1485
$299,900
Open House: Sunday, October 5, 2008 1:00 PM – 3:00 PM

216 Canal Street
Salem, MA 01970
Beds: 3/Baths: 1.5
SQ.FT.: 1835
$ 309,000
Open House: Sunday, October 5, 2008 12:30 PM – 2:00 PM
5 Cross Street
Salem, MA 01970
Beds: 4/Baths: 2.5
SQ.FT.:1600
$ 249,950
Open House: Sunday, October 5, 2008 12:00 PM – 1:30 PM

Reasonable Houses in Salem
Boston Sweet Digs Home

In the meantime, look at these perfectly nice houses:

1 Flynn Street Address
Salem, MA 01915
Beds: 3/Baths:1
SQ.FT.:1560
$285,000

16 Rice Street Address
Salem, MA 01915
Beds: 3/Baths:1.5
SQ.FT.: 1126
$217,900

121 Highland Avenue
Salem, MA 01970
Beds: 3/Baths:1.5
SQ.FT.: 2278
$280,000
No Bailout — Holy Cow!

Boston Sweet Digs Home

Yesterday’s rejection of the proposed bailout of…well…everything but insurance giant AIG (been there, done that) was a complete shock. The Dow dropping another 700 points went right along with it. But what does it mean?

First, it’s a giant vote of no confidence — no confidence in this President’s economic policy, and no confidence in the people who shaped that policy. Both sides want to blame the other for the failure and resulting crash, but if you look at the breakdown of votes, both parties are strongly represented on both sides of the issue.

Finally — something to bring this nation together….

The pressure put on lawmakers by their constituents cut close to the bone. The bailout may be necessary to avoid the New Depression, but with a secretary of the treasury asking for immunity from investigation, prosecution, and pretty much all oversight — sure, he took that part out after a while, but what voter/taxpayer isn’t going to raise a stink after hearing that?

It’s not only a mismanaged economy, but also a mismanaged PR campaign.

Both presidential wannabes are calling for us to regroup and try again before it’s too late (while Ms. Palin heads to Walmart for a few more cases of drinking water and ammunition). That’s interesting in and of itself — this is a wildly unpopular issue, and if they really thought we could get away without it, one or the other would jump on the no-bailout train to victory.

Why aren’t they? Because not doing anything is what got us here, and in order for increased government regulation to work, we need to preserve the stuff we regulate.

Bill Clinton had some really interesting takes last week on the Daily Show — most notably, he believes that if we buy up this paper and use the resulting power to rewrite bad mortgages and keep people out of foreclosure, the taxpayers will end up making money on the bailout — and he cites a similar bailout at the beginning of the last century as evidence. Essentially, use the big bailout to bail out the little guy, and consumer confidence increases and the market works again.

I seem to remember someone saying something similar not that long ago….

The good news is, we don’t actually have to act now — our lawmakers don’t have to vote on yet another bill they haven’t had time to read. The turmoil on Wall Street is Wall Street’s own enormous, ugly baby, and the people most hurt by this are the people who benefited from the influence peddling that got us here.

For now. But there has to be some real economic stimulus, and another fat government check for all of us isn’t going to make it happen.

Forget Bailing Out; Just Move To Greater Boston

Boston Sweet Digs Home

The image above links to its source

I often reach out to first-time buyers in this blog — the next generation of homeowner, the 20-somethings wasting good money on some of the highest rents in the country, is my Obi Wan Kenobi.  But it hasn’t occurred to me before that the crushing of other markets might be good for our own.

If you look at just about any national economic indicator right now, it looks like the end of the world.  Capitalism has failed — pick up your hammer and sickle and report for re-education.  But I can’t say it’s hurting me very much.  My mutual funds are down a couple of thousand dollars, and I still owe my soul and the souls of my first 3 children to Great Lakes Higher Education Lending, but I have a great job — and people keep trying to hire me for other jobs!  The national unemployment rate is well over 6% — how is this possible?

Am I alone in my relative prosperity?  Not really.  Coming from a market that always gets the nasty end of the stick in these things, I feel a lot of survivor’s guilt.  My college-educated friends in Pittsburgh are cruising towards their 40s doing drywall, opening drains, and rehabbing houses worth around $25,000 on average — they aren’t happy a lot of the time, and while we’re all doing better than we were a decade ago, their working lives aren’t even close to what they imagined they would be.

But here — well, I have all all of these friends with “worthless” humanities degrees, and they’re all doing pretty well.  One got hired — and trained — to handle IT for a financial firm; another manages a lab at MIT with relatively little science background.  Even the adjunct professors in our crowd are finding better and better niches.  Nobody I know is unemployed, or in danger of becoming unemployed, and nobody seems on the edge of starvation or homelessness.

Of course, I run with an educated crowd.  There are poor people here, and it’s a tough place to be if you ain’t got that dough-ray-mi.  But even (say) retail jobs pay like 50% more than they do in other markets.  Experienced cooks in the ‘Burgh were lucky to pull $8.50 per hour; dishwashers here would walk away from that money.

This is, in fact, typical of greater Boston.   Yes, it is expensive to live up here — houses cost 6-12 times (or more) what they do in Pittsburgh, or Cleveland, or Tennessee.  Rents are ridiculous.  But if you suspend your initial objections to the cost of living, you might find that your skills — or even just your buttocks in a chair — are worth way more here than you think possible.  And the market downturn means that it is cheaper than it has been in a decade to move to Massachusetts; it won’t be cheaper again, unless civilization crumbles (The Rapture, for instance, would be terrible for housing prices — but probably not in heathen Cambridge).

So my message of hope is: move where the food is.  Your chances are better in a prosperous market, a market where the standards for education and social services are higher than they are elsewhere.  People may object to this very idea — one commenter recently told one of our bloggers that eastern Mass.’s “time will come!”  — but this state is in way better shape than the rest of the nation.  Could it be because the political forces that got us into this mess are relatively powerless here?  Can’t say for sure…how are those red states doing lately?

If you take my advice, think about using the relatively inexpensive North Shore to get the best of both worlds — cheaper digs with great access to that downtown birdseed.

Here are some open houses to get you thinking:

4 Cherry Road
Beverly, MA 01915
Beds: 3/Baths:1.5
SQ.FT.:1488
$299,000
Open House: Sunday, September 28, 2008 12:00 PM – 2:00 PM

7 Bow Street
Salem, MA 01970
Beds: 2/Baths: 1
SQ.FT.:875
$210,000
Open House: Sunday, September 28, 2008 11:00 AM – 1:00 PM

7 Cypress Street
Salem, MA 01970
Beds: 3/Baths:1
SQ.FT.:1494
$249,000
Open House: Sunday, September 28, 2008 12:00 PM – 1:30 PM

6 Condos In Beverly…Under $100,000!

Boston Sweet Digs Home

You could spend your 20s by the beach in Beverly, have an easy C-rail commute to the hub, and own for less than rentals cost almost anywhere.

5 of the 7 are on Northridge Road, so I’ll just list two of those — this is a co-op, so traditional mortgages don’t fly.

82 Northridge Road, #82
Beverly, MA 01915
Beds:2 /Baths: 1.5
SQ.FT.: 1,000
$50,000

100 Northridge Road Address, #100
Beverly, MA 01915
Beds: 3/Baths: 1.5
SQ.FT.: 1300
$79,900

158 Park Street Address, #5
Beverly, MA 01915
Beds:1 /Baths:1
SQ.FT.:530
$ 99,000

Feds Bail Out, Install New Course Of Shingles To Prevent Trickle-Down

Boston Sweet Digs Home