Why is Massachusetts housing so expensive? (Boston, Cambridge: for sale, apartment, condos)
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Because in MA RE is a true branch of economy--RE supports many people here (think all those student renters, grad school renters, Cape Cod and Islands RE )and in last 20 years it evolved into pyramid scheme of a "greater fool". Also, RE in MA is something of a competitive sport.
I find that whole RE scene is geared against buyer/renter in general. RE agents are very skillful in spinning, making people fearful that without paying "full price" they will not make competitive bid. Sellers have upper hand, and no obligations for pre-inspections, and full disclosure of conditions like in many other states (e.g. " unknown" lead issue). Most buyers are unfortunately clueless, or just plain blackmailed into caving to demands to avoid being "losers". Don't forget those handy little biding wars. It is worst mix of circumstances, and very bad for FTHB and people with no family here. Also, there is that old and tired "too much demand, to few homes--no more land". That is partially true only in sense that there are not enough of habitable/renovated homes fit for 20th century family (not asking for 21st). NIMBY-ism is very active here as well (that can be good and bad).
It is actually shocking how much most people have to pay to live in shacks. Since, we are so perfect and better than everybody else, everything we have here in MA is desirable and more expensive--and there is no rational foundation to support this, except, that people need much more money to live here, and they have to earn it somehow. It is vicious circle since everything is very expensive, everybody is in for themselves, and people/businesses tend to get more and more greedy to survive. You inherit/flip 50's ranch in dire need of renovations, and boom! You can be a millionaire as of tomorrow.
There is no long term foresight here in MA--and although we are on the verge of the long term decline/collapse, our fellow politicians/residents act as there is no tomorrow, not even for our kids sake. Many states are run better and successfully attracting our people, and competing with MA for everything. But we are still stuck on our glory past for the most part--RE in general is very outdated as well here.
Personally, I am stuck in career that is at present limited to most expensive metro areas in the USA at present--so being here or NY, or LA, it doesn't matter. I like MA (lot to like for sure), but but I am also weary of rat race. I find this area to be very provincial, with very old world in its sharp divide between classes/race. Also, very very materialistic, almost to cruelty. Mindset is--********* if you do not have "enough", just stop "whining" and move away "loser"! MA is only for winners, I guess.
I do dream about Colorado sometimes. We'll see.
Because in MA RE is a true branch of economy--RE supports many people here (think all those student renters, grad school renters, Cape Cod and Islands RE )and in last 20 years it evolved into pyramid scheme of a "greater fool". Also, RE in MA is something of a competitive sport.
I find that whole RE scene is geared against buyer/renter in general. RE agents are very skillful in spinning, making people fearful that without paying "full price" they will not make competitive bid. Sellers have upper hand, and no obligations for pre-inspections, and full disclosure of conditions like in many other states (e.g. " unknown" lead issue). Most buyers are unfortunately clueless, or just plain blackmailed into caving to demands to avoid being "losers". Don't forget those handy little biding wars. It is worst mix of circumstances, and very bad for FTHB and people with no family here. Also, there is that old and tired "too much demand, to few homes--no more land". That is partially true only in sense that there are not enough of habitable/renovated homes fit for 20th century family (not asking for 21st). NIMBY-ism is very active here as well (that can be good and bad).
It is actually shocking how much most people have to pay to live in shacks. Since, we are so perfect and better than everybody else, everything we have here in MA is desirable and more expensive--and there is no rational foundation to support this, except, that people need much more money to live here, and they have to earn it somehow. It is vicious circle since everything is very expensive, everybody is in for themselves, and people/businesses tend to get more and more greedy to survive. You inherit/flip 50's ranch in dire need of renovations, and boom! You can be a millionaire as of tomorrow.
There is no long term foresight here in MA--and although we are on the verge of the long term decline/collapse, our fellow politicians/residents act as there is no tomorrow, not even for our kids sake. Many states are run better and successfully attracting our people, and competing with MA for everything. But we are still stuck on our glory past for the most part--RE in general is very outdated as well here.
What you wrote can easily describe most of metro America though, certainly places like California, NY, NJ, Chicago and DC.
To be honest most states are run worse than MA. States like CA, NY and IL aren't even solvent.
High real estate prices is the bane of all modern economies. When all the disposable income goes to pay for a shack, that's not very efficient use of resources, especially if the people who cash their houses out for millions move out of state with their money. It's a classic case of rent seeking.
Maybe MA should imitate Texas and NH, and impose super high property taxes and get rid of the state income tax. That would control housing prices and ensure greater consumption and demand in other areas of the economy outside RE.
How do people in MA afford to live? When I look at jobs, I don't see salaries being a whole lot higher than those of where I currently live (western NY), even though jobs are more plentiful. Home prices in MA are totally outrageous. Do you have to make 7+ figures to afford to live there? I don't see how people who work in retail or restaurants can afford to live. We're thinking of relocating to MA due to a job change. We're bringing my adult daughter with us. I don't see how she could ever afford to live there on her own. More than likely she'll live with us to save money and then move back to NY to afford to live (never thought I'd say that moving 'back' to NY could save money, but it's true).
By the way, rents in MA aren't a whole lot higher than they are here. I don't get how homes can be worth so much more. How much does one pay in property taxes on a $500k home in MA? Perhaps your property taxes are lower than they are here (we pay about $7k on a $170k home).
I repeat, Massachusetts has the worse housing stock in the nation. Dollar for dollar, if I take $300,000 and go shopping in FL or AZ, I can find a 2,500 sf home, relatively new, with all amenities. In MA, I will end up in Malden with maybe not 6 1/2' ceilings, but definitely 7' ceilings, no garage, layers of paint and wallpaper to scrape off.
Are you looking at homes built in different time periods? Older homes in MA (and some date back to 1800s and early 1900s) have lower ceilings because people where shorter and didn't have central heating.
By the way, rents in MA aren't a whole lot higher than they are here. I don't get how homes can be worth so much more. How much does one pay in property taxes on a $500k home in MA? Perhaps your property taxes are lower than they are here (we pay about $7k on a $170k home).
The tax rate varies by city or town, but you're right that property taxes aren't as high as New York. We have a law here (Proposition 2 1/2) that limits the amount that property taxes can rise.
One reason was the high tech and bio tech booms of the recent past. Those industries pay very high salaries due to the high-value of the products that are provided. Often, even mid-level tech worker bees get (or used to get) huge bonuses which they then went out and looked at RE and prices got bid up. You can't compete with a 30 YO with 200K cash burning a hole in her pocket and the ability to pay another 3 - 5 K a month in PMI. Same thing but even more so in the Bay Area / SF.
Plus supply and demand.
If you want to live in a place like Lawrence, you can buy a foreclosure real cheap but you will then need a security system, a firearms permit and fork out for private schools.
There are some reasonably prices places like Salem where you can buy for 200 - 300K and there are decent schools etc. Not everyone can live in Manchester By the Sea or Cohasset or Duxbury or Weston.
NYers come here and think the quality of life here in Massatucky is far superior to what they are used to and the costs are way less. It all depends on what you are used to. Frankly after being around the US from the Deep South, FLA, California, SW and Midwest, this IS the best place to live and by golly if you want to be here you need to figure out how to do it.
In addition to the high tech and bio tech booms, which has boosted housing costs, Fidelity and other banking/investment/brokerage houses started to boom in the 90s here. Bankers and brokers often earn high salaries and can live in million-dollar homes.
There's also a severe shortage of available land in MA. In towns, such as Lincoln, there's barely any land to buy and build on. In the 90s, developers started not to build starter homes and concentrated their efforts on building million-dollar homes or tearing down pre-existing older homes and building McMansions. Once developers stopped building starter homes, a whole segment of the housing market was lost.
Another reason for the high cost of housing is the end of rent control. Once rent control in Boston and other communities ended in the 90s, rents skyrocketed. They doubled, tripled, or quadrupled. Everyone started to snap up multi-families and cash in on the skyrocketing rents. If you've noticed, though housing prices have come down since the dizzy highs a few years ago, rental prices have not gone down as well or at least for most of them.
So there are a number of reasons for the high housing costs that other states do not face, for better or worse.
On a more positive note, we don't have to drive far to go to the beach, mountains, city, or country.
Um...incomes in suburban Boston are the same in DFW? I don't think so. Please check your facts.
You would be surprised what the incomes are in Eastern Mass. Not everyone has a high paying job somewhere up around Rt 128. Or a high paying white collar job in Boston itself. There are many people that may very well earn less than some of the residents in DFW. I have never understood why everyone thinks Mass is a such a high paying state. It only is if you have some sort of professional occuapation. Many people earn $9 10 $11 an hour and a long commute in winter snows to make that. That and a part time job on top of the full time one.
Mass is expensive. Always has been I imagine always will be.
There's also a severe shortage of available land in MA. In towns, such as Lincoln, there's barely any land to buy and build on. In the 90s, developers started not to build starter homes and concentrated their efforts on building million-dollar homes or tearing down pre-existing older homes and building McMansions. Once developers stopped building starter homes, a whole segment of the housing market was lost.
Also are a lot of land in MA protected from development? I was driving west on route 16, it really amazes me the amount of wooded areas in MA just a couple of miles west of Boston. In most other states, these would all be covered with McMansions piled onto each other, big box chains, overpasses, strip malls and other staples of suburban blight. I frankly didn't see any McMansions until past I-495. The general environs was a colonial surrounded by dense woods and large lots as I drove down the winding road.
It's a really beautiful part of the country and I think a great environment to raise a family. I've lived in Dallas and Chicago, and MA is frankly like being in a different country, in an amazingly refreshing way.
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