Housing prices in MA act like the recession never happened (Boston: real estate, apartments)

[Guineas]

Home prices in some MA towns today are actually even higher than the 2006 peak. Meanwhile highly desireable neighborhoods and wealthy suburbs by the lake in Chicago are all down 30% from peak.

What gives?

Almost every single family home in Massachusetts inside Rt 128 goes for over $400,000, regardless of condition. And many of them still have 1950s kitchens, impractical layouts, uneven floors, and generally need serious work. Insulation is also horrible, with heating costs running over $500 a month in winter. Some of the nicer places (by nice, I mean somewhat worthy of being called an upper middle class home and not a wooden shack) easily go for $800,000 to over a million. Didn't a million dollar home used to mean something like a mansion even in New England?

The median household incomes of these towns clearly do not support these prices. It's like the recession never happened and everyone still believes home prices only go up here.

Buying a home in MA feels a little like a scheme to fund someone else's retirement to Florida.


Wealthy towns around Boston, median single family home price, 2002-2011


Wealthy suburbs of Chicago, median single family home price, 2002-2011

[Guineas]

Housing Demand Weakest in Washington DC, Chicago and Boston

# U.S. Metropolitan Area Metro Movers Index
1 Washington-Arlington-Alexandria, DC-VA-MD-WV 0.37
2 Chicago-Joliet-Naperville, IL 0.41
3 Boston-Quincy, MA 0.44
4 Salt Lake City, UT 0.44
5 Louisville-Jefferson County, KY-IN 0.45
6 St. Louis, MO-IL 0.46
7 New Haven-Milford, CT 0.47
8 Little Rock-North Little Rock-Conway, AR 0.47
9 Kansas City, MO-KS 0.47

Basically, Boston comes in No. 3 in the top 10 markets where there are lots of people looking elsewhere for new homes and apartments, but not a lot of folks looking in.

Apparently, not everyone wants to move to Boston area.

News Room - Trulia.com - Press Releases

[brightdoglover]

I don't know if people particularly believe that prices will only go up, but if someone is willing to pay those prices, that is what will be asked.
I live just inside 495, and on the lower end, houses have come down (although there was never an absurd boom/bust to begin with). Dunno about inside 128, guess you really have to pay for that convenience (Waltham, this means you!)
I do remember, when I first starting looking for a house, being boggled by ads that said something like,
"Great starter home, only $250,000!"

[Guineas]

It's just that the incomes in Massachusetts aren't really higher than any other metro area. There certainly aren't enough tech and health care jobs to support the entire area's housing prices.

Maybe people are just conditioned more to accept run-down houses for higher prices. Concrete hole in the walls in Moscow and Beijing run for millions too. It's all about expectations I guess.

[SuperSparkle928]

Originally Posted by Guineas

Housing Demand Weakest in Washington DC, Chicago and Boston

# U.S. Metropolitan Area Metro Movers Index
1 Washington-Arlington-Alexandria, DC-VA-MD-WV 0.37
2 Chicago-Joliet-Naperville, IL 0.41
3 Boston-Quincy, MA 0.44
4 Salt Lake City, UT 0.44
5 Louisville-Jefferson County, KY-IN 0.45
6 St. Louis, MO-IL 0.46
7 New Haven-Milford, CT 0.47
8 Little Rock-North Little Rock-Conway, AR 0.47
9 Kansas City, MO-KS 0.47

Basically, Boston comes in No. 3 in the top 10 markets where there are lots of people looking elsewhere for new homes and apartments, but not a lot of folks looking in.

Apparently, not everyone wants to move to Boston area.

News Room - Trulia.com - Press Releases

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Quote:"Apparently, not everyone wants to move to Boston area. "

OR, they can't afford to do so. There is so many technology, medical and financial companies here, that housing prices stay high. A two-income high-tech couple can live here with relative ease (and I know many hundreds of them).

[SuperSparkle928]

Originally Posted by brightdoglover

I don't know if people particularly believe that prices will only go up, but if someone is willing to pay those prices, that is what will be asked.
I live just inside 495, and on the lower end, houses have come down (although there was never an absurd boom/bust to begin with). Dunno about inside 128, guess you really have to pay for that convenience (Waltham, this means you!)
I do remember, when I first starting looking for a house, being boggled by ads that said something like,
"Great starter home, only $250,000!"

----------------------------------------------------------------------

I bought my first starter home on the North Shore in 1990 (I was single then). It was only half-built (so I finished it myself), and at that time real estate in this area had plummeted. Banks were afraid to give mortgages because the housing prices were falling so rapidly.

$250K for a starter home is a bargain (depending on town and condition).
I paid that 21 years ago for an uncompleted house. (though I made a fortune when I sold it).

[konfetka]

I think because the recession didn't affect Boston economically as hard as most other areas in the US, people are moving here for jobs, which they cannot find in other states, therefore demand is keeping up with the supply. The conditions of the houses has to do with most of them being older, and the fact that the area has been historically developed earlier, than most other states, limiting the number of new construction.

[Verseau]

Originally Posted by konfetka

I think because the recession didn't affect Boston economically as hard as most other areas in the US, people are moving here for jobs, which they cannot find in other states, therefore demand is keeping up with the supply. The conditions of the houses has to do with most of them being older, and the fact that the area has been historically developed earlier, than most other states, limiting the number of new construction.

Here's your answer. The unemployment rate in the Boston metro area currently stands at 6.6% (the lowest rate in the top 15 largest metro areas after Washington DC). The unemployment rate in the Chicago metro area is 9.6%.

[mdovell]

Originally Posted by Verseau

Here's your answer. The unemployment rate in the Boston metro area currently stands at 6.6% (the lowest rate in the top 15 largest metro areas after Washington DC). The unemployment rate in the Chicago metro area is 9.6%.

That depends as what is the metro. Lawrence isn't that far from Boston and the rate is 15.5%

Workforce Development
New Bedford is at 12.2%
Fall river 12%
Brockton 9.3%
Providencetown 13.5%
Fitchburg 10.4%
Springfield 11%

Employment isn't specifically tied to housing prices as there's a large rental market in boston. Students do not always work. International students by law have to be full time and therefore might be less likely to work. There's plenty of rental properties that always have students in them nearly year round. Much of the cape is also rentals as the population booms in the summer and fades in the winter.

Prop 2 1/2 also artificially raised what people think their homes are worth. If you cannot raise the rate then you raise the assessment. So what the town says a house is worth really isn't the market rate. More importantly what some sites show is asking prices not actually selling prices. Zillow has a bad reputation because they never said specifically how they reach their numbers. If zillow sold stock instead of giving numbers in housing they would be facing jail time from the SEC by now.
Why Zillow Sucks - YouTube

[missionhill]

Originally Posted by Guineas

There certainly aren't enough tech and health care jobs to support the entire area's housing prices.

On the contrary, there are plenty of well-paying tech and health care jobs and jobs in many other fields, and probably not enough houses, or dwellings, let's say, to meet the demand, because the regulatory environment and the hysterical opposition to multiple-family dwellings in almost any location limits construction of new housing. It's probably as good an example as you'll find of the old supply-demand rule.

There aren't, by the way, plenty of jobs available to people without lots of specialized skills, but if you're in hi-tech and many other high-education, high-skill fields, there's no shortage of jobs.