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We are moving to the Boston area from out of state and are not in a hurry to buy a home, even though we intend to buy one eventually within the next 5 years. I wanted to get some advice from those who are familiar with the Boston suburb real estate market:
What is the housing market (current inventory and sold price) like in areas such as Newton, Belmont, Lexington, Arlington, Acton, and Concord? Do you think this will change considerably in the next 5 years?
Do you think the pandemic-related recession will cause housing prices in the Boston area to drop considerably over the next year or two?
Are there certain areas or price points that may be more affected by the recession than others?
Home prices are so steep here that I'm worried to make a $1M investment only to have it fall significantly in value (e.g., buying in 2008 at the peak before the bubble). Any thoughts or insight would be appreciated.
And a separate question: we have 1 kid (1 year old) and may have a second. Is it better to buy a cheaper home in an area with not-as-nice schools now and then move in 5 years when she starts kindergarten or better to buy into a nice house in a great school district now? Thinking that prices in the better school districts will rise up proportionally in price so better to buy in the nicer neighborhood now than later, even if it means paying higher taxes and saving less now... Would love to get some thoughts on this.
Here's my $0.02:
I doubt there will be a significant fall in prices, but no one ever knows. This pandemic is going to cause a lot of things to change significantly and will be a turning point in history, but no one can say for sure just what those effects will be. Back in the recession of 2008, housing prices in Newton held steady -- they didn't increase much but they did not decrease, so that is different from some parts of the country. Towns like Newton, Belmont and Arlington will keep their value just because they are commutable to both Cambridge and Boston. I've read some articles about the pandemic making people re-think city life, and heard from realtors that lots of people who live in Boston are buying second homes on the Cape or somewhere further out, and there was discussion about younger people moving out of Boston to the suburbs like Wellesley. So there may be some increased demand for those close in suburbs. What I really don't know is how the further out suburbs will do -- will people want to leave towns like Newton, which are more urban suburbs and move to places with a lot more land like Acton or Chelmsford or others out near 495? Or will a big economic change hit those further out suburbs, causing them to fall in price more than those closer-in suburbs?
As far as having young kids/having more kids, keep in mind it is easier to do an in-town move down the line rather than a move to a totally different town. Kids can stay in their schools and friends, and you already have the convenient grocery stores, salons, dry cleaners, etc. Or, if you can stay in the house and renovate/add on later -- that's always an option in towns like Newton or Belmont - whatever renovation you do is almost certainly going to add value.
The towns you mentioned are all great places to live and raise family and are not going to collapse or anything. They have held steady (and high) all along. Taxes are always going to go up in these good-great school towns. It's just how it is. I spent most of my working life in Littleton and the schools were great and taxes always went up. Would have been in Concord if I could have begun to afford it. Those are all fine towns and they will always be a good investment. (I am not an agent or any such, just fought the real estate wars all of my working life to be commutable by Rt. 2. Lived alone and no kids and watch these things avidly). Best wishes.
you take a big hit when you sell - realtor fee, movers, etc. among others - you are better off finding something that fits and maybe need some improvements later. If you cant find something you like now, then consider renting. Nobody has a crystal ball but the better suburbs didnt see drops in RE prices in the Recession in early 2000s. MA schools are supposedly very good. Even the ones not ranked at the top but still reputable are better then a normal school in another state so dont feel like you have to buy into the top tier.
Yes, I do think there will be a decline in prices though it may not be anywhere near as significant as places like Vegas. Maybe an average of 5-10%? I do think you should wait until the you know the area and can decide which location best fits your lifestyle.
Who knows. My personal opinion is that the high quality towns with good schools and commutes into Cambridge remain an excellent value. Cambridge, most of Boston, Somerville, Arlington, Newton, Wellesley, Lexington, Winchester, and Concord. I'm sure I'm missing some. There is a nexus of biotech and tech that puts Boston among the top 5-10 cities in the world regarding technical innovation. With mortgage interest rates at essentially inflation, Boston real estate will almost certainly exceed that rate over. 20-30 year time frame with minimal risk.
Things are different now. When 9/11 happened we didn't even have Wi-Fi we had Broadband but no Wi-fi. When 2008 happened we had Wi-Fi but we are still getting up to 4G And smartphones. Now we're talkin about 5G on the horizon and satellites creating worldwide internet.
As for technical Innovation there's very little to if any manufacturing the Boston metro area. Pharmaceuticals are nice but many of those places are located outside of it. I personally have a friend that worked out of Wyeth now Pfizer for quite some time that's nowhere near Boston. You can talk about designing and Engineering all you want but that's not contingent upon being in Boston.
if you reduce something to data and you're allowed to basically exchange data around the world with no marginal cost than your need for being in certain areas is lessened. The New York City that Industries largely tourism and entertainment and in Boston that Industries largely Academia.
I've had some discussions about this in the past but basically I think this is going to go like this. If you have students that are in other countries that cannot come back either because of borders closed or do to covid-19 shoe domestically in their country or in the United States Academia is going to have to have online classes to maintain a revenue stream. I cannot picture International students taking a gap year that is not an option. So I condemn you wants to maintain the students you're going to have to make sure that every class is also available online I'm not saying it replaces it for an experience but you're going to have to have that option.
Then domestically we're going to see people that frankly don't want to foot the bill to actually pay for the dorms and lodging and so forth. It's going to be a hard argument to say that International students can take classes online but if you're in country you cannot. Let's say somebody lives in some remote part of Alaska and bu says I have to come in the class but yet someone from Montreal can go online. A policy like that is bound to create lawsuits.
We've already seen with work from home means in that in many cases you can run things just as productive because you don't need as many people and now we don't need as much of a physical building so a lot of that extra UC and Academia just doesn't need it. The Olympic size swimming pool, college sports, huge dining halls, towering firms etc.
I get it that college students bring money to an area but a lot of that is student loan so it's technically public money at a Bentley what's going to happen is FAFSA is going to be contingent on being able to offer online classes. Once that happens in the private loan Market jump ship and pretty soon you have a legitimate option across all of Academia.
we can't keep on thinking that Boston is unique or special or different when the reality is they put all their eggs in one basket with Academia. Rents dropping and property values are dropping and frankly if you don't have to be there why go there?
the bigger the venue in the bigger the acts the harder it's going to be for anything to come back. You can't tell us that Fenway Park's can still operate with the same revenue of selling out Dunkin Donuts in Hartford. You can't scale down operations of facilities and that's the Crux of all of this. Some of my ancestry was landed gentry in England. Ever see Downton Abbey? Those big stately looking castles and mansions. You want to know what happened to all that? They simply couldn't afford it. There was no Revenue coming in to justify the operations.
The irony here is Boston largely depends on non taxable entities such as Academia to justify taxable entities like shops and restaurants.
We are moving to the Boston area from out of state and are not in a hurry to buy a home, even though we intend to buy one eventually within the next 5 years. I wanted to get some advice from those who are familiar with the Boston suburb real estate market:
What is the housing market (current inventory and sold price) like in areas such as Newton, Belmont, Lexington, Arlington, Acton, and Concord? Do you think this will change considerably in the next 5 years?
Do you think the pandemic-related recession will cause housing prices in the Boston area to drop considerably over the next year or two?
Are there certain areas or price points that may be more affected by the recession than others?
Home prices are so steep here that I'm worried to make a $1M investment only to have it fall significantly in value (e.g., buying in 2008 at the peak before the bubble). Any thoughts or insight would be appreciated.
And a separate question: we have 1 kid (1 year old) and may have a second. Is it better to buy a cheaper home in an area with not-as-nice schools now and then move in 5 years when she starts kindergarten or better to buy into a nice house in a great school district now? Thinking that prices in the better school districts will rise up proportionally in price so better to buy in the nicer neighborhood now than later, even if it means paying higher taxes and saving less now... Would love to get some thoughts on this.
Thanks!
Don't try to time the market. True for stocks*, which are actual investments. True for investment properties, which again are actual investments. Doubly true for owner occupied single-family houses. You are not making a $1m investment. You are using money to buy a house that you will live in. I know it feels like you are making an investment, but that is not really what you are doing.
Prices will not always go up. Prices will go down at some point in the future. Will they ever be lower than they are today? Perhaps. Perhaps not. You will listen to a bunch of experts who will have had absolute clarity about past events, but they are all just guessing (some people are up front about this). I wish people who make predictions about the future would make quantitative predictions with a fixed time horizon, so we can regularly go back and evaluate those predictions. To listen to this board, the Boston housing market has been nearing a correction for at least six years. As I said before, there is always a correction in the future. Knowing when and how big is the trick.
With the caveat that you can't time the market, you can time your personal circumstances. Are you planning to be in the area for > 5 years? Look into buying. Buy in an area that makes sense for you today, at a price that is conservative enough that you can withstand some economic turmoil. Are you not sure you'll be here in 5 years? It might be better to wait and rent. Not to time the market, but to time your personal circumstances.
As to your last question, that's a personal preference. Will you be OK being "forced" to move again in 3-4 years, no matter what the market conditions may be? Will the tax savings cover the transaction costs?
*there are people who can time the markets. that is their job. generally be wary of anyone who has a trading strategy they are willing to share. especially with random strangers on the internet
With the caveat that you can't time the market, you can time your personal circumstances. Are you planning to be in the area for > 5 years? Look into buying. Buy in an area that makes sense for you today, at a price that is conservative enough that you can withstand some economic turmoil. Are you not sure you'll be here in 5 years? It might be better to wait and rent. Not to time the market, but to time your personal circumstances.
As to your last question, that's a personal preference. Will you be OK being "forced" to move again in 3-4 years, no matter what the market conditions may be? Will the tax savings cover the transaction costs?
*there are people who can time the markets. that is their job. generally be wary of anyone who has a trading strategy they are willing to share. especially with random strangers on the internet
The above is probably the best advise you'll receive.
If I were personally considering a home purchase, I might hold off until Q1 2021 simply to see where inventory, Fed action, equity markets head, and productivity/employment head ... this could very well lead to more pain upside in the interim, but at least you'll be buying with fewer known unknowns. I'll post this chart without comment ... something to consider.
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