Future Real estate outlook (Boston, Cambridge: real estate market, 2014, mortgage)

[Whatsnext75]

What do you think that real estate will be like in Boston in 5 to 6 years? Do you think it will be pretty much the same as it is now? It seems to have gone down a bit from a year ago? I'm no expert and it seems like people here know more than i do so i wanted to hear thoughts.

[Shrewsburried]

Originally Posted by Whatsnext75

What do you think that real estate will be like in Boston in 5 to 6 years? Do you think it will be pretty much the same as it is now? It seems to have gone down a bit from a year ago? I'm no expert and it seems like people here know more than i do so i wanted to hear thoughts.

I imagine prices might start to flatten, but I'm hardly bullish on the idea. Prices have bumped significantly due to cheap lending, a strong local economy (again, fueled by cheap lending), low inventory, and foreign investors.

What will keep prices relatively flat: If/when the FED bumps rates and foreign investment weakens.

What will drive prices up: Continued low rates/inventory in combination with foreign investment.

Full disclosure: I am simply a guy who likes to read news articles. Do not take my input seriously.

[Shrewsburried]

Originally Posted by kingeorge

But all in all RE downturn in the near future is wishful thinking. If things go bad, there will be lot more to worry about than just RE.

This x1000.

This pretty much sums the Boston/Metro-west market.

[breezy1]

We just refinanced and the bank appraised our house at almost $90,000 more than we paid for it in July 2012 based on comps in the area (Watertown)! Doesn't sound like a downturn to me ...

[Shrewsburried]

Originally Posted by kingeorge

Huge issue facing buyers are loaded foreigners who will buy even on a high, as well as local folks who refinanced into 2% interest rates, and will not be selling anytime soon. Most are busy renovating and expanding, so contractors of all trades are having a great 2014, and continuing.

These facts are a double whammy for inventory. Let alone higher prices or interest rates. And inventory hints at being on a lower side. Many baby boomers are not selling either, so big boomer sell-off will probably not materialize anytime soon.

A recent article discussing foreign investment in Boston.

China's Town: Big Chinese Buyers Are Sinking Their Cash into Boston Real Estate

[kingeorge]

I would not hold my breath for any significant downturn. Even if price jumps flatten out, Boston and Cambridge are in a pretty good shape for a next decade or more. Why?

Because strong economy is here, seems it will stay, and inventory is limited. Inventory is limited with steady influx of new families relocating for bio-tech and pharmaceuticals flooding this zone; with loaded foreigners looking for an investment, who will go into bidding wars, and buy on a high, often with cash offers; with local population that refinanced into 2% interest rates, and will not be selling anytime soon.

Contractors had great year in 2014, with many homeowners staying put and renovating or expanding. In the old times most people would likely trade up, but this is much harder nowadays, especially if your current mortgage and interest is much lower, but you need to pay so much more for very little extra space gained.

Baby boomers are not selling-off in droves either.

All of this hints at lower inventory to stay around for a while, and that folks sitting on the fence about buying waiting for lower prices, might find less space, more competition, and even higher prices five years from now.

Cambridge and Boston RE markets are becoming global RE markets, so what local middle class Joe could or couldn't afford is of no consequence to RE anymore (unfortunately or fortunately is a good question for a debate). Further out of metro area, this is not the case, yet. I am curious if it starts spilling out, in a decade or not.

It is tough for less able buyers nowadays.

If for some reason we do have big downturn, then RE prices are least of our worries, in a great scheme of things.

[Brave Stranger]

The greater Boston real estate market has passed the rubicon....it's now like NYC or San Francisco. It's not going to be subject to wild price swings down. The area is becoming a major international hub, for better or worse.

[wolfgang239]

Originally Posted by Whatsnext75

What do you think that real estate will be like in Boston in 5 to 6 years? Do you think it will be pretty much the same as it is now? It seems to have gone down a bit from a year ago? I'm no expert and it seems like people here know more than i do so i wanted to hear thoughts.

Hold that thought until the Spring. It will be interesting to see if this year is a repeat of the past 2.

[kingeorge]

Originally Posted by wolfgang239

Hold that thought until the Spring. It will be interesting to see if this year is a repeat of the past 2.

Good point. If it is, madness is just around the corner.

[Whatsnext75]

What could happen this spring?