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Los Angeles (Not really legacy, but felt obligated to include)
Which will see the largest increase in home/condo/real estate prices over the next 5 or 10 years?
Which city will see the largest price change?
Who will see the lowest?
Predictions for some of these cities?
My take:
1. Chicago- Lots of inventory, low price, great urbanity, clean, etc. I think this coming decade it will see huge price increases. Its a city like no other. (~95-110% Increase by 2030)
2. Philadelphia- I think Philadelphia is a sleeping giant tucked between NYC and DC. definitely poised to boom too, maybe not on the scale of Chicago since I think it has a head start... (~85-90% Increase by 2030)
3. Washington DC- High wage job growth, HUGE demand, I cant see it NOT grow by a ton (~55-70% Increase)
4. Boston- Demand will be steady, but not massive. Lab space will double bringing lots of white-collar jobs to the city. However, I still think most of the increase will be u to Boston's inefficiency to build good amounts of units (~50-60% Increase by 2030)
5. Los Angeles- I think demand will help push its already sky-high property prices. Increased transit, more investment, probably will see a steady growth (~30-40%)
6. New York City- It will definitely recover from COVID. I think it will keep up with inflation, maybe a little ahead of it actually. I think parts of NYC are underpriced, especially the Bronx and Queens. (~25-30% Increase by 2030)
7. San Francisco- It is already at an all-time high. I dont think its sustainable to see the 2010-2019 growth that we saw for another decade. (~5-15% Increase by 2030)
Yeah I think it's a bad sign for Chicago that even its affluent, highly desirable suburbs like Oak Park and Evanston are seeing declining home prices right now.
Out of these, my gut feeling says Philly, then DC. I don't know much about the scene in Philly but it's kind of surprising you can still find homes for under $500k in much of NE DC, despite having good transit access, manageable crime rates, being fairly close to downtown, and having access to one of the nation's top job markets. That's not gonna last.
I don't think that we'll see significant appreciation in most cities this decade (at least compared to inflation). I say that as some who enjoys cities and hopes that my house value would continue to climb. Still, if I treated my home as an investment and not as a place to live, I would cash out now.
I think uptrending crime is going to be a significant problem for cities for years to come. I think Chicago and Philly will have the least appreciation citywide, just as they have had for decades. I think Boston and DC are most set up to have housing price growth.
Even though its smaller than the others on the list, don't count out Baltimore regarding legacy cities. If DC and Philadelphia continue its nice ROI growth, then this leaves Baltimore as the true wild card among legacy cities. Since its not geographically located in the traditional Rust Belt, its possible that its beleaguered leadership of the 2000s and 2010s could turn around. Of course within Baltimore itself, those wild cards include transitional neighborhoods, though an improved city would improve the desirability of every neighborhood. Then you have projects like Port Covington that could provide a source of revenue, and I'd wish the old industrial area near Canton got revamped even more.
The bar is already low to begin with (median rents are barely $1K and the average home/condo is like $160K), which means that even getting to $1500K rent and $240K median home prices would be a nice return, yet still not to the point where its still astronomically expensive like you see in NYC, DC, and Boston. That's not far off from the median value in nice neighborhoods like Butcher's Hill, Midtown-Belvedere near Penn Station (old money there), and Upper Fells Point. You can even get a 2 bedroom condo on Baltimore's Charles St. just a couple blocks from Penn Station for like $320K, and a five bedroom for well under a million just a few blocks from the Washington Monument and about a block from the Peabody Conservatory.
Even Wards 7 and 8 in DC are noticeably more expensive compared to 20 years ago. Where else can you buy a rowhouse in a historic old money neighborhood for under a million? Not in DC, Boston, NYC, and most of Philadelphia. Plus, mega cities are out and Baltimore seems like the perfect size to reinvent itself, and having not one but two commuter rail lines to DC from its core makes But if Baltimore can quell its crime like most of the other cities on this list did in the '90s and 2000s, it will certainly bring good things to Charm City.
Even though its smaller than the others on the list, don't count out Baltimore regarding legacy cities. If DC and Philadelphia continue its nice ROI growth, then this leaves Baltimore as the true wild card among legacy cities. Since its not geographically located in the traditional Rust Belt, its possible that its beleaguered leadership of the 2000s and 2010s could turn around. Of course within Baltimore itself, those wild cards include transitional neighborhoods, though an improved city would improve the desirability of every neighborhood. Then you have projects like Port Covington that could provide a source of revenue, and I'd wish the old industrial area near Canton got revamped even more.
The bar is already low to begin with (median rents are barely $1K and the average home/condo is like $160K), which means that even getting to $1500K rent and $240K median home prices would be a nice return, yet still not to the point where its still astronomically expensive like you see in NYC, DC, and Boston. That's not far off from the median value in nice neighborhoods like Butcher's Hill, Midtown-Belvedere near Penn Station (old money there), and Upper Fells Point. You can even get a 2 bedroom condo on Baltimore's Charles St. just a couple blocks from Penn Station for like $320K, and a five bedroom for well under a million just a few blocks from the Washington Monument and about a block from the Peabody Conservatory.
Even Wards 7 and 8 in DC are noticeably more expensive compared to 20 years ago. Where else can you buy a rowhouse in a historic old money neighborhood for under a million? Not in DC, Boston, NYC, and most of Philadelphia. Plus, mega cities are out and Baltimore seems like the perfect size to reinvent itself, and having not one but two commuter rail lines to DC from its core makes But if Baltimore can quell its crime like most of the other cities on this list did in the '90s and 2000s, it will certainly bring good things to Charm City.
Honestly did not put DC on here because I think it will appreciate the most. Prices are so low that, I can see it happen.
Yeah I think it's a bad sign for Chicago that even its affluent, highly desirable suburbs like Oak Park and Evanston are seeing declining home prices right now.
Out of these, my gut feeling says Philly, then DC. I don't know much about the scene in Philly but it's kind of surprising you can still find homes for under $500k in much of NE DC, despite having good transit access, manageable crime rates, being fairly close to downtown, and having access to one of the nation's top job markets. That's not gonna last.
I think you need to pick and choose better in Chicago. You picked probably the two worst performers, although Market Trends has Oak Park up 44% from last year. According to Market Trends, another upscale suburb, Hinsdale, has its median list price going from $927,000 to $1,215,000 (31%) and neighboring Western Springs up 13% and Clarendon Hills 27% year over year, and inventory dropping to almost a seller's market, Winnetka going from $1,192,000 to $1,699,000 (42%). Redfin has the average price in Chicago up 17% year over year to $310,000, still reasonable. According to some research I just did using Google, inventory in the Chicago area is at record lows, so I don't see prices going down in the near future.
Also according to Redfin, Year over Year appreciation:
Philadelphia, up 13.8% to $239,000
NYC up .01% to $725,000
LA up 11% to 810,000
Boston down 3.2% to $690,000
Chicago up 17% to $310,000
Washington DC up 10.5% to $607k
SF down 1.2% to $1,287,450
I would say its between DC and Philadelphia. Then Chicago. DC has already appreciated at very high rates, and I don't see that trend changing anytime soon. I'm sure the rates will slow over time though (need to maintain a level of healthy growth).
Philadelphia is a mixed bag, but all trends are pointing toward an increased appreciation in home values and rental rates. Not at the level of DC, but certainly among the top for this group. Rental rates in Philadelphia are now even with Chicago and I see them inching further ahead in the coming years.
The thing with Philadelphia is that its a big city and some neighborhoods are booming with prices skyrocketing, while others are still waiting on investment to trickle in. Its inevitable that most areas will feel the growth bug in the next 1-10 years, but at a slower rate then DC. DC is a lot smaller and virtually every part of the city has seen home values increase a lot.
Chicago is booming from a development standpoint, but I see the city struggling with population decline in the future, which could bring uncertainties to appreciation (but I could be very off, I am just going by trends). Philadelphia's location is a curse and blessing, but if the city keeps playing its cards right, it will continue to take off, and has a lot more room to grow than even Chicago. (although Covid threw a wrench into the mix).
Yeah I think it's a bad sign for Chicago that even its affluent, highly desirable suburbs like Oak Park and Evanston are seeing declining home prices right now.
Out of these, my gut feeling says Philly, then DC. I don't know much about the scene in Philly but it's kind of surprising you can still find homes for under $500k in much of NE DC, despite having good transit access, manageable crime rates, being fairly close to downtown, and having access to one of the nation's top job markets. That's not gonna last.
Not sure where you're getting this information from - Oak Park and Evanston are both up this year. It'd be weird if they weren't, given mortgage rates being as low as they are. If anything, the most affluent suburbs (which are a tier higher than Oak Park/Evanston) are experiencing especially tight inventory and high sales due to wealthy residents moving out of the CBD.
Boston would be #2 but I really don’t think the city has enough lifestyle appeal/affordability to retain folks. Growth is now slow to non existent but construction is still happening just not really in the luxury side. This will keep rental prices below peak for quite some time and once the pandemic is over the cost of buying will cool as more homes become available.
The fact that office an residential developments are being scrapped for lab spaces isn’t a great thing. Lab space often has very few workers in it at any given time and the buildings are short, dull and wide. Generally they lack windows and this don’t interact with the streets cape well.They create foot traffic dead zones around them and have a large footprint. Kendall Square took decades to become what it is and it’s a lot more than just lab space. it will be very hard to create that vibe/concentration anywhere else.
Labs aren’t gonna draw as many new workers as general office space and I could see a large contingent of those worker being H1B1 and not permanent Bostonians.
Additionally, I don’t see Lab space elevating the housing market in the Boston areas more depressed pockets but more so in areas that are already firmly out of “investment property” stages.
Last edited by BostonBornMassMade; 02-18-2021 at 09:43 AM..
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