Betting on towns in the Boston area? (Cambridge, Newton: real estate, apartments)

[donewithpretty]

I was reading some old threads that predicted the rise of Arlington's popularity, so I thought it might be fun to record some new predictions.

If you had to place a bet, which towns do you think will rise, fall, or stay the same?

[Brave Stranger]

Lol, Arlington is still on the rise A-Town was so undervalued it was a crime. Once Arlington fixed their schools everything else fell into place. The old Brighams ice cream factory in Arlington was just rebuilt into a high-end rental complex. Rents for the top 2 bedroom units: $3,355 per month. Watched a bidding war next to the property I own in the heights. Open house drew over 70 people. Seller got way over asking price.

Arlington is still the "it" town until it's replaced, and with a recent home price jump of 14.8% in less than 2 years in this economy I don't see it happening soon. As for the new "it" town look at Melrose, Burlington.

[donewithpretty]

My bet is on walkable towns with transportation. Many upper middle class families can't afford to buy into the name brand towns with those qualities, so I see schools in Somerville, Melrose, Wakefield, Waltham, possibly Medford, etc., rising to meet the demand of a new wave of homebuyers.

As a secondary pick, I'd say towns with lots of amenities and easy access to shopping (Burlington, Reading, parts of the north shore) will continue to attract buyers. Based on posts on this board, people are tired of paying to live within a 25 mile radius of Boston yet still needing to drive 30 minutes to go to a movie or pick up diapers.

I expect towns like Newton, Brookline, Winchester, and Wellesley to hold onto their market share because they combine transit and walkability with good schools.

Towns that will fall: Any of the outer burbs with hour+ commutes and no shopping, wealthy towns without town centers.

[tikaram]

I think Natick is on a rise. Not that it's been a run down town or anything, it's already quite desirable - yet still affordable. But I see it gaining on popularity and raising prices within next 5 years.

[alpha_beta]

I think towns that are close to Boston with good transit access and walkability will be where the growth is going forward. Towns like Medford (especially with the green line expansion) and Melrose (look at how many commuter rail stops they have!) definitely strike me as places with lots of potential.

From my tours of Arlington housing I feel like that town is basically done. The housing stock feels kind of overvalued at this point. The houses are so close together and the houses often need a lot of work relative to their valuation and homes in neighboring communities (e.g. Winchester and Lexington). I suspect there'll need to be a little retrenchment or price stagnation before it can grow further. About 90% of the house I've seen need a lot of investment

Your traditional power houses (Newton, Brookline, Belmont, Winchester, etc.) will probably remain very valuable. They have very strong fundamentals and there's only so much land inside the 95 belt. I don't know that you can expect more than organic growth at this point, but I don't think an investment there will lose you money.

I don't like Malden and Everett for growth. I think we're probably 15+ years from them having a chance. Despite their proximity to Boston and Cambridge, they have comparatively poor transit/walking options from what I've seen (very car focused).

[MikePRU]

Interesting thread! I'll be very curious to read what people chime in with. It wasn't too long ago that Needham was a town on the rise. Now we have so much construction going on it seems every street has 4 teardowns in progress.

Personally, I think the traditionally sought after towns will remain . . . well . . . sought after. What the next town is that will turn it around is anyone's guess. As already pointed out, fixing your schools is a huge part of that process. In this area, I've always had high hopes for Natick. I think it has a lot to offer.

[miu]

Originally Posted by donewithpretty

I was reading some old threads that predicted the rise of Arlington's popularity, so I thought it might be fun to record some new predictions.

If you had to place a bet, which towns do you think will rise, fall, or stay the same?

I saw this thread yesterday, and after a bit of thought, I wanted to say that I object to the whole premise of this thread. "Betting" on real estate, too many people dabbling in real estate speculation is why value bubbles occur and burst. Betting on real estate is probably why so many signed up for sub prime mortgages thinking that they were fine since their homes were going to jump up in value and offset their high mortgage interest.

Just buy a home that meets your current and immediate future needs (short commute, good schools if you have kids), and is affordable to your budget and not be so concerned about having your house shoot up in value by the time you want to sell it.

I guess that I'm just old school about buying houses... and I don't like gambling in matters of importance.

[konfetka]

I think it's a good thread, because in the world the one thing that is for certain - is change. When you buy, you are betting anyway, that 20 years from now, when your kids are graduating high school, things will be better, or at least not worse. Especially those of us, who cannot afford to live in the top 5% of towns, we are always betting, and trying to make the best compromise between our wishes and our budget.

As far as far off towns becoming less desirable, there are a few forces that will work to prevent it - population growth; relocation of people, who grew up in more populated and developed nearby towns, who view it as 'moving up' in life; and more pressure for more amenities and development. All this development also brings more office space and jobs from inside Boston to 128, and 495, and makes life more convenient.

As far as walkable towns becoming more popular, that is already true with young and retired people, but more apartments and condos also attract more low-income families and recent immigrants with ESL students, which puts more negative pressure on schools. In this case rent goes up, but house prices go down. The key is in the ratio of low-income and ESL students to the other students. In the case of Salem it's about 40%, which is why their schools were level 4 (out of 5) and '3' on Greatschools, and needed some restructuring. In the case of Salem you can see a lot of growth for local businesses and downtown, but not so much for schools or real estate investment, unless you want to run an Inn or rent. At which point the demand for rentals by childless renters will be high enough for low-income families to look elsewhere is unclear, because those families also look for walkability and transportation.

In the case of middle class towns I already bet on Beverly! You really have to look at it on the case by case basis, because each town is unique in it's resources and potential. Besides being inside 128, on the coast and close to shopping, it also has five train stations and schools on the upward trajectory. You have to look at it's appeal to businesses and families. First of all in my opinion it has come out of the rock bottom in the 90's, when it's largest employer - the Shoe factory was shut down. Now it has been transformed to the largest office building on the North Shore with a cluster of biotech, financial and tech companies. These jobs will attract more educated people with higher incomes. It has an airport. It has three colleges, with many graduates deciding to settle in the city, which has a good mix of entertainment, dining and shopping options. There are 10 private schools with a sizeable chunk of population who send their kids to those schools, contribute to the town, either running their own businesses, or at least spending their disposable income there.

Also the towns between Beverly and Boston are either less desirable for middle class families due to schools, or those with good schools are overpriced and competitive, in the case of Marblehead and Swampscott. The towns with good schools further away are beyond the mental perimeter of proximity to Boston for most people. The schools have improved significantly and the HS recieved a level 1 status (top 20%) for it's progress toward it's goals. Plus there is a good inventory of spacious houses on spacious lots, because it hasn't been affected by as much early growth, as towns closer to Boston, because it's closer to 128.

The coast, historic downtown and educational institutions attract creative talent to the city, which contributed to the creation of the plan for Downtown Beverly 2020.

In the case of Melrose, I have mixed feelings. I wish it would get better, but I don't know if it has seen it's better days. The problem is the size of houses and lots. You can build an addition to a house, but you can't make a lot bigger. A lot of young childless families would move in for proximity to Boston, good transportation and walkability. But by the time they have three kids, they start wondering about getting more space for their family for the same amount of money in towns further away, like I did. May be that's why Melrose elementary schools do better then their HS.

[miu]

I just don't think that the term "bet" should be used in these discussions. It's just not good to link buying a home with gambling for high yield and profit. While real estate bubbles can benefit a few lucky ones, overall there are too many "losers" created in its aftermath.

And the original post implies that in looking for "winner" real estate transactions, those who lose their "bets" will end up with housing that loses by being worth a lot less than their original purchase price. And that leads to people walking away from their loan obligations and their homes being foreclosed on. After all, if everyone keeps examining the values of their homes, who wants to keep paying a mortgage on a house or condo that has dropped drastically in its market value?

And wouldn't it be great if we never had to live through burst real estate bubbles again?

[donewithpretty]

I just don't think that the term "bet" should be used in these discussions.

Then don't participate? I would hope it was obvious I'm not trying to predict a bubble or a burst in the area. We've already lived through that.

The idea of the thread is more of a time capsule about people's ideas. Towns will continue to change over time, and people's desires in a town will change. In one decade, everyone might want to live in the city; in another, they'll want 4000 square foot houses in the exurbs. I'm simply interested in what other people think will happen next.