Real Estate Market beginning a big Price Correction? Especially in the suburban over a $million bracket? (Somerville: renting, houses)

[vendela]

IS anyone else seeing a possibly price correction looming in the R.E. market particularly in areas like Lincoln, Wellesley, Dover, Concord, Sudbury and in the over $1.2 million bracket? Feels like it's more than a seasonal slow down. One realtor told me that the millenials eschew the over $million large suburban homes and prefer renting or smaller more urban style places under a million. And many empty nesters are the same. Anyone have stories to support this? I've found several articles projecting a correction or very worse in the coming year.

[tysmith95]

The towns by 495 have not had the appreciation of towns along or inside of 128 since the recession.

[Whatsnext75]

Doesn't surprise me if this is true. For years ive felt these areas seemed like a rip off. Sounds like other people feel the same as i do.

[tysmith95]

I think those towns are expensive because of all of the office building/businesses/labs in Burlington and Waltham. That's not changing.

[Dm84]

You see the same thing happening in Sharon. There is a ton of inventory but houses over $800k or so aren't moving nearly as fast, if it all.

The issue is deeper than Millennials not wanting these homes- they simply can't afford them.

[jayrandom]

I think anecdotal explanations are best for describing trends, not predicting them. There will be a correction at some point. The market is always one recession away from a correction and there will be another recession. That's just the way it works. If you can predict when you'll be able to make a lot of money.

At some level there's only so much room for a certain price segment of given market to come down, namely the segment below. As long as there is still upwards pricing pressure in a town at the entry level, its tough for bigger houses to fall that much as the segments can't cross. People may prefer to pay less for a smaller house, but they won't pay more (at least in the same town). So I'd be less worried about the $1m range in Wellesley where a starter home is in the $800-900k anyway. There may be a correction, but it will likely be at all levels.

[rethcir]

There isn't anywhere near enough starter or middle-income housing in desirable locations for people in their 20's and 30's within 128.

How are you supposed to afford a million dollar house, or really any house in the area on a median household income of 67k?

[mwbms28]

I would argue that it is not millennials but Asians who are driving the markets in at least some of the towns you mentioned.

The school systems are also rock solid.

Finally, more and more jobs are cropping up along the 128 corridor.

Frankly, if the markets overall continue to advance, then both Somerville and the towns you mentioned will do well. With how hot Somerville has been, I think the time for huge gains has already passed. That said, Somerville is still probably a pretty good investment.

[tysmith95]

I don't understand why somerville is so expensive. East Somerville basically looks the same as somewhere like Everett. Yet it costs twice as much. I don't get the allure.

[bugelrex]

Originally Posted by mwbms28

I would argue that it is not millennials but Asians who are driving the markets in at least some of the towns you mentioned.

The school systems are also rock solid.

Finally, more and more jobs are cropping up along the 128 corridor.

Frankly, if the markets overall continue to advance, then both Somerville and the towns you mentioned will do well. With how hot Somerville has been, I think the time for huge gains has already passed. That said, Somerville is still probably a pretty good investment.

The driving factor is the high paying jobs, those who work in tech with 5+ years experience usually have incomes around 120k-160k. If both spouses are in the same field a 300k HHI can easily support a 1M+ house (if they think both jobs are secure).

In many cases, a 10+ year experience in a top tech firm can yield 200k base salary with ivy credentials or high skills

Until these jobs are threatened, houses in very good school districts close to tech companies will be somewhat stable...