Boston real estate does not seem to be hit as hard as other areas of the country, especially like California. Here is my take on it:
1. Real estate in Boston never had the overinflated jump that other areas did.
2. There is a demand for luxury real estate there.
3. Boston is a historic and cultural place to live with plenty to do and see.
4. Even Boston condos have held up pretty well considering that condos seem to take the first hit.
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All I ever write about is California real estate, because it is what I know. Do any of you have insight on the east coast market? I'm curious.
2 comments:
all I know is it's good to hear from Howard's blog again...he looks good snoozing under the 'ol tree...have some egg nog, Howard!
I live in the Baltimore/DC market (really more DC).
Yes, Virginia, there is a bubble, and it is deflating. However, it is not as bad as SoCal, Miami, Phoenix, or Vegas. You live in a numero-uno primo bubble zone, Brad. DC and the rest of the east coast are in the second tier of bubble-mania.
The major problems in my area right now are in the ex-urbs. When housing prices became ridiculous in the cities and on the beltways, folks decided to save money by moving away and doing the 2-hour (each way) daily commute in horrible traffic.
When land valuations and property taxes got out of hand, the farmers all decided to parcel out their acreages, make a ridiculous profit, retire, and move to Bermuda. The builders crammed giant McMansions onto ½-acre lots in the overpriced cornfields and sold them at $500k to about $900k a pop. Note that even the richest counties in Maryland have median household incomes of less than $90k, so was this ever really a practical business model?
They overbuilt just in time for the credit crunch and fuel panic to make further sales impossible. There have been significant price declines in the ex-urbs, and they are rolling inexorably toward the cities. Ex-urb builders have been sitting on enormous amounts of unsold inventory since early 2006. Entire new developments are vacant, yet new new developments continue to come on line.
The Baltimore-Washington metro area is somewhat less bubblicious than SoCal, and some others, but it is still absurdly overpriced. Also, it is in the earlier stages of the bubble deflation, when inventory continues to shoot up, but it has not yet caused severe price declines. I guess the builders and their financiers still betting that the TARP will work and a “spring bounce” is just around the corner.
I suspect the same is true of Bahwston, New York, and other east coast bubble cities. East coast 2008 was west coast 2007. East coast 2009 will be west coast 2008. What L.A., Vegas, Phoenix, and Miami are today, D.C., Baltimore, Boston, and New York will be tomorrow. The valuations are simply not justified, and it is causing big problems. The correction is happening, and it will continue until we revert to the mean.
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