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Should you buy a home in Boston in 2020?

Experts weigh in on buying a home in one of the country’s most expensive housing markets

Deciding whether to buy a home is rarely an easy decision—and it’s even more difficult in the Boston area. Why? The region hosts some of the most expensive residential real estate in the U.S.—its median house price was $655,000 in January—and the competition for it is fierce.

There are myriad reasons for these conditions, not least the region’s patchwork of zoning regulations and a long-running dearth of new supply (even though the area is in the midst of a major development boom). Also, the Boston metro has been slapping on new residents steadily for years now, with a population ready to crest 5 million any year now.

It can all add up to exasperation for prospective buyers. Younger buyers, in particular, might be dissuaded from ever taking the plunge—indeed, a sizable portion of millennials in the Boston area expect to rent in perpetuity. Meanwhile, older buyers looking to downsize face an inordinate amount of competition from foreign investors and newcomers in general.

So! To divine whether residents and transplants should enter into this housing thunderdome, Curbed Boston solicited feedback from housing analysts, influencers, brokers, and others, all of it revolving around the question: Should you buy in 2020?

We collected the responses below before the outbreak of novel coronavirus in the U.S. How might its spread impact the housing market this year? Read this.

Constantine Valhouli

Cofounder and research director at NeighborhoodX

What’s the prognosis for the local housing market?

Prices are at or near historic highs for Boston. In previous real estate cycles, Boston had what equity analysts call low “beta”—meaning that the property prices didn’t move too far up in a strong market, but they also didn’t fall too far (with the exception of a few neighborhoods) in a down market. For the past decade or so, Boston’s prices have moved closer in line to New York City, with the average asking price per square foot in the Seaport on par with the most expensive neighborhoods of Manhattan.

Is there a bubble?

This is such a nuanced question. Bubble, in that prices have risen considerably—or bubble, in that prices have risen to unsustainable levels and the underlying value isn’t there to support those prices?

In the past 15 or so years, Boston has fundamentally changed. Again, the price gap between prime neighborhoods of Boston and those of New York City have narrowed considerably. This reflects Boston’s stronger economy, as well as the growing concentration of wealth in neighborhoods that had previously been under the radar.

There is also a strong argument for the bullish drive behind price increases in places like Allston-Brighton (Harvard’s massive holdings and ongoing transformation of the neighborhood are making it feel like an extension of Cambridge) and Dorchester (it wasn’t that long ago when neighborhood proponents were still trying to convince people to move here for its proximity and beautiful housing stock).

If there is a bubble, are some areas or parts of the market more insulated than others?

In the last real estate cycle, there were considerable foreclosures in Roxbury and Dorchester. But prices stagnated for years because the price increases were driven by speculation more than the actual amenities and lifestyle that the neighborhoods offered at the time. A decade later, there is a stronger base of dining, nightlife, and retail; this will help reinforce the underlying value of the neighborhoods in this cycle, I believe.

In general, the prime areas are so inherently desirable that they will likely be insulated from any cyclical market pressure.

What about gentrification and the effects of climate change?

Gentrification: The middle-income earners are increasingly being pushed farther out, into longer commutes. The upside to this is that some new neighborhoods and cities will benefit from an influx of new owners who will be looking for more city-like amenities. I have a feeling that gentrification will have more young people living farther out—the new Somerville of 1995 might be in Quincy, Waltham, Malden, Chelsea, or Revere—and these places will become interesting because they offer affordable rents and the chance for people to have large parties, play and record music, and engage in large-scale art projects.

Climate change: The low-lying areas that are built on reclaimed land are inherently more risky, and should be priced lower to reflect this higher risk of flooding. These include the Seaport, Back Bay, the Flat of Beacon Hill, the Fenway, and South End. But these are among the most expensive neighborhoods of Boston, so perhaps there is a sense that the residents’ collective political power can lead to government-funded mitigation measures.

“I think there hasn’t been enough thought about where the millennials will go when they start having families.”

—Laurie Gollinger

Laura Gollinger

Vice president of the Collaborative Companies

Is it a good idea to buy in the Boston area in 2020? Why Or Why not?

Yes, I believe strongly in investing in Boston real estate. An influx of companies continues to plant roots here, which expands the job market. Boston is consistently ranked as one of the top cities in the world for tech and is continuing to grow in other areas like pharma, bio and startups. These new growth sectors complement the city’s longstanding strength in education and health care. Boston’s fundamentals are strong and lead me to anticipate strong real estate demand in the near- and mid-term.

What’s the prognosis for the local housing market?

I think we will see an abundance of supply on the luxury side, and that inventory, if not well-positioned, will accrue days on market. Price reductions on list prices and concession offerings will continue to be offered until the luxury new construction inventory is absorbed.

I think new construction luxury projects with large or expensive units will struggle because developers have over-built in that segment of the market and Boston, unlike other major metropolitan markets, is still predominantly reliant on local buyers. Well-positioned product will continue to do well, as will mid-luxury segments tapping into lower absolute price points for more boutique buildings with less amenities and different construction types (not steel or concrete).

What should prospective buyers consider beyond price points and mortgage rates?

While it varies depending on a buyer’s timeline for holding real estate, I think after price and affordability, resale value should be the next thought. Will you be able to sell it for more than you purchased it, and if so, how can you add value to your investment to help ensure this? These questions are important regardless of inventory type.

For new construction, even purchasing at peak levels, how will your unit be positioned in the market when you go to sell? Will it appeal to a variety of buyer profiles (i.e., parking for empty nesters, a den for people with newborns or for people who work from home)? For older product, are you able to renovate the unit to add value and help see returns on those investments when you sell?

Is there a bubble?

I think we are seeing a slight bubble at the highest end of luxury condominiums. Buyers have a lot of choices, both new and resale, and the sense of urgency isn’t as prominent as it has been in prior years. There are only so many high-priced luxury products local buyers can absorb. That being said, I think the spring market will be strong for resales and for new construction mid-luxury product (i.e. wood frame, etc.). Rates are still at historic lows, making money very inexpensive to borrow. Rents in new luxury buildings continue to appreciate so the rent-to-own analysis incentivizes renters to purchase.

Are some areas of parts of the market more insulated than others?

Yes! I think new turnkey mid-luxury still has demand that hasn’t been satisfied. Examples include amenitized but more boutique buildings in areas like Southie and East Boston. More wood-frame-style buildings are also allowing price points to be lower. I think people are still willing to pay for new “turnkey”; however, not everyone is interested in the heavily amenitized luxury product. This is especially true as it relates to the high monthly association fees to maintain those amenities in luxury buildings.

What about gentrification and climate change?

I think there hasn’t been enough thought about where millennials will go when they start having families. Millennials moving out to the suburbs will want to live the way they are currently living in the city—with access to residential conveniences. I predict the next several years will feature more suburban development outside the urban core. Amenitized communities with more modest single-family homes in good school districts and/or on a transit line will be the biggest recipients of this new cohort.

Currently there are some macro world issues that could impact Boston’s real estate market, but as of today the real estate market appears to be strong and headed toward a strong spring market.

“Homebuyers can mitigate their impact by supporting strong renter protections as well as new housing and density.”



The leading Twitter feed for Boston’s largest neighborhood

What’s the prognosis for the local housing market?

I suspect Boston will be even more expensive in five years, but I wouldn’t be surprised if pockets of comparatively cheaper housing arise from local market pullbacks or boomer downsizing.

Is there a bubble?

No. We are in a housing affordability crisis, but in the city at least I don’t feel that prices are going up because investors over-anticipate future demand. To the contrary, Boston’s current under 2 percent apartment vacancy rate is extremely low, even when compared to other high-demand cities. Supply shortages and wage inequality concerns are real and persistent.

Are some areas or parts of the market more insulated than others?

Whenever the market declines, prices in outlying neighborhoods (including Dorchester) take a bigger hit—but the price dip never lasts all that long. After the rebound, some sales always seem like amazing deals.

Any other concerns:

If you are able to buy in Boston, you are in a position of privilege. Your home purchase bolsters the market value of all comparable homes nearby. Homebuyers can mitigate their impact by supporting strong renter protections as well as new housing and density, especially in neighborhoods and towns that exclude apartments and condos.

David Bates

William Raveis Real Estate

What’s your take on the market in Boston?

A guy walks into the Boston Mayor Marty Walsh’s office. He says, “This is a wicked awesome city, your honor. I want to live in it.”

The mayor replies, “Sorry, buddy, unless you’re Jeff Bezos or Bill Gates, the city is all full up. But don’t worry, I’ve implemented a terrific housing plan. Come back on January 2, 2030, and all sorts of homes will be available to you.”

The guy says, “Great! Should I be there in the morning or the afternoon?” Stunned, the mayor asks, “What difference does it make?” The guy says, “with the current state of the T and traffic, I’m just wondering if I should start my commute to our meeting right now or if I have time to grab a sandwich.”

This is my knockoff of a Reagan joke about communism, but it captures my feelings on the Boston housing market in 2020, a market that still has too much demand and not enough supply. Interest rates are low, the economy is good, and the future of Boston is so bright you have to wear shades. So, IMHO, it’s a good time to buy property in the Hub.

Chris Herbert

Managing director of Harvard’s Joint Center for Housing Studies

Is there a bubble?

I don’t think we’re in a bubble—certainly not akin to 2006. I think of a bubble as marked by high demand for an asset driven purely by potential appreciation in values. The spike in housing prices in the early 2000s was, in fact, marked by many people buying homes simply to gain from appreciation. This was most notable in pre-construction sale of new homes in the so-called Sand States, where buyers had no intention of living in the homes. In today’s market, I don’t see people buying homes simply because they view them as sources of capital gains—people want to live in the homes they are buying.

What’s the prognosis for the local housing market?

The rise in house prices is being driven by several factors: new supply that is generally lagging demand, higher costs of inputs for new construction (labor, land, and materials), and very low interest rates that increase the amount people can bid for homes. There are reasons to think that house price growth will stall as prices outpace what people can afford and limit future appreciation. There seems to be little reason to think prices will fall, absent a sharp downturn in the economy or a sharp rise in interest rates.

Interview responses have been lightly edited for length and clarity.

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