Downtown Boston and Boston Suburbs Are Just Beginning
To Move In Opposite Directions
It has been my contention that downtown Boston Real Estate is recession proof and will stabilize in price before heading higher while Boston Suburbs real estate will continue to languish. Because there have been so many home buyers who wanted to get into downtown that as soon as prices showed some weakness a new group of buyers stepped in. Some of these buyers have been on the lookout for weakness in the downtown market.
Looking for a buying opportunity.
On the charts its obvious the two areas are going in opposite directions.The classic megaphone pattern is a dead give away showing the directions each will take.
The major difference between the desirability of downtown Boston as opposed to Boston Suburbs is also obvious. When you live in a downtown Boston neighborhood or Brookline you are close to the best schools and hospitals in the WORLD, while if you are in Medfield or Franklin or Walpole, you have the advantage of having access to what Boston has to offer, however the languishing market and foreclosures in the Boston Suburbs will continue. This weakness in Boston Suburbs real estate does not surprise me. Although there is every reason for them to be substantially more desireable and expensive than any other suburb in the country, I think they have further to go to the downside. I believe that more people want to jump from the suburbs to downtown than the other way around. One big reason is that people would love to drop the 5 to 15 hours of commuting time they spend every week. They have wanted to do this for a long time and have been waiting for downtown to get less expensive.
Unfortunately, I think that ship has sailed. Bargains will be gone from downtown. Check out my article “If You Wait For The All Clear Signal To Buy Your Boston Home You Missed the Bottom of the Boston Real Estate Market by About Six Months ”
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This from the Boston Herald this morning emphasizes my point
Boston condo sellers slow to adjust prices downward
Downtown Boston condo sellers must have missed the memo. Of the 497 condos listed for sale in the Back Bay, Beacon Hill, and Midtown neighborhoods, only 200 (40%) have had price adjustments. Some of the properties still at full-price were first listed for sale as far back as April, 2008 and many were listed before the turn of this year. Not all owners are turning a tin ear to what the market is telling them; average current list price is at 90% of its original price and some as much as 30% off.
The downtown market is showing stable but uneven results. There were 153 condo sales during the past three months in these neighborhoods with a $755,000 median sales price compared to 113 sales in 2009 with a $637,500 median sales price but less than the 192 condo sales during 2008 with a $563,125 median sales price.
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Downtown Boston never looses its desirability. There is always a med student, professor, doctor, nurse, student, high tech worker, financial analyst or biomedical professional trying to get into the downtown neighborhoods where they work or go to school. Even with the new luxury Boston condo developments, inventory is very limited.
I do a daily inventory watch for Back Bay, Beacon Hill, South End and Fenway priced between 300K and 600K because thats where most people live socioeconomically speaking. This is the list I send to prospective buyers when I don’t yet know where they want to be or how much they can spend. The number varies from 113 in the winter to 290 this morning in the middle of the spring market.
This metric hasn’t changed in 8 years and counting.
The supply/demand balance will stay very different between Boston Condos and Boston Suburbs homes. Interest downtown is on the increase while interest is diminishing in the suburbs.
Do you agree? Your comments will be appreciated!
Jeff was a stock trader for 5 years and is a technical analyst and student of the markets.
Contact Jeff
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Recession Proof Boston Real Estate and the Megaphone Formation
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