6.28.2005

Newton housing bubble?

For a few years I have been thinking, how long can the rise in local housing prices continue? Newton and Waltham, and for that matter, the entire eastern Massachusetts region, is collectively an attractive place to live, has lots of career opportunities, attracts thousands of new residents every year, and has a limited supply of undeveloped land on which to build new housing. On a strict supply-and-demand argument, it would seem that the sky's the limit for local housing prices.

On the other hand, there has to be a cutoff point, at which people say, it does not make sense for me practically or as an investment to buy that house at that price, considering the amount of money my family has now, and will make in the future. When one considers that the monthly mortgage obligation for a young family buying a single family home in Waltham or a condo in Newton will likely be over $3000, and rental prices are half that, the choice of whether to rent or buy becomes much clearer.

I think prices have reached that threshhold. I have noticed in Newton particularly that there are lots of properties on the market that have "for sale" signs for months, and I know some people in Newton who had to lower the asking price on their house by $50,000 and still it hasn't sold. On Parmenter there is a string of attractive houses and condos with "For Sale" signs, and one or two on Falmouth Road, too. An oversupply, or is this just the traditional house-hunting season with a lot of turnover?

In Waltham, two houses in our borderline neighborhood sold within a week or two of being put up for sale, but prices here are lower, and there is a lot of competition for detached single family homes near Boston and 128 that a young family, at a stretch, can buy. A young family with similar assets ten years ago could have bought something in Newton, but not anymore, so the houses on the other side of the border, on Parmenter and Falmouth, don't get as much interest.

8 Comments:

Blogger REBoston said...

I think that there has been some slowdown in sales of existing homes in some of the towns that I work in. The slow down seems connected to a general rise in interest rates. Even though the rates are still at historically low levels ( 5.77% National Avereage, according to Realty Times) people have more information than ever due to the increasing use of the Internet. The recent talk of a 'bubble' has a lot of consumers taking a 'wait and see attitude". In my opinion , rising rates will be offset by slightly lower prices. The real estate market will continue to flourish but at slightly lower price levels. Locally, the best properties will continue to command the best prices and lesser properties will find it somewhat more difficult to find interested buyers. Ari Ben Harav http://www.bostonrealtytours.com

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Anonymous Anonymous said...

Just wondering about housing bubble in newton as on my street (pearl st) there seems to be some serious speculation. Some idiot bought a house that couldnt be rented, spent god knows what and now is trying to double his money. Then he bought all the neighbors houses and hasn't sold a single unit. Man I wish I knew where I could get some junior golf equipment.

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