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monsoon

Bursting Real Estate Bubble in Boston?

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I saw this article posted on UrbanPlanet's portal and thought it might be worth a discussion here. Is this a fluke or is real estate really over priced in Boston right now and deserves to come down some?

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I saw this article posted on UrbanPlanet's portal and thought it might be worth a discussion here. Is this a fluke or is real estate really over priced in Boston right now and deserves to come down some?

Thanks for the link, monsoon. Boston's housing is definitely overpriced for first time buyers who don't have any real-estate equity that has been growing with the market. My hope is that any reduction in housing values isn't offset altogether by higher interest rates that make a mortgage cost about the same.

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The Boston metro is one of the most expensive in the country. A slowdown in housing price growth that led to affordable prices would be good for keeping young people from being forced to move away to less costly cities. Boston is not a market driven by speculators, so a bubble burst, were prices plumet from a glut of speculative development, is not likely. It's just a normal part of the real estate cycle.

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What we are seeing in Boston's Real Estate Market (including the Suburbs) is a small correction in pricing. Based on the numbers I am seeing, most sellers priced their homes based on the rampant escalation in prices experienced from 2000 throgh 2004. When I look at comparable sales for 2005, it appears to me that most homes sold for about 4% to 6% over 2004 prices rather than the expected 20% to 25% increase. Certainly, if the prices had continued to appreciate at those levels, the real estate bubble would have been very real. Predictions are that future increases will be more sustainable in the single digit ranges.

I am seeing a slow down in condo sales in Cambridge, Somerville and Medford. There were many speculators buying up the two and three family residences and converting them to condos. There is now a glut of that inventory on the market. Some of these speculators are taking a small bath to move the inventory. The smarter ones and the ones that are financially able are renting out the properties and waiting for the market to turn.

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Housing slowdown squeezes borrowers. Foreclosure cases hit 12-year high. [Boston.com]

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As demand increases, rents rise for first time since '01 [Boston.com]

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There has been a lot of mixed news lately. It still seems the suburban market and state in general are in the process of bottoming out, or holding near the bottom. Luckily, it seems there was no burst. There has been good news lately, with most of it the city limits of Boston, and particularly in the downtown area neighborhoods.

From today's Herald

Gibson Sotheby

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I read somewhere that Intercontinental Hotels was involved in the development of a mixed-use project in Boston that featured a large hotel and about 130 hotel residences (condominiums not eligible for rental program). Does anyone have any information about this project ? A developer in Nashville is trying to get a similar but smaller project started with this flag so I am curious about any info anyone has. Seeing (from this thread) that there is apparently some growing pessimism about the residential market in Boston, and assuming the project I mentioned is nearing completion, I'm curious whehter there has been any fallout associated with the condo portion of the project mentioned above.

Here in Nashville, like everywhere else, there are developers trying to sell a limited number of condos at huge premiums to what the condos would otherwise sell for in order to help finance their hotel projects. With the condo-hotel market softening everywhere, again, I'm curious whether some of the more mature markets for this product are starting to see less appetite or willingness of buyers to pay such a big premium for the opportunity to have the a la carte hotel services.

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I believe the IC completely sold out north of $1,000 per foot (it opened in November I think).....but then again, this is Boston, and pre-sells began 3 years or so ago, during the boom. I searched for a thead on the project, but I couldn't find one. Do you have more specific questions?

EDIT. I found the thread, which includes some pictures of the completed hotel/condos.

http://www.urbanplanet.org/forums/index.ph...st&p=623720

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The IC Boston is also known as 500 Atlantic Ave., not to be confused with Russia Wharf (next door, now UC). There is a thread on this site. It is a waterfront property and is finished and open now. I think most of the condos are sold.

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An article about how many new condo towers are priced at $1,000+ per square foot.

Boston Herald Article

The price increases in the new towers come amid an overall upsurge in both condo sales and prices in neighborhoods like the Back Bay and Beacon Hill.

It is similar to a condo pricing surge a few years ago in the Big Apple, which soared past the $1,000 a square foot mark and has ver looked back, said David Costello, an executive at ERA Boston Real Estate Group.

It's not all that uncommon in new high-end development downtown to be seeing $1,000-plus per square feet, Costello said. A few years ago, it was unthinkable.

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