According to Redfin, the median price of a Boston-area home rose to approximately $360,000, which is a 6.1 percent increase since April this year and considered the biggest month-over-month price hike since April 2012.
What Will The Rise in Boston Real Estate Mean For Property Management?
If you've watched or read the local Boston news, or even walked around to see the city overall lately, the city's real estate market is experiencing an all-time high for residential and commercial developments.
For many of the Hub's longtime residents, this has been painstaking as the prices of living in the Boston area are going from relatively high to insurmountably bank-breaking to their wallets.
It's hard to find affordable housing anymore and landlords are feeling the crunch financially. The increase of property taxes will continue to rise with profits or break-even points on their property investments more difficult to clear.
How Much Can The Greater Boston Area Afford For Affordable Housing?
So what does this mean for the local property management industry? Will landlords of privately-owned properties who once had affordable housing have to leverage the rising costs of property taxes by cutting back on property management services?
Mayor Marty Walsh and his administration have quite a tall order to overcome finding places for people who are being pushed out of the city limits. Many of the city's longtime residents who have lived in Boston proper areas like Allston, Brighton, Charlestown, Dorchester, Roxbury, Somerville, South Boston, Watertown and surrounding cities of Cambridge and Quincy area seeing new condo developments.
With the shortage of apartments for those who can't afford to buy homes, there has been a series of housing initiatives that the local government is trying to make sense of for these people. The costs for homes is rising faster than the cost of renting.
The alternatives of micro-apartments in Boston for the young adult population has ending costs that do not necessarily meet the means of living out of necessity. Plus Mayor Walsh is looking to have a fee attached to developers who want to buy and create more commercial estate properties to support his plan to raise $20 million in funding to allocate those monies towards 53,000 affordable homes by the year 2030.
Also, the rising influx of the tech and pharmaceutical industry workers coming from Silicon Valley and other cities to Boston and Cambridge, where the latter is swiftly becoming an Eastern U.S. mecca for both industries, has made property values in that already expensively priced area continue to skyrocket at an exponential rate.
Chief Economist Nela Richardson of the real estate company Redfin explained the migration of wealthy workers. "Boston is an interesting story because it's attracting outsiders from tech and pharma." He continued: "There's a lot of wealthy workers coming to town. Match that with demand with a shortage of supply- that's a recipe for speed."
Home listings on the market in May 2015 sold at a record-breaking rate. Factor that in with a shortage of supply. If you know the Law of Supply and Demand enough, you will see that this is a runaway freight train that won't be stopped anytime soon.
There is much competition to buy a home. In May 2015, there was an estimated 72 percent of offers for homebuying faced competition. That same month, Boston-area sellers put almost 12,900 homes on the market. That is a 25 percent year-over-year increase since May 2014. And the numbers keep rising.
According to Redfin, the median price of a Boston-area home rose to approximately $360,000, which is a 6.1 percent increase since April this year and considered the biggest month-over-month price hike since April 2012.
We are already seeing the signs of a housing bubble waiting to burst in the coming years. Just like in the U.S. real estate market crash in 2006, banks lending to buyers that take out mortgage products which exceed the actual home values, on top of money that dries up in various industries causing labor layoffs and a hostile job market that still exists today can lead to foreclosures and high turnover of tenants and residents.
This will help property management in a two-fold manner: with all of the landlords that buy housing before the prices get too high because they need to ensure their value and attraction from those who can afford to stay in the city.
Also, for the coming years, the affordable housing that the Walsh administration is vying for will help HOAs and others want to live in a place that has great services and will help landlords with smaller mortgages since people still want a quality of life while living in the city.
Overall, living in the Boston proper area and its surrounding neighborhoods is a lifestyle decision. Otherwise, these landlords and tenants would opt to move south like birds to escape the harsh winters, and rising costs. The prices will rise, but they will bottom out eventually. With the economies of scale, this bubble can only float for so long before the blowback occurs for the better for lesser-income residents and landlords to afford a decent mortgage and high quality yet low-priced Boston property management for their investment to stay profitable in the coming year.
Mayor Marty Walsh and his administration have quite a tall order to overcome finding places for people who are being pushed out of the city limits. Many of the city's longtime residents who have lived in Boston proper areas like Allston, Brighton, Charlestown, Dorchester, Roxbury, Somerville, South Boston, Watertown and surrounding cities of Cambridge and Quincy area seeing new condo developments.
With the shortage of apartments for those who can't afford to buy homes, there has been a series of housing initiatives that the local government is trying to make sense of for these people. The costs for homes is rising faster than the cost of renting.
Fees for Commercial Real Estate Developers?
The alternatives of micro-apartments in Boston for the young adult population has ending costs that do not necessarily meet the means of living out of necessity. Plus Mayor Walsh is looking to have a fee attached to developers who want to buy and create more commercial estate properties to support his plan to raise $20 million in funding to allocate those monies towards 53,000 affordable homes by the year 2030.Also, the rising influx of the tech and pharmaceutical industry workers coming from Silicon Valley and other cities to Boston and Cambridge, where the latter is swiftly becoming an Eastern U.S. mecca for both industries, has made property values in that already expensively priced area continue to skyrocket at an exponential rate.
Chief Economist Nela Richardson of the real estate company Redfin explained the migration of wealthy workers. "Boston is an interesting story because it's attracting outsiders from tech and pharma." He continued: "There's a lot of wealthy workers coming to town. Match that with demand with a shortage of supply- that's a recipe for speed."
Home listings on the market in May 2015 sold at a record-breaking rate. Factor that in with a shortage of supply. If you know the Law of Supply and Demand enough, you will see that this is a runaway freight train that won't be stopped anytime soon.
There is much competition to buy a home. In May 2015, there was an estimated 72 percent of offers for homebuying faced competition. That same month, Boston-area sellers put almost 12,900 homes on the market. That is a 25 percent year-over-year increase since May 2014. And the numbers keep rising.
According to Redfin, the median price of a Boston-area home rose to approximately $360,000, which is a 6.1 percent increase since April this year and considered the biggest month-over-month price hike since April 2012.
Do Landlords and Tenants Need to Wait For A Housing Bubble To Burst?
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| Sign of the times in Real Estate 2002-2012 |
From looking at these numbers, you may be thinking that the Boston area is becoming a city for the uber-elite. So does this mean that you have to study coding or have the mind of an MIT-schooled engineer in order to sustain a stable living here?
Do you have to wait another fifteen years per Mayor Walsh's plan for affordable housing in Boston, and not have to worry about making a stable life month to month? Well, not exactly. But it may take a renter much longer than expected to save and buy a home, or think about becoming a landlord in areas such as the Metro West areas of Waltham, Framingham, Malden, Medford, or other areas that area Commuter Rail-accessible for people to come into the city to work.
Do you have to wait another fifteen years per Mayor Walsh's plan for affordable housing in Boston, and not have to worry about making a stable life month to month? Well, not exactly. But it may take a renter much longer than expected to save and buy a home, or think about becoming a landlord in areas such as the Metro West areas of Waltham, Framingham, Malden, Medford, or other areas that area Commuter Rail-accessible for people to come into the city to work.
We are already seeing the signs of a housing bubble waiting to burst in the coming years. Just like in the U.S. real estate market crash in 2006, banks lending to buyers that take out mortgage products which exceed the actual home values, on top of money that dries up in various industries causing labor layoffs and a hostile job market that still exists today can lead to foreclosures and high turnover of tenants and residents.
This will help property management in a two-fold manner: with all of the landlords that buy housing before the prices get too high because they need to ensure their value and attraction from those who can afford to stay in the city.
Also, for the coming years, the affordable housing that the Walsh administration is vying for will help HOAs and others want to live in a place that has great services and will help landlords with smaller mortgages since people still want a quality of life while living in the city.
Overall, living in the Boston proper area and its surrounding neighborhoods is a lifestyle decision. Otherwise, these landlords and tenants would opt to move south like birds to escape the harsh winters, and rising costs. The prices will rise, but they will bottom out eventually. With the economies of scale, this bubble can only float for so long before the blowback occurs for the better for lesser-income residents and landlords to afford a decent mortgage and high quality yet low-priced Boston property management for their investment to stay profitable in the coming year.
Boston Housing Boom - Final Thoughts
Are you feeling the financial crunch of how hard it is to find or afford housing in Boston?
Are landlords becoming too strict on their criteria for screening tenants with decent credit?
Are you as a landlord experiencing high turnover in your units due to your rise in prices per higher property taxes you must pay?
You may wonder where is the middle ground to balance out the supply and demand of housing.Tell us your thoughts in the comments below and how long you feel it will take to get to this cost balance for housing.
Are landlords becoming too strict on their criteria for screening tenants with decent credit?
Are you as a landlord experiencing high turnover in your units due to your rise in prices per higher property taxes you must pay?
You may wonder where is the middle ground to balance out the supply and demand of housing.Tell us your thoughts in the comments below and how long you feel it will take to get to this cost balance for housing.
