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Will the rich towns escape?

Posted by Scott Van Voorhis December 1, 2008 09:30 AM

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So far the real estate downturn has hammered poor urban neighborhoods and middle class towns.

But will the tide of distress reach the golden shores of Weston, Wellesley and Brookline before it finally recedes?

It’s a fair question and one that has sparked a lively debate on the blog.

In one camp are the “location, location, location’’ devotees who appear convinced that no spate of foreclosure auctions will ever taint a Wellesley or Weston.

On the other side are those waiting a little too eagerly for what they confidently predict will be a fall from grace.

Frustration is certainly understandable. Some of the Boston area’s most expensive towns to live in have actually seen their median sale price go up, not down, amid the current bloodbath.

The median price in Wellesley shot past the $1 million mark as of the end of October, compared to $993,500 the same month last year, the Boston-based Warren Group, publisher of Banker & Tradesman, reports. The median price in Weston rose to $1.3 million, up $170,000 over the past year.

But once we subtract for house and town envy, there are some facts to back up the argument that, before it’s all over, everyone will feel a little pain.

An explosion of shoddy, subprime loans to struggling home buyers helped fuel the current foreclosure epidemic. That has led to a stock market crash and a recession that is likely to lead to a new round of foreclosures as more and more people lose their jobs.

Writes JWC in a recent comment: “The ‘not my house’ or ‘not my neighborhood’ attitude will change over the next year or so in my opinion. So far, we have seen drastic price reductions in areas affected by the subprime debacle like Dorchester, Lowell, Chelsea, Everett and Lawrence. So, the ‘not my house’ attitude for some has been justified. But, times have changed recently. ...and oh boy have they changed.”

That about says it all.

The grim reaper of unemployment is likely to hit across income lines, as we have already seen with plans by big financial institutions like Fidelity Investments to cut jobs.

That hardly means an epidemic of foreclosure auctions at Weston mansions. But a little price adjustment at the high end might not be such a bad thing either.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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