What a time to be building

The planning for these developments likely started two years ago when we were in the midst of a housing boom. It isn't always easy to pull the plug on projects of this size. There are contracts signed and agreements made years in advance. What will probably happen is that there won't be any new projects started now (to be completed in two years) and by then there will be a fresh demand for housing.

If it is not the case already, I would bet the ranch that these projects end up in the workout group of their respective banks and ultimately the portfolio of the FDIC or RTC Redux.

Developers are like sharks. They have to keep moving or die. There is no way they can recoup investments or even minimize losses on undeveloped or partly developed projects. They have to finish before they can get out.

Scott, more houses = more jobs! Don't you know that? Someone has to work at the Natick Mall...sorry the Natick Collection ; )

Wait a minute. I thought there was no buildable land in the suburbs of Boston? At least that's what Bill, BV, et.al. keep saying.

Great news. Keep building. It will just push prices down further.

I am a local builder trying to get through this and I couldn't have explained it better then Marcus!!

Why don't you developers try to only make a modest profit instead of trying to steal the money from the buyers. I was talking to one developer of a single family and offered to buy a lot he just purchased for a $100k profit with no work on his part. He wanted a $350k profit! I just laughed a 40% profit for doing nothing but signing papers. I AM A BUYER or LOOKING TO BUILD but I am savy to know a deal.

John- 2 condo projects 20 miles outside Boston is hardly a development project worthy of comparison to the planned communities in the Sun Belt and West...you need go see what was built in these areas...it was crazy...1,000s of homes all going up at once...if an entire town propped up 20 miles from Boston, then you'd be talking about the same size development...and also if you read what I have said, I agreed that 20-30 miles outside boston is buildable...

Miami is out of freaking control! 50 thousand condo units in 8 years in Miami Dade alone. From 1990 to 2000 only 5 thousand units were built. The bubble mindset still prevails here. Thousands of realtors want to make 6 figures for a couple hours of work a week. Did you see the 60 minutes they did on the "repo riviera"? What about the time magazine article calling us a credit driven nightmare? Check out miamicondoforum.com for more info on the biggest real estate crash in us and world history.

Bill as I have mentioned I own chunk of dirt in Scottsdale, AZ and the realtors out there are always using the "shortage of land" argument , what they really mean is there's a shortgage of "affordable" land. The funny thing is that it was quite affordable ten years ago. Clearly there is no shortage of land in Maricopa County, yet lot prices are quite expensive, even though there are literally thousand of vacant "flipper" homes. The government in the area is bought and paid for by homebuilders/realtors, etc., Arizona would have no economy if it weren't for these industries.

You guys should see the 3rd tier rings of Atlanta! There are an incredible amount of mcMansion subdivisions that were built that are sitting half empty, half built, etc. Many of the intown and northern suburbs are doing ok but there are huge swaths of development that should have never been built. I cannot believe that governments even allowed this to happen. Greed greed greed.

Condo developments outside of Boston might suffer, but here in the downtown city center condo market, things are absolutely THRIVING.

285 Columbus anyone? SOLD OUT.

Penny Savings Bank down in SoWa? SOLD OUT.

The Mandarin Oriental? SOLD. And per the Globe article last week, many units being flipped for incredible profits.

What else... hmm... 45 Province? GOING GOING....ALMOST GONE.

High end luxe downtown condo developments are completely on fire right now. Why? Because people in our nabes have the money and the desire and the good sense to live here. Blue Chip Boston continues to boom, unabated. Our market is immune. The wealth our residents have was never tied up in risky hedge fund investments as in places like NYC or SF. This is one reason our conservative cold roast Boston Brahmin nature has protected us. We're sound, OLD money.

Boston is escaping largely unscathed from the global worldwide recession. I predict that real estate prices in the downtown markets will grow at double digits in 2009. Congratulations to those lucky enough to have bought over the past decade, and an even heartier congratulations to the new buyers!!! You've made it!

I don't know why I respond to sunshine...

But.

How are units at the Mandarin getting flipped for huge profits if none have actually sold?

*****"I cannot believe that governments even allowed this to happen. Greed greed greed."******

Why WOULDN'T local governments allow "this" (overbuilding in the exurbs of Atlanta) to happen? You make it sound like highly affordable housing is a BAD thing...

*****Boston is escaping largely unscathed from the global worldwide recession.*****

This is a fairly meaningless statement, unless you're talking about the 5% or so of the Greater Boston Area that is central/downtown Boston. While it's true that metro Boston/Eastern Mass seems to be modestly outperforming the national economy right now, we're hardly immune, as any number of unsold homes in the burbs (plus double digit price drops since early 2005) will attest.

#5: "I thought there was no buildable land in the suburbs of Boston? At least that's what Bill, BV, et.al. keep saying." I didn't say that, but you know that...

Off course armories and warehouses are being converted to condos. Isn't this a testament to the _limited_ build-able land in the area. In our town, all of the old schools were converted to condos. And of course there is still some building going on. An old farm house gets sold and the land cut up to three or four parcels and built on. Lots that sit vacant here and there. How this _limited_ build-able land affects prices is another issue, and I have never addressed that because I leave that to you smart guys.

I used to live in Long Island (sadly, for a couple of years, and by long island I mean way out by Riverhead). There is alot of land there. When a strip mall closes and a new one opens, they don't even bother using the old strip mall, they just let it rot and build a beautiful new one right next door. They don't even bother to tear the old one down. They build condo complexes spanning hundreds of acres with hundreds of units. And I imagine that pales in comparison to some cities out west. Strangely enough, you don't see much of that near Boston. I suppose it could be the zoning requirements.

My goal in 2009 is to find 100 to 200 free acres (contiguous, flat, buildable, not near any endangered species, etc) within 128.

But yet they keep building in Manhattan, which has even less buildable land. Inexplicable.

Though once again, that's just a supply constraint. You have to look at both sides of the equation, supply does not rule all.

16: Charles...agreed, 100%. From now on, instead of a "land shortage" or whatever the derogatory term is, lets refer to it as a "supply constraint". I am fine with that. I feel like we finally have made headway here! ;) Do you or John or Hung or anyone else here agree that there is a supply constraint?

Yes, I think we all agree there is a supply constraint, and have stated so above. Where we disagree is that the supply constraint will keep house values up, as that supply constraint has existed for a long while in Boston, and Manhattan, and Japan, and all have suffered from significant real estate price drops.

Something can be valid and still not be the whole of the equation. One could say that thanks to the supply constraint Boston values will only drop 25%, instead of the 35% in Phoenix, and that would make sense to me.

If you tell me that a supply constraint is a guarantee against a price drop, there's no way I can take that seriously, as the evidence against it is 100% And that is what people seem to be saying. If they are in fact saying that Boston prices will crash, but not as much as they would otherwise, I doubt any of the economic types on here would disagree.

absolutely agree 100% there is a supply constraint..

18: Charles: I agree. And if I might add, not sure too many people are arguing that a supply constraint will totally insulate Boston housing prices as you assert. At least that is not they way I've read things. I do think people have said that the absence of significant supply constraints in the sun belt let to massive overbuilding which will in turn result in a larger crash in those areas.

To your point that they keep building in Manhattan...of course that is true. They keep building in a way, however, which is consistent with the current nature of Manhattan, however. Many tall buildings, for which, I presume, they have to tear down smaller buildings first. Certainly that is a significant constraint as well.