Return of the affordability crunch?
Well that $8,000 tax credit certainly appears to be working well. Maybe a little too well, actually.
Check out Jenifer McKim’s story on the bidding wars that have erupted as first time buyers scramble to cash in before the credit expires this fall. (Rona also has put up an excellent post on the tax credit on as well.)
Frankly, reports of growing feeding frenzy among buyers desperate to land modest properties don’t thrill me.
It surely signals a return in force of the housing affordability issues that have increasingly dogged the Boston area over the past few decades.
A case in point is the two-family home in Dorchester that attracted 200 potential buyers, and 30 offers, a number over the $194,000 purchase price, the article notes.
There is also an example of a couple struggling to find a home in the Boston area for $300,000, having been outbid at least once.
All sound reminiscent of early years of the decade, when the late, great real estate bubble was just starting to inflate.
It’s a market I know well, having gone housing hunting back in 2002 with my wife, Karen.
We struggled to find anything half decent under $300,000, winding up buying our Natick fixer-upper for $280,000. I remember one open house in Norwood, where a crowd of potential buyers were practically lining up outside a modest Cape, oblivious to the small planes flying overhead from nearby Norwood Airport. (Of, for that matter, Interstate 95 just beyond the trees.)
Those certainly weren’t the good old days, at least for buyers. And I hope we are not headed back there all over again, but I am not so sure.
The fact is, despite years of declines, the Boston area remains one of the most expensive metro markets in the country to live in.
Home prices surely have fallen, with a decline of 15 percent from the market’s peak in 2005, according to Case-Shiller.
But that far less than many other major markets.
Yes, we have escaped the massive over building that has dragged down prices in once-booming markets like Las Vegas, often as a result of massive numbers of foreclosures.
Yet the Boston area has seen a relatively small amount of new construction, leaving middle income buyers to battle over older and often inadequate homes. (The Globe article points to another trend to watch –inventory is down 16 percent.)
Sure it’s heartening that sales are picking up again, given how depressed the real estate market has been.
I have certainly argued that point a number of times.
But maybe it’s time to take a look at affordability again as well.
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