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Why pay a premium for hipness?

Posted by Scott Van Voorhis March 30, 2012 06:46 AM

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Ah, the hipness premium. Seems downright dumb and shallow to me, but I am clearly in the minority given the silly amounts of money people are willing to blow to live in a trendy neighborhood.

Take a mediocre condo or house in need of work, plunk it down in JP, Davis Square, Cambridge, or the South End, and suddenly you are talking big bucks.

But is that cramped two-bedroom really worth hundreds of thousands of more because it is in Davis Square instead of Quincy, or the South End instead of Medford?

Artiefufkin hit it on the head with this comment on my post on buying for the long haul.

"Something I've noticed about the Boston area real-estate market is that the premium for hipness seems to be irrationally high," he writes. "It simply isn't rational to pay an extra $200k for a condo simply so that you can walk to cool restaurants rather than having to drive 10 minutes or take a 10 minute subway ride."

Logically, there shouldn't be such a huge price gap between, say, Davis Square and Quincy.

Both Davis Square and Quincy are on the red line, with relatively easy commutes to where the jobs are in downtown Boston and Cambridge.

Both have blue collar roots and the schools, while just fine, are hardly a big draw in either city.

But Davis has gone uptown while Quincy has not.

Yet is it really smart to shell out $1.5 million for a loft in Davis when you could buy five homes for the same price in Quincy, where the median price is now $282,375?

"Davis Square restaurants, shopping, Linear Park, and subway are literally only steps away. Ideal for the red line commute," reads the ad for that ultra expensive, three bedroom loft.

Wow, sign me up!

As Ben, my incredibly tightfisted older brother liked to scold me back when I was a spendthrift teen, a fool and his money are soon parted.

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

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