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Home prices accelerate across Greater Boston

Posted by Scott Van Voorhis August 20, 2013 06:40 AM

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Home prices rose 6 percent across the country in July.

But Boston-area prices outpaced even those heady gains, posting an 8.4 percent increase in July compared to the same time last year, online real estate portal and research firm Zillow reports this morning.

In fact, home prices in Boston, as well as in Brookline, Cambridge and Arlington, have now shattered previous price records set during the housing bubble, Zillow finds.

The increases may be good news for sellers, but it's definitely bad news for buyers struggling to get a foothold in what is already one of the country's most expensive housing markets.

In fact, the latest increases are bucking predictions by some economists and housing market experts that home prices will begin to level off as interest rates rise.

However, the exact opposite is happening right now across the Boston area, from I-495 in, with a years-long drought in home and condo construction having left the market starved for inventory.

Nor are builders rushing to fill the market demand, with building permits in Massachusetts hovering at record lows during the first half of 2013. Not sure what's happening there, but the onerous local permitting process, in which local towns do their best to keep out any new housing except for a few McMansions that will generate lots of taxes, is probably one key factor.

Think prices can't go any higher, that the market will naturally right itself? Well think again.

If anything, the even nuttier prices seen out in some of the major California metros, and in the Silicon Valley, are a preview of what the Boston area and Eastern Massachusetts can expect on our current trajectory.

The average home price just hit $1 million again in the heart of the Silicon Valley market, numbers not seen since the real estate crash.

That gets you a modest style ranch home.

Now there are one or two prolific numbskulls out there who I am sure are already hitting the comment board right now to accuse me of trying to drive up prices on behalf of all the Realtors out there.

OK, so I will spell it out. The ever higher home prices we are seeing in the Boston area are bad news all the way around, threatening to drive middle class homeowners and buyers out to New Hampshire or out of New England altogether.

I'm one of those homeowners and I love living here, but I don't like the trends I am seeing.

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

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