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Wary buyer feels like he's "gambling"

Posted by Scott Van Voorhis September 17, 2013 07:09 AM

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It has been a crazy roller coaster ride over the last eight years for home prices.

After soaring into the stratosphere during the housing bubble, prices came crashing down with the Great Recession.

Now home prices are back again. Cities all but left for dead after the crash, like Las Vegas and Phoenix, are seeing prices skyrocket again, while blue-chip cities like Greater Boston, New York and Washington, where prices fell but never collapsed, are now experiencing double-digit increases.

Not surprisingly, more than a few home buyers are wondering what's next and worried they could lose their life savings if the real estate market casino heads down again.

Here's Astrom. He's looking to buy a house in the Boston area but fearful that he could wind up in the red if the real estate market casino starts heading down again.

I am trying to buy a house right now for a long term residence in a good school district to provide my kids with decent education and my family with decent housing, but I feel like I am embarking on a gambling venture that may either spell financial ruin or conversely nice profits depending on what cards are dealt to me.

The good news is for Astrom is that home prices in the Boston area have been spared the dramatic roller coaster ride in prices that distorted the real estate market in many big Sunbelt cities.

More than 60 towns and neighborhoods in the Boston area have already blown past previous records set during the bubble years, according to The Warren Group.

Overall, Boston area prices are just 15 percent below their 2005 peak.

OK, but the bad news? Sure, home prices in Greater Boston have been more consistent than in many other major metro markets over the past decade - consistent as in consistently high.

In the end, though, all real estate is hyper local. A lot depends on where you buy, how much you pay, what town or street you pick, and even whether you wind up with good neighbors or a bunch of bad apples.

If you are looking for price protection, the best bets are upscale suburbs offer the best bet.

Yet they are also the hardest to buy into, with median prices soaring towards the $700,000 and up mark and scarce listings.

There are lots of towns in the middle, some of which have held up better than others, but there can be big differences. Go online and look at five, ten years worth of price data.

And in a cruel twist, the most affordable communities are also the ones most prone to volatile price swings, whether it's old factory and mill towns like Brockton and Lawrence or Boston neighborhoods like Dorchester and East Boston.

You are not guaranteed a handsome return just because you buy a home - after all, nothing is guaranteed in life, from health to job security.

Yet while home prices may be more volatile today than they were back in the 50s or 60s, the ups and downs of the real estate market are not completely random, like a spinning of a slot machine.

It's not gambling, Astrom - at least not yet.

This blog is not written or edited by 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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