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As prices rise, housing bears see red

Posted by Scott Van Voorhis November 22, 2013 07:14 AM

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Maybe reading comprehension just isn't what it used to be.

Not sure what it is, but every time this blog delves into rising home prices, an increasingly problematic aspect of life in the Boston area, some of our more vocal housing bears on this blog automatically cry foul.

In fact, they see nothing less than a real estate industry conspiracy intent on revving up the housing market!

Not that home prices need any help right now, but the idea is pretty absurd.

A case in point is the reaction on the comment board of this blog to Thursday's post, "Hot fall market shatters records - and raises concerns."

Here's my argument, I've made it for years now, and, frankly, I don't think it's all that hard to grasp.

Housing prices are on a relentless, decades-long upward march inside I-495, increasingly pricing out ever greater numbers of working and middle class families.

Yes, things cooled a bit during the real estate downturn and Great Recession, but the price declines locally weren't anything like what they saw out in Las Vegas or in Miami.

Is that because we are just so incredibly precious and special here?

No, increasingly restrictive zoning practices and NIMBY mindsets have put the home builders in a straightjacket, making it all but impossible for developers to truly meet demand for new housing.

Hence anemic levels of building going back more than two decades now and increasingly scarce listings.

Couple that with a local economy that is good at spinning off high-paying jobs in biotech and high-tech, but not much else, and you have a mismatch between rising demand and severely constrained supply.

Does that mean home prices will just keep going up forever? Of course not.

But all real estate is local, with each market driven by its own, peculiar dynamics.

Frankly, I am more worried about the increasingly number of buyers priced out of this market than the idea that we will someday see some sort of Las Vegas-style price implosion.

In fact, a steep plunge in home prices actually would be a good thing here and might truly make housing more affordable here. But you actually have to have lots of new homes getting built for that to happen, as happened in Las Vegas, Phoenix and other Sunbelt markets where the housing crash hit the hardest.

A little overbuilding might do us a world of good here in Greater Boston, but given current trends and attitudes, that's not going to happen anytime soon.

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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