January 24, 2008
Econ Cat’s Real Estate Guide to the Recession
Which would you believe, indeed. UniversalHub posed a seemingly-obvious question on Wednesday, but if you’re a potential buyer in the Back Bay or Beacon Hill, you might just find yourself siding with the much maligned daily.
Yes, foreclosures did go up in ‘07, but they didn’t go up all that much - certainly nowhere near the levels reached the last time bad mortgages dropped an R-bomb on the local economy. And other than the Kenmore/Fenway area, Back Bay and Beacon Hill have been the least-hard-hit by the increase.
If you’ve already got the money to buy, this widely prophesied recession is the best thing that could happen to you. Decreased demand has already turned in slower sales, and that should soon translate to significantly lower costs for buyers. Throw in some freshly-slashed mortgage rates, expansion of high-end development city-wide, plus a handful of overextended speculators needing to sell off property ASAP, and you’ve got what could most modestly be termed a buyer’s market.
So take a look at some new postings and save the ones you like as favorites. I’m a big fan of this sunny 5th floor two-bed with a renovated kitchen and a Mary Poppins-view over the rooftops of Charles Street, and this penthouse studio, which has another remarkable view, and more elbow room than entire buildings nearby. At $679,000 and $360,000, respectively, they’re good deals now. But with current rates and a softening market, a savvy buyer might make them a bargain for life.
Ellie said:
Econ Cat, I love your contrarian view. The media is in such a frenzy to create news about a recession, the election, Britney spears or anything else that they miss the point that the mortgage crisis is very concentrated. It’s a huge problem on the outskirts of cities, in Southern California, the Central Valley and Nevada, and in a few other places. It certainly has an effect across the country, but sometimes I feel there are more voices shrieking about a recession than data supporting the view. Meow!
January 25, 2008 2:18 PM
John said:
Ellie I fully agree. All this screaming and yelling really grates on the nerves! I can’t think of a single person who has been foreclosed on or has lost a job. Here in Boston’s Back Bay, I feel we’re going to be immune to any suffering that might possibly take place in lesser areas. Home prices have continued to increase, and the job market is fantastic. Even during recessionary times, the doctors and lawyers who haunt this great nabe aren’t going to be suffering for want of work. So let the good times roll!
January 25, 2008 3:36 PM
cosmo.catalano said:
Very true points, Ellie and John. But let’s not forget that while most foreclosures occur on the outskirts, it’s banks in the city center that have to write off the loss.
Citibank and Merrill Lynch have posted some serious red ink as a result of taking a risk on these mortgages, and Bank of America took a massive hit buying Countrywide and its debt.
The doctors, lawyers, and investment bankers of Back Bay won’t get evicted anytime soon, but I’d wager you’ll see fewer properties bought on spec this year.
January 26, 2008 3:44 PM