When do YOU think residential housing will turn around from a macro perspective?
This question was asked on Linkedin.com and this was my response:
Real Estate is local. So the bottom is going to be different for different areas.
Even in the Boston area the better perceived towns will bottom out first and the lesser perceived towns will follow. It also differs depending on what price range you are in.
People were moving farther away from Boston to find affordable properties and now these people are not having to go so far. The towns closer to Boston and the Boston neighborhoods are benefiting from this migration back to the center. The towns farther out will suffer.
It's hard to over build in Boston. We don't have large tracts of land to build large number of homes. The towns south and west of Boston have restricted growth of homes through the increase of lot sizes that reduce the number of lots per acre. The towns have done everything to reduce density. The Commonwealth has done what it can to push back. So, what ended up being built due to this struggle have been 55 and older complexes and rental units in the towns that still have less than 10% of their housing inventory deemed affordable. Once you hit the 10% threshold the Commonwealth fast track permitting doesn't apply. The other area of growth is areas around train stations which gets special treatment/incentives by the Commonwealth.
The macro is having an effect but the micro economics of an area also has an effect on the real estate market. You have to look at both for each area to see the overall effect.
Real Estate is local. So the bottom is going to be different for different areas.
Even in the Boston area the better perceived towns will bottom out first and the lesser perceived towns will follow. It also differs depending on what price range you are in.
People were moving farther away from Boston to find affordable properties and now these people are not having to go so far. The towns closer to Boston and the Boston neighborhoods are benefiting from this migration back to the center. The towns farther out will suffer.
It's hard to over build in Boston. We don't have large tracts of land to build large number of homes. The towns south and west of Boston have restricted growth of homes through the increase of lot sizes that reduce the number of lots per acre. The towns have done everything to reduce density. The Commonwealth has done what it can to push back. So, what ended up being built due to this struggle have been 55 and older complexes and rental units in the towns that still have less than 10% of their housing inventory deemed affordable. Once you hit the 10% threshold the Commonwealth fast track permitting doesn't apply. The other area of growth is areas around train stations which gets special treatment/incentives by the Commonwealth.
The macro is having an effect but the micro economics of an area also has an effect on the real estate market. You have to look at both for each area to see the overall effect.
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