Teardowns - spreading like cancer (Boston, Brookline: real estate, condos, mortgage)

[panchilly]

Look at this high-tier Castle in Wellesley
https://www.redfin.com/MA/Wellesley/...operty-history

The speculators bought the old house for nearly 2M and are bulldozing it. Putting up a 5M house on that lot. Who the hell is buying this stuff!!!???

As we've seen, teardowns aren't just restricted to the tier 1 towns, they are spreading far and wide even to areas like Hillbillyricca. By my estimation they are hitting as far as 2 or 3 towns out from 128 now. They might eventually envelope the entire inside of 495...

[tysmith95]

Ok totally agree with you on this one, that original house was way too nice to be a tear down.

[smc733]

I know a number of other posters have been ripping on you, because they hate the thorught of their precious Boston real estate ever going anywhere but up up up, because something about Boston being economically perfect (despite the fact that it suffered worse than average in 82 and 91, and fared about at the national average in 08).

This is the exact same speculative behavior we saw late cycle last time in 2007. Will the fall down be as bad? Maybe not, even though the fed doesn't have the tools to keep the wheels on this time. We are absolutely headed for some level of deflation out of this bubble.

[redplum33]

Originally Posted by smc733

I know a number of other posters have been ripping on you, because they hate the thorught of their precious Boston real estate ever going anywhere but up up up, because something about Boston being economically perfect (despite the fact that it suffered worse than average in 82 and 91, and fared about at the national average in 08).

This is the exact same speculative behavior we saw late cycle last time in 2007. Will the fall down be as bad? Maybe not, even though the fed doesn't have the tools to keep the wheels on this time. We are absolutely headed for some level of deflation out of this bubble.

Agreed.

[panchilly]

This time around the super high priced stuff like slumerville condos going for 800 a square foot will probably feel the brunt of the downturn. 495 will probably do just fine. Most of 495 hasn’t recovered from the prior peak when adjusting for inflation. The prices on 495 are pretty cheap.

The myth that urban house prices are immune and never go down is just that: a myth. Urban got crushed in the late 80s early 90s downturn. Even areas like Brookline.

[smc733]

Originally Posted by panchilly

This time around the super high priced stuff like slumerville condos going for 800 a square foot will probably feel the brunt of the downturn. 495 will probably do just fine. Most of 495 hasn’t recovered from the prior peak when adjusting for inflation. The prices on 495 are pretty cheap.

The myth that urban house prices are immune and never go down is just that: a myth. Urban got crushed in the late 80s early 90s downturn. Even areas like Brookline.

No doubt those areas will definitely get hammered. They're well above pre-recession highs, which were already unsustainably high. Especially as the foreign investment dries up as a product of the global slowdown.

I don't know how much I agree about 495 holding out, at least not those inside or directly bordering the ring. They may not suffer as much in terms of $ and %, but they're bound to be affected. Most of the inner 495 ring is also above pre-recession highs as people have been pushed out that far. When the boomers start to retire and panic sell, what little demand that exists in the next recession will start to go for suddenly now-affordable properties closer to or even in the 95 belt. I won't be surprised one bit to start to see houses like that $825 Billerica "starter-castle" drop into the mid to low $600s. While nice actual starter homes (like Pinehurst) adjust to 2-3% YoY values from their 2012 lows, perhaps in the mid-$300s.

The pricing here is simply way out of line with incomes. Once unemployment ticks up, which is bound to happen due to the late economic cycle, some correction is guaranteed, particularly since interest rates are still low, so no one can trick the values into staying higher. Just look at what 5% mortgage rates (a whopping 75 basis point increase) did to the market in the fall.

[City Guy997S]

Originally Posted by panchilly

Look at this high-tier Castle in Wellesley
https://www.redfin.com/MA/Wellesley/...operty-history

The speculators bought the old house for nearly 2M and are bulldozing it. Putting up a 5M house on that lot. Who the hell is buying this stuff!!!???

As we've seen, teardowns aren't just restricted to the tier 1 towns, they are spreading far and wide even to areas like Hillbillyricca. By my estimation they are hitting as far as 2 or 3 towns out from 128 now. They might eventually envelope the entire inside of 495...

Place wasn't great.....low ceilings made every room look like a basement.

Also shows that the house was on 2 lots, if they can subdivide that is a great score alone.


New homes are cheaper to run (more efficient) and are usually easier to sell. Then consider all the work being done, all the tradesmen that get paid vs. an old house that might get a new kitchen/baths and a coat of paint.

[KoNgFooCj]

In Boston they should bulldoze a few hundred tripledeckers and build high-rise housing to house the people living in the street. Then go to New Balance and convince them to shoe the children with no shoes on their feet.

[GeoffD]

In the big 1990 downturn, the higher end towns didn't decline much. The working class towns got hammered. Andover vs Tewksbury, for example. Percent bachelor's degree or higher in US Census data is probably a pretty good predictor in the 'burbs. I don't think the most recent recession lasted long enough in metro Boston to have that kind of impact.

[smc733]

Originally Posted by GeoffD

In the big 1990 downturn, the higher end towns didn't decline much. The working class towns got hammered. Andover vs Tewksbury, for example. Percent bachelor's degree or higher in US Census data is probably a pretty good predictor in the 'burbs. I don't think the most recent recession lasted long enough in metro Boston to have that kind of impact.

Perhaps, but housing is sitting at ~32% above the long-term inflationary trend. There's a school of thought that those areas that avoided the severe drops last time may be more succeptible this time.