bostonbubble.com

[admin]

The subject is the title of this article, not my opinion:

http://www.msnbc.msn.com/id/8544466/

The author's argument can be summarized as: houses have been getting bigger and nicer to enough of an extent to justify recent price increases. He backs it up with numbers which do appear to show that new homes have been getting substantially bigger.

However, his numbers are for the US in general - I would actually expect the trend to be far more muted, if not the opposite, in Boston. First of all, he is only counting new homes. What new homes have you seen going up in Boston? I haven't researched the numbers, but I for one would expect that the number of new homes in Boston makes up an insignificant portion of the market, at least compared with the rest of the country. Secondly, what I have noticed in the Boston area are an awful lot of condo conversions, and I would expect that to decrease the square footage per property since you are increasing the number of properties while holding the total square footage constant.

Even for the rest of the country, I'm not sure how much weight to give the author's argument for the same reasons. How do new home sales compare with used home sales nationally? I don't know the answer myself, but it would seem that they would have to account for a substantial percentage of sales in order for his argument to hold any sway (and perhaps it does, nationally). It does not sound applicable to Boston, though, just based on my anecdotal observations of new construction (or dearth thereof).

The second part of his argument is that homes have been getting nicer. For example, more homes have central air conditioning now than in the past. OK, that might actually apply to Boston since you can retrofit existing homes with new amenities. However, are we to believe that standard housing amenities have only improved in the last decade or two and weren't improving before then? What about the introduction of central heating, electricity, phone service, etc.? Are we to believe that the improvements of the last decade or two have been so much better than the improvements that preceded them to the point that they justify the current deviation from the historical norms for price to earnings ratios, price to income ratios, use of margin, and every other indicator that is out of line with past trends?

- admin

[jfunk138]

I am new to the Boston area, living here since July 2004. Before coming to Boston in the lived in Pittsburgh, an area that is undervalued in terms of housing by many accounts. Aside from the initial shock of never having seen so much crappy vinyl siding in all my life, the first thing I noticed was a total lack of for sale signs. I blame this on 2 things. The market was still red hot then and that houses are built really far apart here. For an area with as much population as eastern MA has, there is far too much empty space. And it really is empty of people and wildlife. I have seen maybe 1 deer since moving to Tewksbury, MA. I ask people what is going on here? How can prices be so high when there is so much empty space? The answer I always get is that eastern MA is nothing but wetlands and areas that can't be built on. Well I speak from experience, you can build on it. Pittsburgh has its 3 rivers, fed by many, many creeks, lakes, ponds, etc. It has its share of wetlands. It also has extremely hilly and mountainous terrain that is difficult to build on. But guess what? In Pittsburgh they still build. They let the market decide if a piece of land is suitable for a house, not a zoning board. Got a little water in your way? Nothing a bit of pipe and a ton of dirt can't solve.

So there is the problem I see, if eastern MA continues to limit building, they can effectively negate the effect of any bubble. If the zoning board sees demand falling, they can just clamp down on building even further and prop up prices and make their constituents happy. Still not enough, take some houses through eminent domain and build a park.

So the solution for eastern MA is to stop worrying about how many trees are in their backyard and start worrying about how much time and gas they waste in their daily commutes. It seems absurb to find a town with 2 acre minimum lots inside 495 (Sudbury). And what is up with Carlisle? I thought I was in northern NH driving through there, it is so desolate. Really want to take a hike in the forest with the blackflys? Drive west 50 miles or north 50 miles. When your driving 1 hour each way to work everyday as many people do just to afford a place to live, 50 miles for a once a week/once a month experience doesn't seem so bad. Will the people of eastern MA ever come to their senses? Doubt it...