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Is Boston entering a long term bear run?

 
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Boston ITer



Joined: 11 Jan 2010
Posts: 269

PostPosted: Wed Apr 07, 2010 1:35 pm GMT    Post subject: Is Boston entering a long term bear run? Reply with quote

http://seekingalpha.com/article/197308-the-national-housing-survey-and-the-real-estate-bear-market

The above article implies a lot since it indicates that even New Yorkers are still bullish on housing, and NYC has taken a bigger hit than metro Boston in terms of sharp price drops.

Quote:
I see this mindset in New Yorkers who genuinely believe that $1 million is not a lot of money to pay for a 2-bedroom apartment, even when it comes with thousands of dollars a month in maintenance costs on top of that. Of course they never would have believed such a thing 10 years ago, but the anchoring effect of the housing bubble is astonishing to behold.


My impression is that if prices don't crash, like Houston during the mid-80s oil patch bust, then Boston's in a long tunnel which can go sideways for 15 or more years.

All and all, be prepared to live in metro Boston and be on the road for work, in the decades ahead, if you buy in this town. I don't believe that the MA economy will recover to its healthy 1996 levels (just prior to the IT/telecom bubble). The fundamentals for the region... affordable housing, tax friendly env for new businesses, a/o a re-emergence of our tech sectors, just aren't there.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Apr 07, 2010 1:57 pm GMT    Post subject: Reply with quote

Massachusetts was a leader in technology during a period where the more advanced Nations employed them and the market for technology was smaller.

With emerging nations having cell phones, Internet, new software etc. I think that Massachusetts can still lead because although there is a ton of new competition, the markets they serve will now be enormous.

Take Harmonix, who makes the "Rock Band" video game. Imagine millions and millions of kids in China and India who want to rock out to Bon Jovi.

In 1996 we had Video Tapes, then we went to DVD's and now we're buying movies for our IPods and we're just downloading them on our DVR's etc. People are using the Internet in place of the radio etc. There is a huge demand for quality content and stuff is so portable that staying out in front of this huge technology wave is going to be incredibly profitable. The mountain of debt that we've accumulated globally and the abuses of the finance industry have veiled the enormous progress we've made in technology. Think about how during the protests in Iran, they were using Twitter to get video and data out.

The real weakness Massachusetts has is that the cost of living is so high that people need high paying jobs and they don't have the free time to do the side projects that yield much of the research. Many companies acquire smaller companies instead of growing R&D in house because in all fairness, who knows where a good idea is going to pop out. Well if everyone is up to their ears in debt, people won't be focusing on doing a deep dive. In all Renaissance Periods, we've had people with wealth and free time. Who has the ability to leave their job and join a team to do a start up today? I think other lower cost of living areas close to academic centers have an advantage in that regard. Depsite all of that, I do think a lot of great ideas and leading technology will still come out of Boston.
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GenXer



Joined: 20 Feb 2009
Posts: 703

PostPosted: Wed Apr 07, 2010 2:11 pm GMT    Post subject: Reply with quote

Rental for a 'chain' 2b-2b apartment in Newton has just fallen from about $1750+ down to $1550. This is about 11%, and it happened early this year. Must say something about real estate prices - vacancies are up and if anything, this means rents have more to fall.
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Boston ITer



Joined: 11 Jan 2010
Posts: 269

PostPosted: Wed Apr 07, 2010 2:21 pm GMT    Post subject: Reply with quote

Quote:
There is a huge demand for quality content and stuff is so portable that staying out in front of this huge technology wave is going to be incredibly profitable.


I'm not doubting the economic value of technology. In fact, this is where we're in perpetual agreement.


Quote:
The real weakness Massachusetts has is that the cost of living is so high that people need high paying jobs and they don't have the free time to do the side projects that yield much of the research. Many companies acquire smaller companies instead of growing R&D in house because in all fairness, who knows where a good idea is going to pop out. Well if everyone is up to their ears in debt, people won't be focusing on doing a deep dive.


Bingo, the average smart person in Boston can't afford to take risks unless he's living in a dorm or sharing an apartment with two friends. Thus, we don't have the critical mass effect, outside of the university crowds. That was the model of the new Boston area, 1960 to 2000, but out of all those time periods, huge beltways grew with companies like DEC, EMC, & Boston Scientific where the average worker wasn't living like a student but that of a normal professional. Today, the model is student living startup, followed by offshoring to Asia. How's that suppose to sustain the region's housing markets if we don't sustain high headcount development centers?
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Kaidran



Joined: 17 Mar 2010
Posts: 289

PostPosted: Wed Apr 07, 2010 2:49 pm GMT    Post subject: Reply with quote

Since the recession I think a lot of professionals have been too scared to move out of Boston to be away from the density of jobs. Even though Boston might not be what it once was it is still better than a lot of places. I think white collar unemployment is still relatively low.

I am in an interesting (lucky) position that I love my job and it is what keeps me here. If I lost it for whatever reason I doubt I'd stay in Boston. I'm moving more to the idea of being a permarenter, even though I actually like taking care or things in a house (I've owned twice before). Boston real estate just looks like a really bad deal for a new buyer at the moment. Too bad a deal for me, even though I think I'd enjoy it.
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Boston ITer



Joined: 11 Jan 2010
Posts: 269

PostPosted: Wed Apr 07, 2010 3:02 pm GMT    Post subject: Reply with quote

Quote:
Since the recession I think a lot of professionals have been too scared to move out of Boston to be away from the density of jobs.


During the prior downturn, '02-'04 for IT/telecom, a lot of tech professionals did move. I suspect that this time, however, whoever has a job is sticking with it. Since Fidelity, Gillette, & even stalwarts like Boston Scientific are withering on the vine, the whole support structure for the region is a bit shaky. I know that the folks at Intel in Hudson MA are pretty much ready to hit the road at any time. EMC isn't a whole lot different.

Quote:
I am in an interesting (lucky) position that I love my job and it is what keeps me here. If I lost it for whatever reason I doubt I'd stay in Boston.


I concur.
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