Thursday, November 1, 2012

The Boston real estate market and why we live here




We certainly don’t live here for the weather, the well-built transit or roadway system, or the comfortable cost of living! Are there other reasons that you are here, facing this housing market? Are you here for the natural beauty? Cultural options? The availability of jobs in your field?

During the real estate meltdown of the past five years, I have followed articles that attempt to explain why the market here is like it is. In 2008, The Atlantic gave this theory. (If you want to read it yourself, the discussion of how talent-attracting regions are economically robust begins on page two, paragraph two.)

In short, Boston and other places like it are “brain Meccas.” For Boston, the reason cited is the colleges. We have a lot of middle class, wealthy, and/or smart young people who come here for their college education. They think fondly of this place and many try to stay. Some come back. Some college educated people from elsewhere come here based on the buzz of their friends who went to school here or for a job.

Because there is a highly educated work force, there are jobs for that work force here. Those jobs pay well. It is a bit of a cycle. Skilled workers encourage the formation of specialized jobs with good salaries, this leads to housing and services for the workers to spend on. That well-paid work force drives the economy in areas like ours. It also drives up the cost of living.

Does this theory hold water in your experience? If not, why are we all here paying much more for our homes than people in Cincinnati, Nashville or anywhere in Texas?

The Atlantic article predicted that these robust economic centers would suffer less in the bubble-burst, which is what has happened, more or less in the Boston area. Don’t get me wrong; prices fell and I am not pretending they didn’t. Comfortable housing near the economic centers saw pockets of demand through the bubble burst. This softened the landing of falling prices. Areas that were second-choice locations fell harder. Overall, the Boston metro area had a better go of it during the crash than a lot of other places in the country (and Europe.)

I look around at the FNC site, to see how other urban areas have fared. I am content to be working here, near Boston.  I am also content to be living here.

Are you content with the real estate economy around Boston? Is there a market you think is doing better, living through the post-bubble years?

3 comments:

Anonymous said...

* Multiple universities in close proximity ==> unique research/teaching opportunities.

* Many communities that value education ==> unique tutoring opportunities.

* Moderately dense population with dozens of parishes within half an hour drive ==> unique opportunities for a church musician.

* Well-established wildlife sanctuaries ==> unique naturalist programs for children.

All this in a borough that doesn't overwhelm me with its size, easily navigated by public transportation, ample cultural opportunities. As I was reminded on a recent trip, Boston is a SMALL city.

Unknown said...

I hadn't thought about the size of the city, but you may have something there. I will look into the cities that are recovering to see if smaller cities are recovering better than larger cities.

TFF said...

I suspect the stability of the housing market in Boston has more to do with the stability of our leading industry -- education. The associated high-tech industries have also fared well through the recession.

Was mostly answering your implied question, "Why are you willing to pay a premium to live in Boston?" Certainly it is more expensive than most cities, though still cheaper than some of the largest cities. (You don't need to move two hours out of town to find a $300k property as you do in NYC.)

We came for the universities, remained for the universities, and at this point we have invested too much in developing local contacts and businesses to leave without sacrifice.