The inventory problem

The biggest problem that my clients and I faced since the end of the real estate bubble has been the housing stock around Boston. The housing stock in Massachusetts, by and large, is old: not Colonial-era old, rather, Industrial Revolution-era old. Large tracts of housing sprang up in cities and towns throughout Massachusetts between 1880 and 1930 or so. Much of this housing stock is still here. Much of it is sturdy, wonderful construction. Some of it was built poorly. Some is not aging gracefully. Some has been well looked-after. This makes condition a wildcard.
Not only is the housing stock old. Some is run down. Some has been renovated weirdly. So, when a well-renovated property shows up on the market, it is a strange and sought-after gem, if it is a desirable size and in or near a desirable location.
There is a mismatch between the housing stock in some areas and the people who want to live there now. Much of the housing stock near the Red line was built as two-family and three-family housing. To varying degrees, the two-family housing is morphing into condos since the 1990s. The number of single-family houses is relatively small. Looking at the 02144 zip code - which is West Somerville - there are 612 single family houses, 1254 condos, and 3272 two and three family houses in the Assessor’s database. Similarly, in the Central Square Cambridge zip code -02139 – there are 771 single family houses, a whopping 4489 condos, and 1688 two-family and three-family houses.
What has happened since the recession is that more of my clients are heeding my warnings about the costs of trading up. They are looking for a place that they can keep for the long haul, either as a “forever house” of as a future investment property. My clients are not the only ones. I am seeing a very sharp divide between properties that are in the “good location” neighborhood and towns and those that are in less popular spots. I also see more people rejecting properties that are too small or too run down. The marketing difference is profound between those that are potential “hot” properties and the rest of the inventory.

Factors that are leading to “hot” housing:
Mostly, owner-occupying buyers are buying for keeps. They are reluctant to compromise on location or size, since they are there to stay. Today’s buyers are not blind to history; they don’t want to be in the next wave of buyers stuck at the top of the market.
Locations: Close to subway lines, walking distance to town centers, within a half hour commute to Boston, houses in towns with a good school reputation.
Size:  Condos: Two-bedroom or bigger, two-level, those with good yards, those with two non-tandem spots. Houses: Three-bedroom houses with three real bedrooms (not a third that is really a study,) four-bedroom houses with two full baths. Multifamily: Two-family or bigger properties that are big enough to rent for a positive cash flow.