As prices rise, people look to new cities and neighborhood in which to
buy. Sounds good to me. Very exciting times. First-time homebuyers can find some
great properties from which to choose a new home.
By
Kimberly Blanton, Globe Staff
High prices are driving
first-time home buyers into some long-neglected cities and Boston neighborhoods, fueling record
condominium sales and bringing dramatic change to working-class enclaves.
Immigrants, recent college graduates, shop owners, and others are buying
three-deckers and houses in cities like Chelsea, Fall River, and Worcester — as well as in the
less-fashionable sections of Somerville and in Boston neighborhoods like Dorchester and East
Boston. The properties are being renovated, converted to condominiums, and resold for a
profit.
In Lowell and Lynn, developers are converting factories to condos.
The buyers include empty-nesters and well-heeled professionals seeking an urban lifestyle. Many are
betting that real estate will provide better investment returns than the stalled stock
market.
Condo sales in some urban frontiers are hitting record levels, even
as economists grow increasingly concerned the US real estate market is experiencing a
”bubble,” much as the stock market did in 2000, when prices were driven up rapidly by a
frenzy of speculative buying before they collapsed.
Fears of a bubble
resonate in Boston. The 1980s boom in condo prices caused a collapse in the housing market that led
to several bank failures, including that of Bank of New England, then the state’s largest. Then,
individual investors were speculating in condos, hoping to benefit from rising real estate prices
without fixing them up or moving in. When prices fell, investors who had no stake in the
neighborhoods or the buildings simply turned the keys over to the
banks.
Today, individuals and developers are renovating buildings to meet
unprecedented demand. Many buyers, while enjoying persistently low mortgage interest rates, have
been priced out of suburban and downtown Boston neighborhoods, real estate specialists say. And
unlike investors, homeowners tend to ride out price declines.
In contrast to
the 1980s, ”the people they’re selling to are very stable,” said Kevin Ahearn, president
of Otis & Ahearn. His Boston real estate-services firm estimates that fewer than 15 percent of
the city’s condos are purchased purely as investments — about half of the 1980s
level.
While condo sales have long been strong in Cambridge and downtown
Boston, their growth elsewhere is more dramatic. Between 2002 and 2004, for instance, Lowell’s
annual condo sales total nearly doubled, to 689. Chelsea’s more than doubled, to 329 units.
Brighton, Dorchester, South Boston, and East Boston had similar gains, according to Listing
Information Network, or Link, which tracks real estate.
Complete article: Condo
conversions spreading
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Updated: December 2017
