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Boston Real Estate Now | Scott Van Voorhis

For middle class, more homes out of reach

Highlights from the Boston Real Estate Now blog.

Just 41 percent of homes for sale in Boston are within reach of the average, middle-class family, Trulia finds in a new report.

That’s down from 53 percent a year ago, with affordability taking a big hit amid double-digit price increases.

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Looking at Trulia’s numbers, I’d argue that even that number is too rosy.

Trulia uses Boston’s median family income of $66,149 to define middle class, arguing that homes up to $322,000 are within reach.

That’s pretty high for that income — better not have any student loans or day care expenses.

I’d argue a more realistic number is $250,000, which would obviously shrink the pool of available homes even more.

So after stretching and saving, what can a middle-class family in Boston expect to buy?

Well the median affordable home in Boston is 1,250 square feet, hardly a palace but not bad either given we do live in a part of the country dominated by older, smaller homes.

So how do we stack up with other cities?

Just 30 percent of the homes in San Francisco, Orange County, San Diego, and New York are affordable for middle class buyers, Trulia says.

And you’ll get far less.

In New York, a middle-class buyer might be able to snag a 500-square-foot apartment — now that’s small!

If you want to get more house for your dollar, it pays to head west — well to the Middle West, to be exact.

As many as 80 percent of the homes in various Midwestern cities are affordable for middle-class buyers — in Cincinnati the median house is nearly 1,500 square feet.

A palace by Hub standards!

Condo craziness

Would you fork over more than half a million for a 500-square-foot condo? Even if it was in some hot Boston neighborhood like the South End or the Back Bay?

Apparently some buyers are doing just that, the Globe reported last week on the latest report by LINK, a firm that tracks the downtown Boston condo market.

Here’s what Debra Blair, LINK’s president, told the Globe.

“I found it remarkable,” she said. “If someone wants to live in the city, they’re willing to pay a premium on the urban lifestyle.”

Remarkable, or just foolish? After all, when prices hit a soft patch again, those overpriced, 500-square-foot condos are going to be hard to sell.

Overall median price for a downtown Boston condo set a new record in the third quarter, hitting $525,000, LINK reports.

And 40 percent of the condos sold over the summer and in September went for above the asking price in the 12 neighborhoods monitored by LINK. In the South End, Beacon Hill, and Charlestown, more than half of all condos sold fetched a premium.

Meanwhile, downtown Boston luxury condo prices are once again nearing their last peak, set in 2008, when the median hit $2 million.

Of course, downtown Boston prices can’t just keep on keeping on, year after year. All hot real estate markets cool off or take a tumble eventually. Still, it’s hard to see that happening, at least right now, in the Hub’s overheated condo market.

Are buyers getting cold feet?

I am typically inclined to shrug off the nutty antics in Washington. Another day, another phony crisis.

But it does look like some buyers were already getting cold feet heading into our latest national crisis (which seems to be solved for the short-term, anyway).

There was a big drop in Boston area buyer activity in September, Glenn Kelman, chief executive of online real estate platform/brokerage firm Redfin, noted recently.

In fact, buyers in Greater Boston are apparently even more nervous than the rest of the country.

Consider some of these significant down shifts in buyer activity this September compared to August:

Signed offers were down 18.2 percent locally, compared to 10.4 percent nationally.

Home tour requests dropped 4.5 percent in the Boston area, compared to 1.2 percent nationally.

Scott Van Voorhis is a freelance writer who specializes in real estate. For the full Boston Real Estate Now blog, visit www.boston.com/realestate.
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