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Is buying a home around Boston worth it anymore?

Purchasing a place used to make sense. Now, we compete so fiercely, and pay so much, for so little, some buyers are afraid they’re making a bad call.

Photo-illustration by Ryan Huddle/Globe staff

THE VIBE IN THE ROOM is contained desperation. Everyone is afraid of something. The woman in the back is worried about commitment. “The responsibility of it,” she says. The man two rows in front of her is concerned about making a mistake. “A bad investment,” he calls it. And then, maybe, you’d lose your home and find yourself living with your parents again. “This is a worry,” says a woman named Jenny, well dressed in a coral pink blouse, “that you’re not going to have anything at the end.”

In the front of the room, Jorge Colon listens — turning with each answer to jot down the person’s fear on an increasingly crowded whiteboard. As the program manager of The Homebuying Mentors and the facilitator of its classes, Colon helps people of all income brackets navigate the kill-or-be-killed waters of homeownership. “Think positively,” Colon instructs the class on this particular night, addressing about two dozen aspiring homeowners inside a small room at the Harvard i-lab. “We’re here to make it easier.”

Of course, if you’re following the market, and even if you’re not, you know there’s nothing easy about buying in — or anywhere near — Boston right now.

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The numbers only tell a piece of the story, but they’re startling all the same. According to the latest data from the Warren Group, a real estate tracking firm in Boston, median home sales prices in Suffolk County are up more than 31 percent this year compared with 2010, right after the housing crash. That means a $500,000 house back then could go for $650,000 today, just five years later.

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And these prices could have serious, long-term effects on the region. Picture a world where teachers, nurses, paramedics, and others are relegated to more affordable exurban living but still working in Boston, increasing commute times — not just for them, but for all of us. That’s the future that some are predicting for Massachusetts, a state ranked 44th in homeownership rates, 48th in affordability, and 49th in racial diversity of homeowners. Forget about the Haves and Have-Nots; we are increasingly becoming the Haves and Have-Nevers, united by one thing: No matter if we are renting or buying, we’re all overpaying. “And if you’re paying a lot for your housing, you don’t have money for other things,” says Kasey Wiedrich, director of applied research at the Corporation for Enterprise Development, the nonprofit that published the rankings this year. “It makes it harder to make ends meet.” Or handle emergencies. Or save for college. “It just makes all of those things more difficult.”

“It’s demoralizing,” agrees Erich Kahler, one of the people attending the Homebuying Mentors class recently. He and his fiancee, Jen Weiner, rent in Medford — a one-bedroom for nearly $2,200 a month. It could be worse, they admit. Parking is free, and there’s a swimming pool and central air. But every month when they get charged an additional $50 rent for the privilege of owning their cat, Dash, Kahler and Weiner have the same thought. “It makes you want to buy,” Weiner tells me.

They want a home. Ideally, between their workplaces — Kahler’s in Lincoln and Weiner’s in Boston. A neighborhood with a sense of community and a house with room enough for the children they want to have. Hopefully, a two-bedroom. “But probably, more likely, a one,” Kahler admits. Yet with a budget of around $350,000, they have a problem that many can appreciate. As Weiner puts it, “We can’t afford anything that we like.”

The scariest part of all might be this: Even when couples like Kahler and Weiner find their elusive home, they may never see the incredible growth in home value appreciation that has enriched — literally, made millionaires of — the last generation of homeowners around Boston.

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“Buyers today are not negotiating value,” real estate agent David Bates says. “They’re trying to win.”

Oh sure, you can still buy a home around here and live there till death do you part. But if the down payment wipes your savings clean, and your monthly mortgage makes it impossible to build it back up to where it should be, was it all really worth it?

IT’S ALL ABOUT TIMING, and mine has been terrible. I came to Boston in 2005 (the peak of the housing bubble), moved away for family reasons and a job in 2009 (the low of the low), and then returned to New England this past summer amid a new boom fueled in part by a long winter, a lack of housing supply, and too much demand. Along the way, my wife and I made some questionable decisions. We sold our 800-square-foot Jamaica Plain condominium (stupid) at a loss (really stupid) and said we were never moving back to New England (wrong). But it’s important to remember context. By all accounts, in 2009 the housing market here and in most other American cities was doomed, hobbled by the Great Recession and not going to bounce back any time soon. “It just doesn’t have the makings of a recovery,” one economist said that July. A Globe headline around that time summed up the general feelings on homeownership this way: “A home, or a ball and chain?”

To us, and many others, it felt like the latter. And by living elsewhere — in Cincinnati and New Orleans — we had the chance to experience life the way most Americans have it: in relatively cheap housing. The real estate data company Zillow recently reported the Boston metro area is one of the most expensive places to own in the United States. “You’re talking twice the national average for the Greater Boston area,” says Svenja Gudell, Zillow’s chief economist. “And Boston itself is even more expensive.” The firm reports that the median cost of basic expenses around here, including things like insurance, taxes, and utilities, tops $9,400 a year. That’s before mortgage payments— and homeowners spend nearly 22 percent of their annual income on those.

Renters have it even worse, according to Zillow, giving almost 35 percent of their income to landlords who may or may not fix leaky faucets or respond to complaints about the loud dog in Unit 3. In New Orleans, by comparison, homeowners spend less than 16 percent of their income on mortgages. And life in Cincinnati, the Queen City, is even easier, with homeowners on average allotting just 11 percent of their income to monthly mortgage payments.

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My family was living the dream, it turns out, on the Ohio River. But for hardened Bostonians who could never imagine living in the Midwest (boring, you say) or the Deep South (no way, you think), imagine this: Similar affordability can be found in plenty of other major American cities. In Chicago, Dallas, Washington, D.C., Philadelphia, and Atlanta, both homeowners and renters spend far less of their income on housing than Bostonians do, leaving a greater percentage of income for other things, like actual living.

When we returned to New England, coming back for my wife’s job near Portsmouth, New Hampshire, we made sure to pack up our life lessons along with our belongings as we hit the open-house circuit alongside countless couples like Erich Kahler and Jen Weiner. We resisted a total gut-job disaster of a home in Portsmouth in need of at least $200,000 worth of work. Price tag: $435,000. And we couldn’t afford the tasteful but tiny Federal in Newburyport with almost no yard and near a major thoroughfare. Price tag: $690,000.

We were looking for something cheaper,  mostly because we didn’t want the expense. And we didn’t spend much time ruminating on the Jamaica Plain condo we sold back in 2009, either. Because while it’s true that condo prices have risen since then — in Jamaica Plain and across the city — the broader housing picture, specifically for single-family homes, is muddier than most people think. As much as housing prices skyrocketed last summer, as fast as homes flew off the market, the numbers show that Greater Boston single-family home prices, on average, are just returning to where they were a decade ago. Homeowners who bought 10 years ago are, on average, no better off now. “You’re actually selling today at the same price,” says Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern University. “You haven’t made any money.”

Aram Boghosian
Former frustrated house hunters Erich Kahler and Jen Weiner, with their cat, Dash

BARRY BLUESTONE IS ONE of Boston’s go-to minds on housing. He’s a walking repository of knowledge on everything from construction costs to demographic shifts. But even he was surprised by what he found when he examined how prices have changed in the past 30 years. “The numbers,” he tells me, “are so spectacular.”

Median home sales prices — the metric by which many people judge the market — can be misleading, he says, “because you’re not comparing apples to apples.” If a bunch of expensive homes sell all at once, it will appear, Bluestone says, “like median prices have risen rapidly.” And if a bunch of lower-priced homes have hit the market recently, the opposite will be true. What’s required to get a clearer picture, he says, is something like the S&P/Case-Shiller Home Price Indices, a repeat-sales calculation of existing homes. That model — cofounded by Karl “Chip” Case, professor emeritus of economics at Wellesley College — reveals that home prices jumped 37.6 percent between 1985 and 1995. “Pretty healthy growth for one decade,” Bluestone says. And then things got — to use a technical term — crazy. “If you bought a home in 1995, a typical home, and then you sold it in 2005, you saw prices go up 150 percent.”

“That,” he says, “is how people got rich.”

The late ’90s was a key time for Boston  and other major cities, especially on the East and West coasts. Fueled by a strong economy, low unemployment, and attractive interest rates, this was the time to buy. “That was probably the tipping point,” says Anne Thompson, an economist at Dodge Data & Analytics in Bedford, who, as a graduate student, helped Case gather data for his first index 25 years ago. And if you missed that window — or worse, you did what I did and bought at the peak, between 2003 and 2007 — “then,” Thompson says, “you’re kind of screwed.” In the past decade, the Case-Shiller model shows that home sales prices are down by about 1 percent.

Yet people are still dreaming, still living, effectively, in the past. In surveys compiled by Thompson, Case, and their colleague Robert Shiller — the author of the book Irrational Exuberance — homebuyers in Middlesex County reported last year that they expected their homes to increase in value by 4.2 percent in the next year, roughly what people reported in the same survey back in 2003, just before the boom. “That’s something that really struck me,” Thompson says. “I think they’re still overestimating for the long run. If you compile 4.2 percent over the next 10 years, that’s a lot of home appreciation.”

It’s the kind of life-changing home appreciation that many experts believe won’t happen anymore — even in the most desirable communities. “A home is a person’s castle,” Bluestone says, listing all the emotional reasons why I, you, and young couples like Erich Kahler and Jen Weiner want to own. “People become more invested in their community and more invested in maintaining their community.” And that’s not going to change. But buying? To get rich — fast? “The next generation,” Bluestone predicts, “will not have that benefit.”

Yoon S. Byun/Globe file
Barry Bluestone at Northeastern University has studied the region’s housing market for decades.

YET MANY IN THE NEXT generation won’t be able to buy at all, especially in Boston, where supply is limited, condo prices are soaring, and experts like Richard Taylor, director of the Center for Real Estate at Suffolk University, are calling for city officials to find more space for low- and moderate-income families. “Right now,” he says. “Posthaste” — before it’s too late.

In October 2014, Mayor Martin Walsh unveiled, effectively, a schedule to create that supply. His housing plan called for 53,000 new units in Boston by 2030, and city officials say it’s not a report that was released to sit on a shelf somewhere. “Middle-income and affordable housing is one of Mayor Walsh’s top priorities,” says Sheila Dillon, the city’s housing chief. “And I can say many of us are working seven days a week to make sure that Housing Boston 2030 is implemented.”

City reports this year reveal signs of progress: more than 3,500 new unit permits in the first nine months of the year; about 230 permits for low-income housing; and just over 1,100 new permits for middle-income housing. Nearly 1,300 permits were filed in the second quarter, the most in any quarter in Boston in more than a decade.

“That’s a very positive trend,” Dillon says, noting that so far the city is running ahead of schedule in most categories. But Boston cannot solve its housing woes alone. “We need a regional housing response,” Dillon says. Translation: more affordable housing, not just in Boston, but near Boston, in other towns. And people will also need to get creative, as they have done recently in Allston.

In the shadow of Harvard, residents have noted an increasing amount of speculative investors scooping up properties to rent — and sit on — for years.

“They are primarily cash investors,” says Val Frias, associate director of the Allston Brighton Community Development Corp. “So they can move nimbly. They can move without inspections and other things required by lenders. So even if you were someone with perfect credit — and 20 or 30 percent to put down — you won’t be able to compete.” What Frias’s nonprofit needed was a lot of cash , and last spring it received it from an unlikely source: Harvard University, the reason for all the speculative investors in the first place. Harvard agreed to give the Allston Brighton Community Development Corp. $3 million so it can buy homes and flip them — to owners, not renters.

It’s a novel idea and, early on, it’s working, at least in small ways. With the help of the Harvard money, the nonprofit obtained a line of credit and has already bought three properties: a condo and a pair of two-family homes that almost certainly would have gone to rent-happy investors. Instead, the nonprofit plans to renovate the two-families and has already sold the condo — to a homeowner — with one caveat: With every sale, it must be owner-occupied for 90 years.

“So this is the first floor,” says Michelle Meiser, the nonprofit’s director of homeownership, giving me a tour recently of one of the two-families. The dining room is large. The wood mantels and pocket doors original. It has all the makings of a good home. “We own this whole building,” Meiser says. “It’s a really nice place to be.”

IT’S THE KIND OF PLACE that will sell in one day. Still, it’s hard to imagine solving the problem like that — one property at a time. It’s also hard to imagine the sale last spring of David Fram’s 1,779-square-foot house in Brookline, where neither investors nor nonprofits were at play. It was just ordinary people making — it would seem — insane decisions that we now find totally normal.

Give credit to Fram, a 68-year-old software developer. He was trying to be reasonable. He and his wife bought the home — a four-bedroom, on a small lot, accessible to the T only after taking a bus — in April 2006, the peak of the market, for $620,000. They made some minor improvements, adding track lighting, for example. “But nothing big,” Fram says. “We didn’t build new rooms, expand new rooms, or finish the basement.” So when they went to sell this year and their real estate agent suggested listing for $795,000, Fram refused.

“I said, ‘I’m not comfortable with that,’ ” he recalls. “ ‘That’s too much money.’ I thought it was excessive or greedy.”

Fram listed, instead, at $765,000. At the open house, prospective buyers — mostly couples, divorced parents, and young families with children — circled the rooms with purpose, ending up in the kitchen. “It really wasn’t a very big house,” the listing agent, Karen Edgers, says. And there were lots of questions about bus routes and education; the property is in a zone where children could end up at any one of four elementary schools. Still, within 48 hours, Edgers was sitting with Fram at his kitchen table with five offers — all of them at asking price or above. “Each with a handwritten note,” Fram says, “about why we should pick them.”

The hopeful buyers wrote about their failed marriages and their children and their dreams for the future. They flattered Fram — You did such a nice job decorating the house! — and, in one case, even attached a personal photo. “They were a beautiful couple,” Edgers recalls, “a beautiful, happy picture of them on a beach or something.” But in the end the decision was easy. Fram sold to the highest bidder, the one offering $820,500 — more than $55,000 over asking — with no contingencies for inspections or mortgages. Fram, who moved into a condominium in Arlington, says he felt “incredibly fortunate” with the way his situation unfolded. “We made out well, financially,” he says. “Better than we ever expected.”

IN RECENT WEEKS, Erich Kahler and Jen Weiner, the Medford couple, finally caught a break of their own. They learned of an estate sale in Woburn and visited the home. The 1960s-era Cape-style house wasn’t exactly what they were seeking. The bathrooms were dated. The kitchen had no dishwasher. There was shag carpeting upstairs that would need to be removed. And the location would roughly double Weiner’s commute to work.

But it had other things they wanted. They had once worried that they wouldn’t be able to find a two-bedroom home; the Woburn house had three. They’d have room to grow here. And two full bathrooms. And a lot in a quiet cul-de-sac. So they went over their budget of $350,000, made a bid, and got it. They close later this month. “Agreeing to buy anywhere this close to Boston, we knew we’d overpay,” Weiner tells me. Still, they’re excited for a future free of landlords and pet fees, and Weiner believes the home will end up being a good investment. “If,” she says, “the housing market stays as competitive as it is now.”

That’s the question everyone always wants to ask Karl Case  of the Case-Shiller indices , and I met with him recently at his Wellesley home to discuss it. But the conversation quickly turned personal as Case, 68, revealed his own plans to sell — downsizing, like Fram, to a condo paid for in part by money from his house sale.

“This is a great little house to live in,” he tells me, lounging in the den in a T-shirt emblazoned with the logo “Life is Good.” He and his wife, Susan, bought it in 1991 for $392,000. But when they sell it — a four-bedroom with white siding, red shutters, a renovated kitchen, an added sunroom, a stone path to the front door, and a two-car garage in one of the most desirable communities in the state — Case figures it will go for almost triple the original price. “It would sell for $1 million,” he says. “It is amazing.”

It’s also proof, he says, of some advice a friend in the industry gave him 30 years ago: “The only thing dumber than not owning a house is not owning two.” The thinking was that the market over time was headed in one direction — up. And anyone who wanted to get in on it had better buy, and soon.

In some ways, the same thinking still influences buyers in the Boston market today — especially in hot neighborhoods like Case’s. “You ever drive up north on Grove Street?” he asks me, referring to one of Wellesley’s main streets. “Do it,” he says, getting excited and maybe exaggerating a little. “Just drive up there, looking left and right for about a half mile to a mile. They’re $5 million houses, minimum. And people are paying cash.”

At these prices, Case says, it’s hard to believe today’s buyers will make out like those who bought 30 years ago, hard to believe they’ll see growth like he has and walk away at retirement age, on the back end of life, financially flush, thanks to a home purchase long ago. When I ask Case whether the adage about owning two houses still holds true — if we should all own two, as if that were even possible — the professor pauses, looks at me, and doesn’t flinch.

“No,” he says. “I don’t.”

Related:

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Millennials face tough obstacles to buying a home

Soaring rents squeezing Boston-based industrial firms

Keith O’Brien is a freelance writer. Follow him on Twitter @keithob and send comments to magazine@globe.com.