Home values in suburbs and urban neighborhoods within the Route 128 beltway are blowing past their 2005 highs and setting stunning new records.
The median price headed towards the million-dollar mark in a growing number of ZIP codes, including Newton, Needham and Lexington, according to the latest numbers from The Warren Group, publisher of Banker & Tradesman.
But even as Boston and the inner suburbs boom, real estate prices in many towns along Interstate 495 have yet to get back to where they were a decade ago, let alone hit new highs.
So what gives?
Simply put, urban living is hot right now, even in the suburbs, where demand for “in-town living” is soaring as buyers bid up homes near the center of Needham or Winchester, brokers say.
But more fundamental factors may be at work, from torrid job growth to our state’s increasingly beleaguered roads and hapless public transportation system.
“There has been a real shift in where the jobs are and where people want to be,” said Elaine Bannigan, owner of Pinnacle Residential Properties in Wellesley.
The explosion in single-family home prices within Route 128 is nothing short of phenomenal.
Lexington’s median home price hit $912,150 in March, a $257,150 increase over March 2005 – an increase large enough in and of itself to buy a small home in a number of 495 towns.
Newton weighs in at $950,000, up from $768,280 a decade ago, while Needham has seen one of the biggest gains, rising to $980,000 from $628,800, The Warren Group reports.
In the urban core, several Boston neighborhoods, as well as Cambridge and Somerville, have seen prices rocket.
It will cost you more than $700,000 to buy a house in Jamaica Plain these days; a decade ago, the median price was under half a million. Charlestown has jumped to $754,500, compared to just over $500,000 in 2005, while the median price in Cambridge has leapt to $1.3 million; Somerville is closing in on $600,000, up from $429,500 back in March 2005.
It’s not just the lofty numbers, but where some of these sales are happening that’s remarkable. Homes near the center of Newton, Needham or Winchester are being bid up now in a way they never would have a decade or two ago. Buyers are no longer looking for a little country house in the suburbs, but rather a bit of a city feel, with walk-to restaurants and coffees shops and a nearby T station.
“We have towns that have preserved their old-fashioned downtowns,” Bannigan said of the suburbs inside 128. “They are smoking hot. Buyers want to be within walking distance of downtown Needham or Newton.”
Way Out West
Some towns along 495 have older downtowns, while others, one-time farming towns, don’t. But regardless of their degree of urban appeal, the suburbs along the 495 corridor have yet to see the kind of rebound in prices that has taken place inside 128.
In fact, it’s hard to find any town where home prices have climbed back to their 2005 peak, let alone left it in the dust.
The glory days of the late 1990s and mid-2000s, when the 495 corridor was abuzz with new corporate campuses and new subdivisions, are long gone.
Franklin was one of the fastest-growing towns in the state a decade ago, with hundreds of new homes built each year during the late 1990s. But Franklin’s median home price today, at $379,000, is a mere $13,000 more than it cost to buy a home in the town back in March 2005.
Marlborough, which has kicked off a campaign to encourage new housing and retail development downtown, has seen its median home price fall to $288,500 in March from more than $342,000 a decade ago.
Hudson’s median price is $309,000 now compared to $339,000 in 2005, according to Warren Group stats. Foxboro’s median price was nearly $390,000 a decade ago – today it’s $379,500; Attleboro’s home price of $269,000 is down from $319,450.
Where The Jobs Are
Though location may important, the job-creating boom that has transformed the Boston/Cambridge/128 area may be more so.
Millions of square feet of new life science research and lab space have taken shape in Cambridge, in Boston’s Seaport and along 128 in recent years. Much of Cambridge, Boston and increasingly Somerville is now one giant construction site, while new office and retail construction is surging in Waltham and Burlington.
With the new office towers and lab buildings have come thousands of new jobs and thousands of new buyers on the hunt for homes and condos with a convenient commute to their well-paying but demanding jobs.
With an exception or two, the 495 corridor is just now starting to see some significant construction, with new lab space and apartments taking shape in Marlborough and developer Sam Park at work on an ambitious mixed-use project in Littleton.
As have home sales, lab and office prices keep rising inside the 128 belt; the 495 corridor may eventually benefit as homebuyers and companies head west in search of savings. But in order to have an impact on home values, much more development will be needed.
“It’s spotty out on 495,” said David Begelfer, chief executive of NAIOP Massachusetts, which represents developers across the state. “We are seeing some growth along 495, but you have to see more growth for it to start to affect the housing market.”
Now add to all that the headwinds created by the state’s transportation crisis. Commutes from towns near or along 495 that might have seemed reasonable a decade or two may not seem so great now as the state’s commuter rail system increasingly goes Third World. And with 128 and even 495 increasingly jammed beyond capacity, driving in from an outer ’burb – 30 to 40 miles from Boston or Cambridge – is no picnic either.
Maybe 495 will make a comeback and surprise us all – maybe someday it will get hot again like it was back in the late ’90s and early 2000s. Future decades may very well hold some surprises.
But in this real estate cycle, inside Route 128 is hot and 495 is not.
