Scott Van Voorhis
If you bought a house in the outer suburbs along I-495 and beyond during the peak of the real estate bubble, you could very well still be underwater.
But if you managed to land something in Lexington, Newton, or some other upscale suburb close to Boston circa 2005, you would have hit the equivalent of the real estate jackpot.
More than a decade after the real estate market reached its last high-water mark, it is very much a tale of two real estate markets in Greater Boston.
Home prices are once again shattering records in both the suburbs near Boston and in the area’s urban core. The wealthiest towns are reaping the biggest gains, with a more than doubling in the number of communities where it helps to be making several hundred thousand dollars a year to buy the average house.
Yet many towns and communities farther out on 495 and beyond have yet to see prices get back to where they were a decade ago and, given the cyclical nature of real estate, there’s no guarantee they will anytime in the near future.
It is a trend that both mirrors and is helping fuel the growing economic divide between high earners in the area’s leading growth industries – such as biotech, high-tech and financial services – and everyone else.
Million-Dollar Towns
If you want to see an example of how the richest communities in Greater Boston are getting even richer, just check out the big jump in million-dollar suburbs and neighborhoods.
There has been an explosion in the number of communities with median home prices in the $1 million and up range, as well as in the still very lofty $800,000s and $900,000s, according to data from The Warren Group, publisher of Banker & Tradesman. (All data is year to date through November.)
There are now 14 different communities across Massachusetts where the median price of a home surpasses $1 million. We are talking about Newton, Wellesley, Weston, Lexington, Lincoln, Dover, Cambridge, Brookline, downtown Boston and Charlestown, as well as the increasing elite summer resorts of Provincetown, Nantucket, and Chilmark and Aquinnah on the Vineyard.
That’s compared to eight back in 2005.
There’s also a pipeline of towns poised to break into the $1 million range. Manchester, Concord, Belmont and Winchester are all now in the $900,000s and could easily break a million with two or three more years of price growth, Warren Group stats show. In 2005, there was just one town in the $900,000s, Wellesley, which has since joined the million-dollar club.
The price gains posted by some of the most affluent communities across the Boston area and Eastern Massachusetts have also been astronomical in some cases.
The price of a stately home in downtown Boston – say in the South End, Back Bay or Beacon Hill – has seen the biggest increase, skyrocketing to $3.15 million today compared to $1.3 million in 2005.
Cambridge’s home price has nearly doubled since 2005, soaring from $717,000 to $1.3 million. Ditto for Provincetown, where median is just under $1.2 million, compared to $678,000 and change in 2005.
And let’s not forget Newton, $767,000 in 2005, nearly $1.1 million now, or, for that matter Manchester, $692,000 then, to nearly $950,000 now.
A number of factors are helping drive up prices in Greater Boston’s urban core and in its close-in suburbs. First, it’s where the jobs are. The tech/biotech boom, and to some extent, the continued growth of the financial services sector, are all heavily clustered in Boston, Cambridge and the inner suburbs along the 128 corridor.
Then there’s our ever more dysfunctional transportation infrastructure, which discourages even relatively modest commutes from not-so-distant suburbs beyond 495 or even 128.
And finally there is the simple fact that urban living is hot right now, especially among Millennials and aging Boomers, while the suburbs are not.
Mixed Bag In The Outer Suburbs
The same trends that are helping push up home prices in Boston and its nearby suburbs are also helping to keep prices depressed in the outer suburbs.
It may not be a stampede, but companies are jockeying to get closer into Boston and its suburbs, where highway and rail access is more reliable and where it’s easier to recruit younger talent.
Even as tech and biotech startups and giants alike flock to 128 and ivy-clad Cambridge, home to Harvard and MIT, there has been a steady outflow of corporate jobs and campuses from the 495 belt. Dell’s acquisition of Hopkinton-based giant EMC, which owns a sizable share of the commercial real estate market on 495, is poised to deliver another big blow as suddenly surplus real estate is sold off or subleased.
And the flow of companies and jobs east towards Boston is clearly having an impact on home prices in the outer suburbs.
A few towns out on 495 have seen median home prices catch up or surpass the highs reached a decade ago – Hopkinton and Boxboro, to name two. Yet median home prices in middle-income and blue-collar communities along 495 like Milford, Medway, North Andover, Lowell, Marlborough, Bellingham, Attleboro, North Attleboro, Plainville and Littleton are still well below what they were a decade ago.
Just take Milford, where the median home price is $305,000, compared to $365,000 back in 2005. To just get back to the starting line, Milford would have to see two to three years of 8, 9 or 10 percent price growth, and it’s hardly an anomaly.
Given current trends, it’s anyone’s guess when some of the hardest-hit outer suburbs will get back to peaks reached a decade ago. Nor are there any signs of an impending crash in home values in Boston and the suburbs around it.
There is a chasm between the haves and have-nots in the Greater Boston real estate market and, if anything, it is growing ever wider as the months and years roll by.
