Voters in Newton recently approved a 23-acre mixed use project that will provide 800 units of housing, as well as office space and retail space. The project was originally approved by the Newton City Council in a 17-7 vote, but a group in opposition of the project lobbied that the project’s fate should be voted on by town residents. Ultimately, the project was voted on and approved, partly in thanks to a group that rallied in support of the project. But we are left wondering if this is a case of community involvement gone too far as Greater Boston (and many other places in the country) is faced with a severe housing shortage. Read more about this case here.
Without a doubt, many of our fellow developers have already read about and rejoiced over the recent ruling from the Massachusetts Supreme Judicial Court (SJC) that essentially prevents neighbors of development projects from suing land-use decisions unless they can prove harm. But we want to again revisit why this is so important, not just for developers, but for everyone participating in the real estate market in Massachusetts. We all know that there is a housing shortage in the state, especially in Boston. Simple economics tells us that because demand is high and the housing stock is low, housing prices are high (both for rentals and home-buying). Therefore, in order for housing prices to come down, we need to increase supply. Developers everywhere are trying to do just that, but there are many hurdles along the way that prevent developers from increasing the housing stock at the rate it is needed. One such hurdle can come in the form of lawsuits from neighbors, which can easily delay a project for a year or more. So, the SJC ruling in favor of the development outlined in Murchison vs. Sherborn sets an important precedent that neighbors need to be able to prove harm in order to sue land-use decisions. Read more about the details and effects of this case here.
Despite the obvious slow down in real estate market, experts are quite optimistic that the real estate market will pick right back up once COVID-19 resolves, especially in a market like Boston. With an already limited housing supply, experts also don’t expect a big dip in housing prices either. “Once the economy can return to normal, and people can get back to normal, I think the fundamental shortage of homes will still be there. That’s why I don’t see much prospect for prices to fall very far as a consequence of this,” said Jeff Tucker, a Zillow economist. In the meantime, real estate agents are getting creative with virtual tours and other ways of “showing” properties with prospective buyers and tenants and the City of Boston has created a fund to help tenants pay rent. For more details about the current and future housing market, click here.
As the world began grappling with the COVID-19 pandemic, many began to wonder what the economic fallout would be as businesses around the nation closed in an attempt to stop the spread of the virus. As small and large sectors of the economy grinded to a halt, the likelihood of another economic recession became more and more likely. While there’s little doubt that we are currently experiencing a recession, we still do not know what the future holds for a recovery or what the lasting economic impact will be. The word “recession” evokes a particular type of pain for those involved in the real estate industry as they witnessed the Great Recession of 2008-2009 wreck havoc on the housing market and home values. While we have recently highlighted the differentiating causes between the housing collapse and this pandemic, the jury is still out on how the housing market will be affected in the medium and long term. However, a recent article posted in the Wall Street Journal reveals some surprising short term impacts of the coronavirus. Despite the economy shrinking, businesses closing and unemployment claims dramatically increasing, there seems to be another metric that’s charting an upward trend. While data from the National Association of Realtors shows that buyer demand has fallen 8.5% over the past month, median home prices during the same period rose 8%. How is it that home prices continue to rise in a seemingly decimated economy? The answer has to do with a problem that the City of Boston has been dealing with for many years now --- there just aren’t enough homes on the market to keep up with buyer demand. Therefore an already chronically undersupplied housing market is simultaneously suffering from a steep decrease in new home listings. So even though demand is down considerably during this pandemic, sellers are either refusing to list their homes for fear of strangers walking through them or they are taking a “wait and see” approach, rather than accepting offers below their asking prices. As a result, a smaller buyer pool is competing for an ever-shrinking inventory of new homes for sale. It is still too early to tell if this trend will continue holding true in the future, but many economists and industry leaders are projecting that home values will remain flat or even see a modest increase over the next year. Historically, If the Boston housing…