The Globe Magazine may be hitting its stride finally, with this fascinating piece on the Massachusetts housing market. It really captures the oddness of this boom. I for one never thought I’d be living in a city with the most million-dollar homes per capita in the nation (Cambridge) or a literal stone’s throw from a ZIP code whose median - not average, median - house cost is $975,000 (Brookline). It’s not that I couldn’t imagine such housing prices existing, but Brookline and Cambridge seem to offer frumpy Victorian homes rather than splashy mansions and to house doctors and lawyers instead of celebrities and the megawealthy.
Of note, too, is the rate of housing price change in the last 5 years: the top ZIP codes show around a 200 percent increase. To the extent that local conditions are driving this increase, we’re not talking about a bubble. After all, more people have come to live in the Greater Boston area and partake in the economic renaissance of the city. But that’s hardly the whole story, especially given the wild shift over the last five years. A perfectly rational market which raised both rent and housing costs as demand outstripped supply at some point gave way to a less rational one in which rents declined but housing prices kept soaring on expectation of further gains. A nifty graph in this week’s Economist charts the cost-rent and cost-income ratios. Neither look pretty right now.
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