Boston Real Estate for Sale

Boston Real Estate

Loading...

The excerpts below are from the December 1, 2010 Beige Book regarding the Boston real estate market.

The Beige Book

The Beige Book is prepared by the Federal Reserve Bank based on information collected on or before November 19, 2010. Overall, the report said the economy in the Boston area seemed to be slowing in the final months of 2010 — but continued to grow overall. Growth is slow, but the report noted that there is more optimism from business owners than seen recently. Manufacturers tied to high tech, retailers, software companies, and IT-related businesses were the most upbeat. The story on real estate, however, has few bright spots, but the overall economic recovery is a good harbinger.

the Federal Reserve’s latest Beige Book report offered another way to see the urban/suburban economic divide. And that is through the real estate market.

From Yahoo News:

“Residential real estate activity remained strong, but accounts of weak conditions in commercial real estate markets persisted,” the report’s summary read. With residential real estate serving as a relative proxy for the strength of suburban markets and commercial real estate standing in for the overall health of urban cores, we see another pillar of this uneven recovery, one that is an advantaging activity that can take place outside of the city centers.

And the details from some of the Fed’s 12 districts show this high-level “strong vs. weak” real estate story is much more potent than the one-sentence summary suggests.

In the Boston Fed’s district, for instance, “the home buying ‘frenzy’ continued in November, with contacts attributing strong buyer confidence to historically low mortgage rates and historically high stock market performance.” At a time when overall employment is down about 9 million from a year ago, it’s quite jarring to see “frenzy” used as a word to describe the home buying market.

But this kind of adjective does appear appropriate when squared with results out of KB Home (KBH) released Tuesday evening, which showed the home builder recorded a 42% increase in purchase contracts in the fourth quarter. This order total marked the company’s best fourth quarter since 2005. A quarter also known as the absolute peak of the U.S. housing bubble.

Meanwhile, in Boston’s commercial real estate market, the pain is only starting to be felt. “With new activity thin, rents have not yet begun to reflect the downward pressure from increased sublease space,” the report said. “The retail and hospitality markets were still very soft, especially as some areas experienced new restraints in response to COVID-19 spikes. Many contacts predicted that some retail space will be converted to industrial over the next several years.”

And this dichotomy between a persistent appetite for individuals buying homes and a lack of enthusiasm for business’ to expand their real estate footprint was repeated nationwide.

 

Read more from the Beige Book regarding Boston’s economy.

Boston Real Estate

Loading...

Call Now