boston-real-estate-20102
As we depart from 2009, here are some real estate predictions for 2010 for the Boston condo market.

Interest rates will rise. In March 2010, the government will curtail its purchase of mortgage-backed securities. This massive infusion of cash into the home finance system has artificially lowered mortgage rates, resulting in interest rates for 30-year fixed loans of around 5% — at or near generational lows. I expect interest rates to climb close to the 6% range by the end of the year.

The bottom of the market for first-time buyers will soon be past us. The hottest market segment are condos priced under $500,000, I expect that will continue through 2010. I expect some low end properties will have bidding wars as well.

Prices will decline on the high end ($1.5 million +). The bidding wars on the low end have no relation to the languid market on the high end. Fewer and fewer buyers on the high end can qualify for loans under current stringent underwriting guidelines, meaning that fewer buyers are even part of this market. Smaller demand means lower prices. Some neighborhoods like Back Bay will hold up better than say Midtown, but overall expect downward pricing pressure in this segment of the market.

Foreclosures and short sales will become pervasive in all segments of the market. The first wave of foreclosures was caused by defaults in the subprime market. The current and next wave of foreclosures and short sales will be caused by delinquencies among prime borrowers. The causes are job losses, resets of adjustable and option ARM (and other exotic) loans, and strategic defaults in which underwater property owners decide it’s better to lose a home through a short sale rather than be saddled with an asset that offers no upside.

Over-priced new construction will become less so as developers are forced to chop their prices. Many new condo developments, like 45 Province Street are priced in line with “boom” values, when the land was purchased, and developed, rather than with new, deflated values. Developers will be faced with the decision of either holding their over-priced inventory or selling at discounted prices. I expect that 45 Province Street will try some type of auction format for some of their condos, similar to the Bryant.

Getting a loan will be tougher than ever. A few years ago, getting a loan was as simple as signing on the dotted line. Today, lenders scrutinize every aspect of an applicant’s financial profile and underwriting hurdles are many. As lenders experience record default rates, expect lending guidelines to tighten.

Real estate will begin reverting to its role as a safe, predictable asset class. For generations, real estate was a relatively boring asset class. The real estate market didn’t offer the skyrocketing returns of stocks — but it also didn’t expose owners to the same risk. But then came the past decade, when real estate fortunes were made — and as quickly lost — through a bubble market of epic proportions. Expect real estate in 2010 to begin returning to its normal role as shelter and a relatively safe investment, without wild price swings and market movements.

With the increase in college dorms in the last few years coupled with a weak job market, I expect that apartment rents will decline, and in neighborhoods such as Back Bay and Beacon Hill more and more landlords will pay the broker fees.

The Boston commercial real estate market will suffer the ills of low vacancy rates, low rents and high default rates.
The biggest concern is credit, as billions of dollars in commercial debt come up for refinance with little to no takers.

Your thoughts!

Author Profile

John Ford
John Ford
EXPERIENCE

Over the course of 20 years in the Boston downtown real estate market, John represented and sold numerous, condominiums, investment and development properties in Greater Boston and in the surrounding suburbs



In addition to representing Boston condo buyers and sellers, John is currently one of the most recognized Boston condo blog writers regarding Boston condominiums and residential real estate markets. John's insights and observations about the Boston condo market have been seen in a wide variety of the most established local & national media outlets including; Banker and Tradesman, Boston Magazine The Boston Globe, The Boston Herald and NewsWeek and Fortune magazine, among others.



HISTORY

For over 24 years, John Ford, of Ford Realty Inc., has been actively involved in the real estate industry. He started his career in commercial real estate with a national firm Spaulding & Slye and quickly realized that he had a passion for residential properties. In 1999, John entered the residential real estate market, and in 2000 John Started his own firm Ford Realty Inc. As a broker, his clients have come to love his fun, vivacious, and friendly attitude. He prides himself on bringing honesty and integrity to the entire home buying and selling process. In addition to helping buyers and sellers, he also works with rental clients. Whether you’re looking to purchase a new Boston condo or rent an apartment, you’ll quickly learn why John has a 97% closing rate.

AREAS COVERED

Back Bay

Beacon Hill

Charles River Park

Downtown/Midtown

North End

South End

Seaport District

South Boston

Waterfront

Brookline

Surrounding Communities of Boston
Contact
John Ford and his staff can be reached at 617-595-3712 or 617-720-5454. Please feel free to stop by John's Boston Beacon Hill office located at 137 Charles Street.




John Ford
Ford Realty Inc
137 Charles Street
Boston, Ma 02114

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