Here’s the problem. When the housing market slows down, and there are less buyers than before, those neighborhoods that are “marginal” suffer the most. “Prime” properties continue to be snatched up, although they may suffer price degradation, as well.
Chelsea is a “marginal” neighborhood (er, city).
And, as the market has slowed, condo developments have either been put on hold, or canceled, completely.
The Boston Globe, in a story about a couple developers who’ve had to pull the plug on their condo conversion project, says that the volume of condo sales dropped between 2005 and 2006 by as much as 66% (although my data shows a drop-off of only 1/3).
The average and median price, didn’t drop by that much, of course, but it doesn’t matter. If you’re a developer-seller, you don’t have any buyers.
And, if you developed based on the assumption you’d get more back than what you put in, but prices drop or even stagnate, you are in trouble.
And, that’s what has happened, in Chelsea.
It’s a shame, because the developers, the ones’ in the Globe article, seemed focused on building good quality condominium homes for people unable to afford higher prices in other towns and cities. Having them pull back hurts people other than themselves.
Of course, Chelsea isn’t downtown Boston – it isn’t even downtown Springfield, for that matter.
Still, keep this in mind. Again, it’s obvious. If you buy in a less-than desirable neighborhood, be prepared for both the good times and bad times.
More: Retreat in Chelsea – By Kathy McCabe, The Boston Globe
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