As prices rise, people look to new cities and neighborhood in which to

buy.  Sounds good to me.  Very exciting times.  First-time homebuyers can find some

great properties from which to choose a new home.

By

Kimberly Blanton, Globe Staff

High prices are driving

first-time home buyers into some long-neglected cities and Boston neighborhoods, fueling record

condominium sales and bringing dramatic change to working-class enclaves.

Immigrants, recent college graduates, shop owners, and others are buying

three-deckers and houses in cities like Chelsea, Fall River, and Worcester — as well as in the

less-fashionable sections of Somerville and in Boston neighborhoods like Dorchester and East

Boston. The properties are being renovated, converted to condominiums, and resold for a

profit.

In Lowell and Lynn, developers are converting factories to condos.

The buyers include empty-nesters and well-heeled professionals seeking an urban lifestyle. Many are

betting that real estate will provide better investment returns than the stalled stock

market.

Condo sales in some urban frontiers are hitting record levels, even

as economists grow increasingly concerned the US real estate market is experiencing a

”bubble,” much as the stock market did in 2000, when prices were driven up rapidly by a

frenzy of speculative buying before they collapsed.

Fears of a bubble

resonate in Boston. The 1980s boom in condo prices caused a collapse in the housing market that led

to several bank failures, including that of Bank of New England, then the state’s largest. Then,

individual investors were speculating in condos, hoping to benefit from rising real estate prices

without fixing them up or moving in. When prices fell, investors who had no stake in the

neighborhoods or the buildings simply turned the keys over to the

banks.

Today, individuals and developers are renovating buildings to meet

unprecedented demand. Many buyers, while enjoying persistently low mortgage interest rates, have

been priced out of suburban and downtown Boston neighborhoods, real estate specialists say. And

unlike investors, homeowners tend to ride out price declines.

In contrast to

the 1980s, ”the people they’re selling to are very stable,” said Kevin Ahearn, president

of Otis & Ahearn. His Boston real estate-services firm estimates that fewer than 15 percent of

the city’s condos are purchased purely as investments — about half of the 1980s

level.

While condo sales have long been strong in Cambridge and downtown

Boston, their growth elsewhere is more dramatic. Between 2002 and 2004, for instance, Lowell’s

annual condo sales total nearly doubled, to 689. Chelsea’s more than doubled, to 329 units.

Brighton, Dorchester, South Boston, and East Boston had similar gains, according to Listing

Information Network, or Link, which tracks real estate.

Complete article: Condo

conversions spreading

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