Report: Troubled Economy Threatens To Push Home Prices Down, AgainPlay
The housing market in Greater Boston may have its rockiest days ahead of it. A new report from The Boston Foundation says that there are troublesome signs in the economy threatening to push home prices downward again. And one big worry is that the staggering housing market will send young working families to seek their fortunes somewhere else.
The Roddas, A Young, Homebuying Family
The Roddas are just the sort of young working family that Boston civic leaders want to keep around. A few years ago, Ben and Irene met and married in upstate New York. He’d gone to college in Boston, and he and Irene were ready to begin a long, happy life.
Boston’s economy and the uncertain housing market are now pushing young families like the Roddas to a tipping point, according to a new report.
"I grew up in New York City. I said, 'I wanna live somewhere different.' We picked up, and so three months later we were living in Boston," Irene said.
Ben’s an engineer and got a job at a telecom company. They bought a condo in Dorchester and moved in in 2007. They had a baby. Great medical care. Boston was treating them well, until: "On April 1, he was laid off," Irene said.
Boston’s economy and the uncertain housing market are now pushing young families like the Roddas to a tipping point. That’s the conclusion of a report from The Boston Foundation out Tuesday.
"Well, I worry that we could see a continued double-dip in home prices," said Barry Bluestone, who runs Northeastern University’s School of Public Policy and Urban Affairs, which wrote the report.
"I would like to think that we’ll bounce along the bottom and things won’t get worse. But there’s too much bad news out there for me to have much hope of that," Bluestone said.
Bluestone said the weak economy makes people afraid to blow their savings on a down payment. After all, like the Rodda family, they might lose their job any day, and that can lead to foreclosure.
Bank-owned homes have gotten so common that realtor Ryan Covino lists all the new properties in online videos.
Renting Prices On The Rise
Meanwhile, all the potential homebuyers sitting on the sidelines need a place to stay. So do all the people who have lost their homes. And they’ve all been renting.
"Rents are at an all-time high," Bluestone said. "Here we’re in the middle of the Great Recession, and yet rents in 2011 are higher than they’ve ever been in Greater Boston’s history."
And those record-high rents really worry him, because they often push people to do something.
"Now we’ve seen home prices dip here a bit, they’re down about 13, 14 percent from their peak. But they’re much, much lower and have fallen much further in other communities where young people might seek jobs and seek lower-cost housing," he said.
Until now, that has not been much of a danger, with the Massachusetts economy outperforming the rest of the country. Why go somewhere else if there aren’t any jobs there?
But now, Bluestone is worried that as the economy here slows down again, other parts of the country will get their footing, leading to an exodus of young working families out of Boston.
Leaving Boston In Search Of Better Options
That’s exactly what happened to the Dorchester couple after Ben lost his job. Irene remembers when Ben got an interview in Memphis.
"He said to me, 'Is this a place you’re willing to move, because if you’re not willing to, I’m not even gonna go,' " Irene said. "I said, 'Well, it doesn’t even matter where I want to live right now. It’s really where you’re going to get paid.' "
Ben got the job and they put their Dorchester condo on the market. And Irene was astounded to see what she could get for the same price in Memphis.
"Down here, I could have 3,000 square feet, four bedrooms. It’s insane! I could have a mini-mansion down here for the same price," she said.
At first, the Roddas were sad to leave Boston, but that didn’t last long.
"Everybody’s friendly; things are cheaper down here. There’s tax on clothing, but everything else –- food, entertainment, so many things are free. It’s wonderful! So I’m actually happy," she said.
Young people leaving Boston… happy. City leaders don’t want to see that become a trend. But the new report says that unless more is done on the state and federal level to shore up the housing market, people like the Roddas will become a growing reality.
This program aired on October 25, 2011.