Now’s the time to buy – if you can afford it – in the Hub’s so-called “Seaport Innovation District” area, says housing data expert, Xiaowen Yang.
Yang – who heads GeoHome, a big-data startup looking at the residential real estate market in greater Boston – just crunched the numbers for the section of the Hub along the booming South Boston Waterfront area and discussed her new findings with BostInno.
Despite the scary prices, she said, the entry-level market in the area is hot.
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“Seaport is the new Cambridge,” said Yang, who is also a geographic information system scientist at MIT.
High paying job opportunities are rapidly spreading through the district, she said, and owning is a good investment, especially for first-time buyers. Meanwhile, a glut of luxury housing means that prices on the high-end are flattening out, even sagging.
The bad news, however, is that housing costs – as in much of downtown where some spots can command up to $1,000 a square foot – are not cheap.
For a nuanced look at the current picture of the neighborhood’s housing market – and for a few predictions of what’s to come – we spoke with Yang.
Q: What are you seeing right now in terms of interesting market trends?
A: We already predicted … that the high-end market is going to drop, and actually it’s already dropped. I think that trend is going to keep pushing down. But, the entry-level market is going to keep going up. It’s going to be very tight.
Q: You mean prices in the entry-level market are going to keep rising?
A: Yes. … If you are an investor, you want to stay away from the high-end market. But it’s still a good time to go in (to the entry-level market).
Q: What areas does that apply to most?
A: Generally speaking, that’s second-tier locations that are still near the MBTA, like … Braintree. But, especially, the Seaport District is a good location. We monitored the sum of salaries for the area, and they jumped 85 percent last year…. The zip code 02210 is extremely astonishing … the average salary is $124,000…. So it’s going to be translated into housing prices. People earn more and there are more job opportunities there.
Q: What other trends do you see in that part of the city?
A: They have too many luxury condos.
Q: So you see that part of the market flattening out?
A: Yes, it’s oversupplied.
Q: Overpriced too?
A: Yes. … None of the builders are thinking about the Millennials, but that’s where there’s the strongest demand.
Q: But you see the entry-level market in the neighborhood – in the Seaport specifically and South Boston generally – as a good opportunity now?
A: Yes, now is the time to buy. For the entry-level, if you are buying for yourself (don’t worry about rising interest rates). Seventy-five percent of first-time buyers are going to move within five years. That means the best strategy is to buy now and use an adjustable-rate mortgage, with interest rates fixed at five or seven years, no more than 10 years, and that would be the best strategy.
Q: There was a report, the UBS Global Real Estate Bubble Index for 2017, that found that while several cities such as Toronto, Stockholm and Hong Kong were overvalued, Boston was one of the few high-cost places in the world that was priced where it’s supposed to be. Do you agree?
A: I totally agree with that.
Q: So you see the Boston market, which many find too expensive already, as continuing to go up?
A: Yes … it’s supported by the job growth. Fundamentally it’s very strong.
Q: What are some other trends you see over this year in Boston?
A: Allston will be gentrifying more soon. Roxbury is another potential candidate for becoming more gentrified.
Q: Back to the Seaport District and South Boston, are those entry-level places you talked about at prices that Millennials can actually afford?
A: Entry-level prices for South Boston should be condos below $600,000, which means around $2,200 monthly payment for the mortgage…. If you have a job there (in the high-tech industry), then, yes, they can afford them.
This interview was edited for length and clarity.