What’d you think will happen in the region next year?
‘Tis the season for prognosticating about what will happen in the new year. Here are four likely trends in Boston-area real estate in 2019.
The sales market will cool. The volume of home sales has slowed during the second half of 2018, and the number of homes for sale in the first place has increased, sure signs of a slowdown in a market where for several years now everything seemed to sell super fast amid bidding wars and all-cash offers.
Part of this surely has to do with tax changes at the federal level—especially caps on deductions for state and local real estate taxes—and with the general uncertainty about the market for mortgages going into 2019 (i.e. will rates bounce?).
A bigger part, we think, is probably due to that age-old axiom: What goes up must come down. The party for brokers, developers, and sellers couldn’t last forever. Home sales in the Boston region will likely continue to slow in 2019, with a concomitant decline in prices.
The rental market will heat up that much more. A side effect of this cooling sales market will be an even hotter rental market. (The Boston area is already one of the most expensive in the nation for renting a home.)
In 2019, more people who would have bought will rent instead as they wait for prices to decline that much more—and that will make the rental market that much tighter and incentivize landlords to raise rents that much higher.
And the pace of apartment construction will do little to alleviate this. Why? Because the Boston region continues to slap on new residents who in turn need a place to live. There is simply not enough supply in the pipeline to overtake rental demand at this point.
Big site sales. There are several prime development sites up for sale in the Boston area. These include the 20-acre Bayside Expo Center site just east of the Red Line’s JFK/UMass stop in Dorchester and an 18-acre municipal tow lot and storage site between that neighborhood and South Boston.
There are also smaller, though no less prime, ones for sale such as Procter & Gamble’s 6.5-acre section of a parking lot between A Street and the Fort Point Channel and several sites around Roxbury’s Dudley Square area.
Look for these and others to trade in 2019, and to in turn lead to a wave of development proposals in a city and region starved for new housing.
Construction everywhere—more so. Take steady demand for housing and office space. Add more and more residents and/or workers. Sprinkle with high-profile plans. It’s a recipe for sustained and serious development in the new year.
The region is already no stranger to construction sites and to battles over building. The new year will see that much more, perhaps at a higher pitch than usual.
That’s because several towns and cities have committed to facilitating the construction of tens of thousands of more housing units in the next 10 years—including in areas not necessarily that receptive to new development—and the City of Boston is developing a new master plan for its downtown. Stay tuned.
Meanwhile, what are your real estate-related predictions for 2019?