Monday, January 16, 2012

Are the suburbs poised for a price takeoff?

Trulia chief economist Jed Kolko is predicting big things this year for "smart cities."
They are hot, hot, hot, according to Kolko, with thriving high-tech and knowledge sectors priming the economic pump and ready to chase away the housing market blues in these lucky markets.

And our western suburbs, defined generously as the broad sweep from Cambridge to Framingham, are high on his list. As "honorable mentions," he throws in the northern suburbs, and, less clearly, Worcester.

Here's what Kolko has to say about the western suburbs.

Suburbs of Boston, MA. This Cambridge-Newton-Framingham market just west of Boston has a strong jobs engine and, like most of New England, missed the worst of the housing bubble. Honorable mention goes to Worcester, one step further west, and Boston's northern suburbs around Peabody. These areas all benefit from offering more bang for the buck than crowded, expensive Boston: this is because most people looking to move are searching in more suburban or smaller areas than where they live now.

Others smart cities that should see home price gains in 2012 include San Jose, Austin/Houston, and Rochester in Upstate New York. Go figure on the last one, though Kolko owns up to the fact the Rochester is his hometown.

I think he's definitely onto something - certainly prices in places like Cambridge and Newton have skated through the worst of the downturn, even if sales are down.

Right now, the 128 beltway is kicking into high gear - with the amount of vacant office space having dropped to 13 percent in Waltham, the highway's bellwether market, according to Richards Barry Joyce & Partners.

Biotech and high-tech firms are hiring again, with Cambridge turning into a hub of construction activity as new research palaces take shape.

If the jobless rate has anything to do with it, then yes, 2012 could be very interesting when it comes to home prices, especially in the western suburbs.

Of course, whether that's a good thing depends on whether you are buying or selling.

Selling yes, buying, less so.

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