‘$1 million is the new $500,000′ for Boston home buyers, institute says

Buying News Boston
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. Associated Press

It’s no secret that the price tags in the Boston real estate market tack on one too many zeros. And much to the prospective homeowner’s dismay, the trend is expected to continue.

The Housing Finance Policy Center at the Urban Institute, a nonprofit research organization, has released a report exploring how the real estate market has changed over the past 10 years. In Boston, the report said, you need to spend $1 million to buy what used to cost you $500,000.

With Boston’s reputation as a job hub and the city’s “inability to provide new single- and multifamily homes quickly enough to meet the increasing demand,” the price of homes has increased twofold in 10 years, the report stated. In 2007, the majority of homes were listed for $500,000 or less, but as of 2017, many properties are well within the $500,000 to $1 million range.

. —Sarah Strochak/Urban Institute

“In most cities, the three biggest problems are the cost of land, the laws that restrict building, and the third is labor,” said Sheryl Pardo, associate director of communications at the institute’s Housing Finance Policy Center. “My guess is Boston is not going to be any different in terms of zoning issues, and the land is expensive.”

With $1 million homes becoming more common in Greater Boston, the report states, “the $2 million home has become the next frontier.” Affordability isn’t the only factor in the housing crisis; the lack of inventory is making it difficult for even the wealthiest of individuals to buy a home, and Boston’s population growth is magnifying the problem: The city saw a 10.9 percent increase from 2007 to 2017.

And the market still looks strong. Boston ranked 20th on the list of 36 large metropolitan areas in the United States at risk of a housing bubble, the institute said.

And what happens if Amazon decides to build its second headquarters here?

“If it’s a place that has an existing supply crunch, which applies to most major cities right now, it’s going to exacerbate this situation,” Pardo said. “It’s true in San Francisco, it’s true in Boston, it’s true in all of these job hubs.”

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