Like many Boston area homeowners, I find myself at a poker table of sorts, staring at a jackpot. This isn’t at one of the state’s new casinos, but right here in my living room. And it’s not a pile of poker chips; it’s a rising heap of home equity.
Home prices have risen 62 percent in Greater Boston from January 2012 to January 2019, according to the national real estate brokerage Redfin. We bought our home in 2008, and as it has grown more valuable year by year, the question gnawing at the back of my mind gets more insistent: Should we cash in on those winnings while we’re ahead? Sell our seemingly overpriced house while the market is still hot and buy someplace cheaper?
Perhaps, after waking up in the near dark on a snowy winter morning, scraping the ice off your car, and then slogging along in America’s worst rush-hour traffic, it’s crossed your mind, too. That treasure chest of home equity can be as tempting as it is comforting, and it could be worth a lot more if you took it elsewhere in the country.
Here are the numbers: About a third (34.4 percent) of Boston-area homeowners own their property outright, with no mortgage, according to the Census Bureau’s 2017 American Housing Survey (the most recent available). The rest carry a median balance of $232,000 in remaining mortgage debt, including any home equity loans or lines of credit. Meanwhile, the median sale price of a home in the Boston metro area was $470,000 in January, according to Redfin, which includes both single-family houses and condos in its sales data.
Some basic math tells us that the typical Boston-area homeowner with a mortgage has about $238,000 in home equity. Were those homeowners to sell now, cashing out in this multiyear boom in housing prices, they’d net about enough for a down payment on a median-priced house in Newton … or an entire single-family home in warmer, less expensive areas like Charlotte, N.C., or Tampa — without even needing a mortgage. If you like snow, you need not venture far. In the Berkshires or the Albany metro area, you could pick up a median-priced single-family for a bit over $200,000.
So that’s the offer on the table for a lot of Boston homeowners: Just move somewhere else, and you may never have to make a mortgage payment again. And yet, most of us appear unwilling to take this deal.
Redfin tracks home searches by location to study real estate migration patterns, and last year found that Boston had the most loyal pool of home buyers in the country: Nine out of 10 real estate searches originating here were for local properties. Compare that with New York City, where more than a third (34.7 percent) of Redfin searches were for homes outside the metro area.
More than in other expensive markets like New York, Seattle, and San Francisco, “a lot of people want to stay in the Boston area, which is surprising,’’ said Daryl Fairweather, Redfin’s chief economist. “Everywhere else, people are looking at more affordable metros.’’ In fact, 14.9 percent of those New Yorkers searching outside the city are looking for homes around Boston — which, expensive as it is, still represents a discount to parts of New York.
Fairweather chalks this up to two factors, the first being a really strong job market. “But what makes the Boston metro area different is you can take the train in from more affordable places,’’ she added. “You can go all the way to Lawrence. There are a lot of more affordable options close to Boston, whereas in New York you have to go out pretty far to get somewhere more affordable.’’
In fact, while Massachusetts lost a net 6,713 residents to Florida in 2016-17 and another 4,389 to North Carolina, we lost even more to nearby New Hampshire (9,317) and Rhode Island (3,862), according to Boston Indicators, a research center at the nonprofit Boston Foundation. (We experienced a net gain of more than 8,000 residents from New York.)
Those defections to warmer and less expensive areas are also being offset by new international arrivals. “People are moving to places with somewhat similar tech economies but with much lower housing costs, which is a challenge,’’ said Luc Schuster, director of Boston Indicators. “Fortunately, those losses have been more than offset by people moving here from abroad.’’
Judy Alexander, a real estate broker with Barrett Sotheby’s International Realty in Lexington, said that while many of her home buyers fall in love with Boston while attending college here, others are drawn in later — from all over the world — by the research opportunities. “A fair amount of my clients these days are researchers working in the pharmaceutical companies located in the Boston area,’’ Alexander said. That multiculturalism adds another layer of richness to the area, she added.
Even many retirees with no mortgage debt seem reluctant to leave the area entirely. “I don’t see a lot of folks as retirees cashing out and moving to Florida,’’ Alexander said. More often, she said, they’re using that sale income to downsize: moving into Cambridge or Boston or following adult children who’ve moved to California or Colorado. “Some people own second houses in Florida, but for the most part those folks who have cashed out bought a condo in Wayland or Acton and live there for six months and go to Florida for six months.’’
For her part, Alexander said she can’t imagine leaving the arts and culture of Boston, nor the outdoor activities within an hour’s reach in any given direction. Other people I spoke to cited family, friends, hospitals, museums, sports, and jobs. Jobs, jobs, jobs.
Tara Welby grew up outside Boston, but she’s not too sentimental about it: She daydreams about moving back to one of the less stressful, less costly places she’s lived, like Portsmouth, N.H., or Florida. “We think about leaving almost every day,’’ Welby said. Beyond the cost of living here, Welby said, Boston’s obscene traffic and unreliable T service combine to create long, unpredictable commutes that make scheduling child care or afterschool activities particularly challenging. “I find day-to-day life difficult here.’’
But she doesn’t deny the gravitational pull of friends, family, and work. Welby and her husband, Aaron, lived in Portland, Ore., but a job loss and unexpected death in the family brought them back to Boston in 2016. “There were lots of things we loved about it there, but it was difficult being away from friends and family, particularly with a kid,’’ said Welby, who works in IT. “I knew I could get a job back here; I wasn’t sure about Portland.’’
Barry Bluestone, professor of public policy and urban affairs at Northeastern University, likes to say that Boston’s economy has benefited from a combination of good leadership and good luck. Many of our signature industries — such as higher education, health care, biotech, and financial services — were merely a blip on the national economy in the mid-20th century, but have grown exponentially since.
“We were, in a sense, poised for a strong economy based on industries that were here for centuries,’’ he told me. “So we’ve been the beneficiaries of pure dumb luck … But [Boston has] had terrific political leadership, which hasn’t squandered those benefits, and we’ve had a relatively progressive business community that has given back to the city to help make Greater Boston a good place to live, not just for the wealthy but those who are struggling.’’
It’s not just Boston: Massachusetts as a whole has made itself a desirable place to call home. “There are a few big policy areas where Massachusetts has been a national leader,’’ said Schuster of Boston Indicators, including health care reform in the early 2000s and the Education Reform Act of 1993. “[That] created a much more progressive state school funding formula that’s helped lower income communities provide a bit higher level of public schools, and so our K-12 schools rank well in national tests compared with other states. And that’s not just because our high-income white kids are doing better; our low-income kids compared to elsewhere perform better, too.’’
Our public schools routinely rank best in the nation, by virtually any measure. Fully 19 of the 100 safest cities in America are in metro Boston, according to Neighborhood Scout. We live longer than most other Americans, too. Maybe it’s not just the promise of a paycheck that’s keeping us here, or Newton’s first law of motion, which describes inertia. It might have more to do with another of Newton’s discoveries: the universal law of gravitation. Between family members, friends, history, and world-class institutions, Boston has a kind of mental mass for a lot of us. And that pull is even stronger because our dense communities are clustered so close to it all.
For years, my wife and I tried to nudge our careers in the direction of flexibility, aching for the day when we could work remotely and untether ourselves from the big-city economy we have relied upon for so long. We dreamed of living small in a rural New England or Hudson Valley college town, or enjoying an urban downtown lifestyle for half the price in a city like Portland, Maine.
And we finally reached that point, career-wise. But when my wife was diagnosed with breast cancer last spring, we went straight to Dana Farber, where she received cutting-edge treatment and a deep well of compassion. My gratitude toward her medical team is so profound that I cry just thinking about them. While I used to worry about missing Red Sox games or whether our daughter would make new friends if we left town, now the thought of leaving Boston — and its hospitals, and my wife’s doctors — feels frighteningly insane.
So we’re going to let those chips ride, win or lose. Because for us, leaving Boston seems like the real gamble.