Real Estate headlines in newspapers and on the Internet SHOUT how the property market has recovered and that now is the best time in history to buy a home, that it is most affordable for the average citizen. Just look at the interest rates that are still below 4% while historically they should be hovering around 6.5%.

Homebuyers are paying only 21% of their income for housing (26%) for first time buyers. Homes that are underwater and delinquent on their mortgage payments are down from 25% at the height of the depression to 8% now.

Yet the next day a headline blares that new construction is down 30%, that Boston is the 15th most expensive city in the world for housing and that it costs between 30% and 35% of a persons income to live here. Plus around Boston there is a severe shortage of inventory, which keeps prices solid and high. The construction undertaken now is usually for luxury housing at the higher end of the affordability scale.

Why are there contradictions? In part because some of the news is from NATIONAL statistics and some LOCAL numbers.


It also depends on your income level and status. For example, first time home buyers tend to carry a heavy student debt burden which makes it harder for them to afford a new home. (From 2003 to 2015 the amount of student debt has increased 398%!! from .3Trillion to 1.2Trillion) In the North East there is also a tremendous amount of foreign investment with cash paid for housing and corporate worker benefits backing relocation sales, which increases prices and makes it difficult for those who need a mortgage to get a winning bid. Add that the middle class is truly shrinking with the vast amount of wealth pooling in the upper 1-3% and we see a decreasing pool of buyers.

So we currently have the paradoxical situation of this being a great time to buy, but with fewer who are able to do so, especially in the Greater Boston area.