Boston Housing Glut

[Patrick Kelly]

I've been seeing some posts about investing in the Boston market in properties that have negative cash flow. This sounds eerily similar to 2008. The Boston market is something that I have been growing cautious of. There are a few things that stick out to me as red flags the continued increase in price with a pretty low increase in wages. The numbers for price to income in recent years seems to be getting a little out of control. You can see some of this info in zillows data center. The big thing that sticks out to me is the amount of class A property that will hit the market in the coming years. Based on The Boston Foundations annual Report Card it is estimated that 4,375 units were permitted in 2015. That has followed a steady trend up over the past 6 years since 2009 when only 32 units were permitted. This is far above the previous high of 2,419 in 2006. Every week I seem to hear about the newest tallest tower in Boston with at least a few hundred units coming on the market. A lot of the units will be marketed to affluent people in their prime earner years and the retiring baby boomer population. I wonder if there are enough of them to absorb all of these units or if we are looking at an over production and we are going to see housing and rental prices drop due to an over supply.