As a real estate agent working in a wealthy area, people often ask me how much longer home prices will go up? Even though in college I received an A- in macroeconomics, I have no real idea.
On any given day, I see two extremes; clients strapped for cash, and others shelling out over $500 a square foot on new construction builds. With a median US household net worth of $121,000, the average American could not even afford a tiny studio apartment in many of America’s well-off suburbs.
By now, it should come as no surprise to any that upwards of 40 million Americans are facing eviction. A paltry $1,200 stimulus check could only be stretched so far. In fact, only about 52% of Americans own any stocks whatsoever, and in communities of color that number is far less. A growing portion of Americans are flat our broke or in debt.
Now let’s take a look at two HCOL suburbs of Boston, Massachusetts, Brookline and Newton, with the help of fresh statistics from the Warren Group. So far in 2020, Brookline’s average single-family home sale price was $2.17m, up 9.5% since 2019. In Newton, $1.3m, up 4.8%. But that’s not all.
The wealthier the ZIP Code, the more extreme the demand becomes: In Beverly Hills, California median sale prices are up an astounding 13.5% year over year. Greenwich, Connecticut? Median home prices have hit $2.1m, up 18%.
Perhaps these numbers should come with little shock too. Years of restrictive zoning have led to a severe housing shortage in many of America’s established metropolitan areas.
My professional opinion is this: I do not see how we can halt the ever-growing housing crunch without serious reforms, likely at the federal level. No local or state laws will likely ever stop the rot. They haven’t done much in the last 100 years, and there is no reason to think they will in the next century.
After all, very liberal localities like Newton and Brookline are still far from diverse. Census data shows that about 3% of citizens in both municipalities identify as African American, about 1/3 of the Massachusetts average, and 1/4 of the United States average.
Only just this year have both localities’ housing stock hit 10% affordability, something pushed by the State for the last 50 years. That’s a good start, but far from where we need to be. Here’s to hoping we can acknowledge our collective housing needs and move forward together.