This time last year most of us were fearful that the economy was going to completely collapse – and our dreams and financial lives with it.
One year later, and we’re still mired in a no jobs being created type of economic atmosphere but for the most part, the worst days seem to have passed.
Locally, Lynn has suffered because of the recession.
Most clearly, we see the difference in real estate values.
Those values have fallen and quire dramatically.
This it the tendency in most postindustrial cities as opposed to the neighboring suburbs.
Prices rise more slowly in Lynn during upswings.
Prices tend to fall most swiftly and to a greater degree when the economy goes in the opposite direction.
One example of the highest rise and the highest fall is the home noted attorney F. Lee Bailey is trying to sell on Lynn Shore Drive.
This is a notable ocean front small mansion with fireplaces, ocean views, study, hard wood floors, air conditioning – you name it, this old stucco home by the sea has it.
He listed it for $1 million about three months ago.
The price has been dropped by about $100,000 and still no takers.
The problem is that there are no comps for the house –and without comps – even someone who wants to buy the house won’t be able to get a mortgage for it to complete a sale.
So, at the top of the marketplace for great homes in Lynn, there is virtually no market as there are very few people wanting to pay that kind of money for a home here. Five years ago, Bailey bought the home for something like $880,000 and houses in the Diamond District were selling at prices like $770,000 – $900,000.
Today, those same homes would be lucky to fetch $650,000-$750,000.
Lesser homes that sold in the $500,000 range three years ago are in the $350,000 range today. Homes that sold for $350,000 three years ago are in the $280,000’s and so on and so on all the way down the line.
Commercial property of all kinds has lost its luster as well.
The question is, when will real estate bottom out? When will the market come back? And what form will the upside take when it comes back?
Even with extremely low interest rates prices have not risen and buyers remain wary of the downside.
It will likely be two to three years before the market rebounds in a meaningful way. It has to because it is basically a numbers game – and people need places to live and potentially, there are more people willing to buy with every passing month. In other words, the market can’t be kept down forever.
Will the real estate marketplace explode again with prices rising rapidly from month to month.
This is impossible to predict and even harder to imagine.
We’ve come back from the abyss but until the memory of almost falling into the abyss is erased, the marketplace will remain tame and spotty.
And that’s the way it is as 2010 begins.