Setting the stage for the next housing bubble?
Maybe I am perverse to be worrying about the prospect of another housing price bubble right now.
After all, we are just starting to come out of one of the worst recessions and housing market downturns in decades.
Yet there’s one troubling trend that could set the stage for a return to runaway prices in the Boston areas, certainly not now or next year, but maybe not all that far down the line, either.
That trend is the plunge in new housing construction. While there recently have been some bright signs of a modest turnaround here – stay tuned readers – 2009 saw the number of new homes built in the Boston area plunge to its lowest tally in decades.
Just 3,500 homes got built this year, an anemic number that represents just the latest in a decades-long decline in new residential construction, Barry Bluestone, the Northeastern University economist tells me.
Back in the 1980s, tens of thousands of new homes got built some years.
But it has been downhill ever since as cities and towns have tightened up zoning rules and buildable lots have become harder to find.
The best recent year, 2005 at the height of the last boom, saw a bit more than 15,000 homes built.
Of course, it’s no coincidence that prices spiraled out of control in the Boston area during the bubble years, followed by a long but relatively shallow decline amid the downturn.
When it comes to producing new housing, the Boston area has been running on empty for quite a few years from now.
And as the market heats up, this is one trend that is surely bound to come back to haunt us.