New trend in condo market

Condos, after years of sluggish activity, have suddenly become very active. The condos on Village Hill and Fairway Village in Northampton are going like hotcakes. Why so? I believe it is the new demand from baby boomers who are downsizing from houses to condos. Some are already in the area and some are coming from afar to be near grandchildren and to live in our area, with its cultural stimulation, local food and farms, and outdoor recreation.

The market in general is very much a seller's market, due to the continuing low inventory (see previous blog posts for the reasons for this). So this and theartificially low interest rates (created by the aggressive interventions of the Federal Reserve and the Obama administration into mortgage and debt markets) are preventing house prices from falling to their natural levels. As a result, home prices and land prices in Northampton, for example, are increasingly out of reach for young buyers without the help of their parents.

Though nicer properties are flying off the market, it is not a healthy market because demand is slowly being destroyed by hyperinflation on the one hand and poor job prospects and heavy debt burdens on the other.

All this could, of course, change in a moment if interest rates rise or another black (white?) swan flies. My guess is that the black swan this time could be massive defaults on student loans or a financial collapse of the fracking industry due to the low price of oil.

David Hopkins 2013