Northampton MA Housing Price Bubble

I lived in Northampton, MA for over ten years, and there's a chance I'd be living there right now if I could afford a decent house there. The thing I like about the town is fact that there's a downtown to walk to (supported by Smith College and other area students, plus the well paid local college staff) and it's a nice place in general to walk or run at any time of the day or night. There are some nice houses, some nice streets, and it's all part of the worst housing bubble this side of Boston.

A couple years ago, an out-of-state buyer picked up a wood frame single family home on your basic 60 foot by 100 foot lot for $680,000, and proceeded to plough (neighborhood rumors vary) between $300,000 and $400,000 into gutting and rebuilding it, adding an in-ground heated pool, etc. Last year the owner high-tailed it back to NY and put the house on the market for $1.2 million. Today, the asking price is $999,999, and they've been trying to rent it for months at $2,500. Let's see, $2,500 would pay maybe, a third of the mortgage payment with the home improvements rolled in? That's what I call a housing bubble.

I know it's all about location, but lets talk about value for a moment as if it wasn't. A house in a good neighborhood of Springfield, MA, about 25 minutes closer to the rest of the world than Northampton, sells today in the range of $150,000 to $250,000. You can find cheaper in bad neighborhoods, there's not really much above the quarter million dollar range. Multifamily houses are cheaper than single family houses (and usually in worse neighborhoods). Taxes are in the same ballpark as Northampton, and yes, Springfield is now ssupervised by a Massachusetts state commission because it was run for decades by lousy machine politicians.

A cheap house in Northampton can be purchased for $200,000, but that will be a house a seller would be ashamed to ask $125,000 for in Springfield. It gets worse from there. A nice, two story one family of any style which would start around $150,000 in a nice neighborhood of Springfield will start around $300,000 in a mediocre neighborhood of Northampton. But Northampton isn't really that big, and the same house, within a one mile radius, will sell for over $500,000 on the Smith side of the street for a few blocks above Smith on Elm.

A house worth owning, a painted lady Victorian or a nice Federal will go for upwards of $700,000 in the classy Northampton neighborhood (again, a stone's throw from mediocrity) while the same house in the best neighborhood of Springfield would have a hard time commanding $250,000. In other words, you're paying for the postage stamp lot at this point, not for the house.

But Northampton isn't Manhattan, San Fransisco or Tokyo, and the pool of potential buyers with a literal yen for college town living isn't as big as the realtors let on. For one thing, it's cold for the old folks. For another thing, Massachusetts is a lousy state to do business in, especially for the self-employed, at a time when entrepreneurship is the name of the future. Northampton offers secure living for a number of college professors and staff, for some doctors and staff at Cooley Dickinson Hospital, and for some lawyers at the county courthouse. After that, it's all about boutique shops and flipping burgers for college students. Oh yes, and the $60/hr handyman rates:-)