Housing boom goes bust in finance crisis

The decade began sweetly as sales of single-family homes and condominium set records. But it ended on sour note.

“We experienced a dramatic housing boom from 1999 through 2005,” said Harold Petersen, an economics professor at Boston College. “But the housing debacle has driven sales down to their lowest levels in years.”

While 2009 is expected to close with sales of nearly 59,000 single-family homes and condos, that number is 34 percent below the peak of 1999 when housing purchases topped 90,000, according to the Warren Group, the real estate market tracker.

Boston homeowners to see property tax hike

The tax bill for the average Hub homeowner will rise by $173 next year as the city tries to fill the gap left by a 5 percent drop in the assessed value of single-family homes in Boston due to the weakened housing market, according to the city.

The residential tax rate for fiscal 2010 is expected to be $11.88 per $1,000 of valuation, compared to the 2009 rate of $10.63. The rate for business properties will rise from $27.11 in 2009 to $29.38 per $1,000 of assessed value.

“If we didn’t increase the tax rate, it would lead to a significant reduction in the city’s property-tax revenue at a time when local aid and other revenue are in decline. That would be bad,” said Ron Rakow, Boston’s commissioner of assessing.

The market may still be down, but your taxes are going up

That’s the frustrating dilemma many homeowners across the Bay State now find themselves in.

Cash-strapped towns and cities are scrambling are boosting residential tax rates as they scramble to find any extra revenue they can.

Boston is expected to announced, as soon as this week, a roughly 10 percent increase to its residential tax rate.

Homeowners in suburban towns are also feeling the pain, officials raising the residential tax rate in Lexington, Braintree and Walpole as well, among others.

The increases, in some cases, are sometimes offset by falling real estate values. But even in a tough market, the decline in a home’s assessed value may not be enough, with the tax rate rising even more.

Now’s the time to rent in Boston

It’s the perfect storm for landlords. There’s a down economy. Companies are forgoing relocations to save money, and in the past few years several new rental buildings have popped up creating a market flush with vacant apartments.

Leasing an apartment in Boston is still expensive compared to many other cities in the U.S., but perspective renters are in luck because many of the newer buildings are offering incentives. These include free rent for a month, thousands back on leasing deals and monthly specials.

Boston’s Incredible Shrinking Skyscraper

For most of its 34-year life, the Hancock Tower, which looms above its brick neighbors in Boston's Back Bay, has been the sort of place where money comes to be managed and protected. Its tenants include Ernst & Young and the investment firm Highfields Capital. The I. M. Pei–designed sliver of glass doesn't seem like a place where several hundred million dollars can vanish in a few months.

But that's exactly what happened at the 62-story building, now under its fourth owner in six years. In January, an aggressive young wheeler-dealer defaulted on a portion of the building's $1.3 billion mortgage just 24 months after buying it. In March, two firms that had purchased chunks of the tower's second mortgage for pennies on the dollar assumed control, essentially rendering up to $400 million of debt worthless. The Hancock's market value is now about $700 million—half what it appraised for less than two years ago.