Boston Real Estate | Finding Patience in a Fast Moving City

Boston real estate has long been a barometer for the rest of Massachusetts. But now, in the recession, the city is behaving out of character. One day things might look promising; the next, not so good. With the rest of the state looking for guidance, it is easy to see how many realtors are concerned. But the truth is the market is trying to work itself out. It is vulnerable to the economy. It is aggressive in its method. And it will not go away. Gently. So, the big question is when and how the market will recover, not if it will recover.

The business of big real estate is in trouble. Shares of real estate investment trusts, public companies that own, manage or develop property, disintegrated between 2007 and 2009. From their peak in 2007, REITs lost three quarters of their market value in March before rebounding some.

That makes this a pretty good time to buy, say real estate experts David Lynn and Ritson Ferguson of ING Clarion, the property arm of the Dutch bank. Lynn, a Ph.D. economist who worked as a city planner, analyzes property value, rents and industry trends. Ferguson, a financial analyst with a computer and consulting background, manages several REIT mutual funds open to individual investors. Together they argue for a selective, measured approach to buying real estate stocks, investment properties and, if you've the stomach and the money, commercial mortgages trading at steep discounts to their face value.

Apartments and industrial properties such as warehouses and port operations should hold up well while hotels will suffer, says Lynn, the analyst. He likes coastal cities where new development is limited by space and building restrictions. Cheap and poorly underwritten, mortgages artificially boosted homeownership in the U.S. during the housing boom, Lynn contends.

So there you have it, now may or may not be the best time to invest. But if you have the credit, capital, and security, numerous deals are available in the city of Boston.

Michael Russell writes about a variety of subjects. This article discusses Boston real estate. For more information, visit the Real Estate Book.