The coming year is full of question marks about the future of the real estate business in Boston, and the future of the state’s economy.
Massachusetts has been one of the nation’s top economic success stories over the past four decades.
We’ve gone from decaying rust belt state to a booming engine of the New Economy.
But while the Bay State has become a worldwide leader in the crucial life sciences sector, and a major tech hub as well, our infrastructure – from our dated housing stock to our traffic choked highways to our deeply troubled public transportation system – has come nowhere close to keeping pace.
We are paying the price for decades of neglect in the form of insane home prices and rents, soul-crushing commutes and growing alarm on part of the business community about the ability to attract and retain talent in such a prohibitively expensive region to live in.
With a new governor in Maura Healey and her new administration, 2023 could prove to be a pivotal year for Massachusetts.
Over the coming year, we’ll find out whether Healey and her team can work with the state legislature to start to deal with these major issues head-on, or instead settles for incrementalism, or worse: solutions like rent control that would only worsen our problems.
On that note, here are five big issues to watch:
Rent control debate to heat up: The Wu administration plans to file a home rule petition on Beacon Hill in 2023 that would likely give Boston the ability to impose some form of cap on rent increases. The exact timing of the proposal is a work in progress, with Arthur Jemison, the city’s planning and development chief, having indicated city officials are taking additional time to craft what will surely be a highly controversial proposal. Can Boston bring back rent control without freaking out developers and derailing plans for new apartments? The jury’s out but count me as skeptical.
Can Healey rein in the NIMBY suburbs? That’s one of the bigger questions the governor-elect faces and the fate of her planned push to rev up housing production could very well hinge on it. In an interview with the Globe last month, Healey called for a “big-time” increase in housing production across the state by “slamming a fist into her open palm.”
Talk is cheap. In order to achieve that big increase in residential construction, Healey will have to come down hard on suburbs that are dragging their feet or even openly efforts to build new housing, something past governors have pretty much shied away from.
Back to the Office 2.0: The first back to the office campaign by major employers back in the early fall was a spectacular failure. Office towers in downtown Boston and in other major cities remain mostly empty. But as we head into 2023, companies are gearing up for another push to get workers back to the office, and, if the economy slows or weakens significantly, they are likely to get more forceful about it.
“They want to get their remote workers back to the office,” Tyler McGrail, executive managing director in Newmark’s Boston office said. “Everyone would like to get people back.”
Can the T be saved? Healey’s other monumental challenge, along with trying to boost housing production, will be finding a way to get the MBTA finally back on track. The governor-elect has signaled she is interested in doing a global search and finding a top transit gun to take on the troubled T. Whoever Healey hires, this new chief will have to make tackling the transit authority’s dysfunctional work and safety culture a top priority.
Scott Van Voorhis
Home prices will fall – the only question is when: The market has been cooling for several months now, with a precipitous decline in single-family and condominium sales. But prices have continued to rise. This pattern can’t go on forever, nor will it, based on past real estate downturns. Home prices fell sharply as what had been a mild economic downturn morphed into a financial crisis and then the Great Recession back in the fall of 2008. But sales had been on the decline for more than a year at that point. Here’s betting we’ll start to see prices come down by late summer or early fall.
There are any number of other major issues and trends to keep an eye one that I didn’t get into here.
The fate of the economy and whether a recession will hit in 2023 is probably the top one, but let’s not forget about inflation, either.
And by next fall and early winter, the next presidential campaign cycle will also have kicked into gear as well.
So, we’ll just have to wait and see what 2023 brings. In the meantime, Happy New Year!
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
