A Boston Foundation report out today paints a grim picture of a housing market with prices spiraling out of control - in which condo prices are reaching parity with single-family home prices, triple deckers are being snapped up by investors and families are struggling to stay afloat.
What has really exploded in price are the iconic "triple-deckers" in Greater Boston. Built for the most part between 1870 and 1920 when massive immigration tripled the city’s population, the median price of a single unit in a triple-decker was $244,172 in 2009. By mid-2015, the median sales price had shot up to $477,057 - an increase of 95 percent in the span of just six years. The demand for units in such buildings - driven in large part by undergraduate and graduate students, medical interns and residents and other young professionals who can pair up, triple up, and quadruple up to pay mushrooming rents - has made such housing an investment bonanza. Rental unit vacancy rates have fallen to 2.6 percent in Greater Boston, less than half the 5.5 percent that research shows is needed to stabilize rents so they rise no faster than normal inflation. Landlords compete aggressively to purchase such buildings and in doing so have pushed prices up to astounding levels.
The report says 25% of Boston-area renters now pay more than 50% of their monthly income just for housing.
Note that between 2010 and 2014, the total number of permits issued in the region was 40,735, far below the more than 67,000 new households added to the region during that same period. However, only 15,000 units of housing were actually built.
What's to blame? Land prices, especially in the suburbs, have rocketed, in part due to snob zoning, or as the report puts it, "a strong focus on preserving 'community character.'" Construction costs have gone up as well, although not as much as land costs.
What if we do nothing? Eventually our economy suffers as people who can't afford to live here go elsewhere for jobs.
The only slight glimmer of hope? Single-family homes could start coming on the market as baby boomers move away or die.
The report calls for looking at innovative ways to build housing - such as using modular construction of components built in factories - increasing state funding on affordable housing and convincing towns to donate land for new housing, and somehow, in some amazing stroke of incredible salesmanship, convincing suburban towns to allow the sort of denser multi-family development that would help families stay and attract the young workers the economy will need to survive.
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Comments
There already is a limit and
By Southside Georgie
Sat, 11/14/2015 - 12:40am
There already is a limit and has been for a long time. The mortgage interest deduction has been limited to total mortgages of no more that $1M for nearly thirty years. Argue that the deduction should be more limited or abolished, but don't pontificate when you don't even know what the rules actually are.
--gpm
Thanks for the info. I'm not
By Dot net
Sat, 11/14/2015 - 10:51pm
Thanks for the info, though your condescending tone is unnecessary. I'm not trying to pontificate, I'm trying to learn things on the fly, when they get brought up.
I still don't think it's defensible to allow for mortgage interest deduction on second homes.
I think it should be about the number
By cinnamngrl
Sun, 11/15/2015 - 7:00pm
Just the fact that a person owns a 2nd property isn't enough. I know a lot of people that own their parents homes, or an apartment where their kid attends college. pick a fair number to tax. Maybe a million is too high. But I can't knock people for front loading their expenses and turn them into investments. Income properties are different. This would be a better place to make changes.
and for the record I don't memorize the tax code either.
Upzone
By anon
Fri, 11/13/2015 - 9:38am
Want more housing for the middle class? Upzone, especially in transit rich and/or mixed use areas. And, of course, by increasing the amount of transit rich and/or mixed use areas, you create more places where you can upzone.
As more units are built, prices will cool a bit.
Want more housing for families? Allow development of microapartments with no parking -- and watch as the 20-somethings decide they've had enough of their 3 roommates and move into their own 600 square foot pad. For every three or four microapartments built, you'll "free up" one more apartment suited for a family.
Want more housing for families? Work with the universities to build more student housing. Every student living on university housing is a student not living in a market-rate apartment.
Want more housing for families? Build it on the Blue Line. It's the subway least crowded, and there isn't the density of higher ed on the north side of the Boston Main Channel, so there's less direct competition with college kids.
If BRA can figure out a way to allow developers to build less parking in exchange for building more middle class units, the median housing price will stabilize a bit.
Microapartments only work if
By anon
Fri, 11/13/2015 - 9:49am
Microapartments only work if the price for the little unit is equivalent (or, ideally, since we WANT people to move into them, less) than your 1 bedroom's worth of rent. The ones that were being proposed by the water were like 80-100% of the cost of a whole triple decker floor. Which, sure, you have to share with roomates, but at least there's more square footage.
You're comparing a triple decker to a new waterfront apartment
By anon
Fri, 11/13/2015 - 10:13am
A floor in a triple decker and a new waterfront apartment are both fine and reasonable places to live. They're not the same though -- the triple decker has more space, but it doesn't have the view. It has old interesting architecture, cranky radiators, a little garden, and a six block walk to the bus stop. The microunit has high end but tiny appliances, is conveniently located but doesn't allow for car ownership. Etc.
It's a numbers game. If microapartments get built, it results in less pressure on other forms of housing because some potential renters/owners shop in both markets, ultimately choosing one and thereby not choosing the other.
If these microapartments were
By 2
Fri, 11/13/2015 - 10:33am
If these microapartments were actually affordable for the majority of millenials working in this metro, and not the small share working in Kendall Sq and Fort Point, then we'd move from triple deckers en masse.
I honestly don't care about all of these luxury amenities like a coffee bar or a pool or giant game rooms that developers keep trying to throw at us. Just build simple studios that are relatively close to transit and see how quickly they'll get snatched off the market. I love my roommate, but she and I have joked that we'd be perfect neighbors -- if we could afford it.
600 sq ft pad
By downtown-anon
Fri, 11/13/2015 - 10:48am
What the hell are you talking about?
My 550sq ft place requires, at current market prices, a $100,000+ downpayment to make the 20% for a mortgage. And it is not in the best shape. The same unit would have required a $25,000 downpayment 20 years ago.
600sq ft is a luxury sized place for a 20 something on anything near a average salary.
Also, the microapartments
By 2
Fri, 11/13/2015 - 11:14am
Also, the microapartments being built in this city average at about 350 sq.ft. 600 sq.ft is indeed a luxury.
600 sq ft is bigger than most
By bgl
Fri, 11/13/2015 - 2:14pm
600 sq ft is bigger than most studios - definitely not a micro apartment.
This is a great big giant...
By BGM617
Fri, 11/13/2015 - 9:40am
DUH! Glad they had to pay for a study to come up with this conclusion. Aaaaand what is going to be done about it? Not much.......It works out great for the people in power and people with money, so who really cares? Only the people being displaced, apparently. Politicians love to talk about the "housing crisis", but no drastic measures are being taken. A crisis calls for drastic measures. Duh. I love Boston and work my butt off to be able to afford to live here, but I know I will not have the energy to do that forever. I'm already pretty much planning to be out in a couple years because rent keeps going up, pay stays pretty stagnant, and it's all but impossible for a single person to save up 20% down payment unless you live with your parents or something.
Stop getting Starbucks every
By anon
Fri, 11/13/2015 - 9:49am
Stop getting Starbucks every day.
Idiot
By anon²
Fri, 11/13/2015 - 11:06am
Sure, that $1640/yr is really going to put a dent in a down payment.
Just think, after 40 years of forgoing Starbucks, you can put a down payment on micro studio in South Boston at the nice old age of 60!
Well
By anon
Fri, 11/13/2015 - 11:21am
Two lattes a day is $3650. $150 worth of partying/boozing every weekend is $7800. That's a down payment on a $300K condo in less than five years if you invest that money instead of flushing it down the drain.
You said
By anon²
Fri, 11/13/2015 - 3:20pm
Starbucks, I said that's not an issue nor possible as to the reason people can't afford housing.
How much other spending should we include to stuff the strawman that poor people are poor because they're not thrifty?
I read the posts, I never
By Patricia
Fri, 11/13/2015 - 4:07pm
I read the posts, I never read anyone mention anything about poor people being poor due to indulgences.
What I'm reading, if you're trying to save for a down payment (20%) - it's not impossible for many people. Budgeting, not spending on things that aren't a necessity, etc... An example being Starbucks would be one of those things in life that aren't really necessary.
This sensitivity to criticism is really tiresome. And talk about strawmen arguments!
Every little bit counts. When
By anon
Fri, 11/13/2015 - 11:23am
Every little bit counts. When did $1600 a year become something to scoff at?
Do something to reduce your cable/internet bill and your cell bill and toss in the electric bill too and that downpayment isn't hard to manage at all.
but, but, but
By bosguy22
Fri, 11/13/2015 - 11:51am
It's not FAIR that some people can afford lattes everyday and I can't!
Fabulous assumptions, guys.
By anon
Fri, 11/13/2015 - 12:46pm
Starbucks was not mentioned in the original response whatsoever. But good job making stuff up! Such vivid imaginations!
It's irrelevent what
By anon
Fri, 11/13/2015 - 2:30pm
It's irrelevent what expensive coffee you drink every morning. The important thing is the attitude of the person who replied. There's nothing impossible about saving for a down payment.
It's impossible for some. Be
By anon
Fri, 11/13/2015 - 3:59pm
It's impossible for some. Be realistic and recognize that not everyone is on the same playing field here. I'm 31 years old living in Melrose (because you know what? When I moved here 10 years ago, apartments really were dirt cheap -- MUCH cheaper than in Boston, Somerville, Cambridge, etc.), currently being priced out because of the exact situation the OP describes. I've had a steady job throughout that decade, have had average raises, have put myself through additional schooling. I do not own a car, ride my (7 year old) bike to the T every morning, and my winter coat is about 5 years old. I recently purchased my first new pair of sneakers in 2 years ($50 since you're keeping tabs). I am typing this on a crappy, years old laptop. I do not own a smartphone, nor do I subscribe to cable. I do not drink or party excessively (see previous statements re: working and going to school at the same time). I very rarely eat out. Likewise, I certainly do not purchase my coffee at Starbucks, Dunks, or any other commercial establishment.
I currently have roughly $600 to my name, despite being paid today. This includes my pretty wimpy savings account. Please tell me again how my attitude is keeping me poor, and how easy it is to save?
*FWIW: I will be relocating to less expensive housing, which will extend my already 1.5 hour daily commute. Alla y'all are right -- no one has the
right to a short commute. Therefore, I expect to hear your personal reports of > 1 hour commutes after doing it for a decade. Your attitude might just change a little, don't you think?
** FWIW #2: will be enrolling in another certification program within a year, to continue higher education in hopes of making more money. No money sucks, and maybe I'll be 40 by the time I can even so much as fathom owning a house, but you know what? I'm working towards it. Onward and upward.
Well
By anon
Fri, 11/13/2015 - 5:19pm
You're doing it wrong then. I'm two years older than you and also started a fairly crappy job with craptacular raises and infrequent promotions about 11 years ago. Suffered three years of slumming it up with roommates and living fairly frugally (though definitely not just on bread and water) so I could invest and save up for a condo down payment, and now have at least $350K to my name between my investments, my retirement account and equity in my condo. Still working the same crappy job that probably pays less than some entry-level jobs at better companies around here, mind you - I'm sure I would have been closer to a million had I not been so damn lazy. And, like I said, I'm just an average dude of average abilities, with a BS degree from a fairly average school, working at a company that pays well below average.
No
By SwirlyGrrl
Fri, 11/13/2015 - 6:09pm
You got lucky to be born at a time when this was still possible.
In the last several years, it has become nearly impossible, unless your parents die.
Really?
By Anon
Fri, 11/13/2015 - 8:13pm
So there's no more good growth stocks? No more 401k company matches? No more cheap shared apartments? No more cheap neighborhoods and towns that will gentrify and get much more expensive over the next few years? All we have now is a guy with a gun that shows up every Friday night and forces you to spend your entire paycheck on booze, and pistol-whips you any time you even think about saving some of that money or making a 401k contribution, amirite?
2008
By SwirlyGrrl
Sat, 11/14/2015 - 12:00am
Yes, 2008. Ask people who planned to retire three years ago about what happened to their "growth stocks".
2008
By Anon
Sat, 11/14/2015 - 1:06am
Was how many years ago? Where was Dow then, and where is it now?
You only need a down payment of 3.5%!
By Murphy1983
Fri, 11/13/2015 - 12:32pm
Are you looking to buy your first place? You only need a down payment of 3.5% with a FHA loan.
https://fhagovernmentloans.org/FHA%20Loan%20Progra...
Yea, well,
By anon
Fri, 11/13/2015 - 9:42am
good luck with all that.
I have never seen in my lifetime the kind of socioeconomic stratification we have today. Yet oddly, the hardcore left in this country is primarily concerned with 'race', skin color, and transgender issues. I don't get it. The master plan seems to be to incite, provoke, a complete societal, political, economic, collapse.
Umm...
By dryanshea
Fri, 11/13/2015 - 9:51am
While we still have many race and gender issues to solve, the "left" has been overwhelmingly focused on economic issues -- especially income inequality -- since the recession hit. Really not sure how you missed all of that through three presidential election cycles.
Just screaming about how evil
By Patricia
Fri, 11/13/2015 - 9:59am
Just screaming about how evil rich people are doesn't do squat.
Trust me, no one missed it.
Not just screaming, but
By Dot net
Fri, 11/13/2015 - 2:56pm
Not just screaming, but proposing legislation to tax capital gains as ordinary income, opposing cuts to the basic safety net such as food stamps, and this: http://wwlp.com/2015/08/05/mass-millionaire-income...
Ya, no.
By Patricia
Fri, 11/13/2015 - 4:10pm
Ya, no.
Thank you for your non
By Dot net
Fri, 11/13/2015 - 4:59pm
Thank you for your non-response response.
Sure
By Anon
Fri, 11/13/2015 - 9:06pm
But only if the money really is spent on education and infrastructure, not on more handouts to buy votes come next election.
the solution is transit
By cho_kettie
Fri, 11/13/2015 - 9:43am
i think the gamechanging solution is investing heavily in a commuter rail network that's a lot faster (electrified), more reliable and services more cities and towns. a big reason young people like me are putting up with high rents is because, commute-wise, it's preferable to moving somewhere less expensive and then sitting in three hours of mind-numbing traffic every day.
if, say, you could get to the city from providence/portsmouth/lowell/nashua/worcester/fall river/new bedford in less than an hour, i think you would start to see those cities fortunes improve drastically while simultaneously taking the massive pressure off metro boston's housing market (not to mention improving the traffic situation here).
unfortunately, this sort of endeavor requires serious committment, serious vision and serious investment — which it doesn't seem like anyone on beacon hill is interested in.
Worcester &c.
By alkali
Fri, 11/13/2015 - 9:55am
Massachusetts has a number of historic cities with beautiful (or potentially beautiful) downtowns. Worcester, Springfield, and even Pittsfield could be different places if you could take a fast train across the state. They can do it in Europe and Asia; it can be done here.
I agree. Also, expanding
By Patricia
Fri, 11/13/2015 - 10:00am
I agree. Also, expanding transportation not only helps Boston, but also helps the Worcester, Lowell and Springfields of the state.
We'll have flying cars before
By anon
Fri, 11/13/2015 - 10:04am
We'll have flying cars before fast trains.
Self-driving
By Sock_Puppet
Fri, 11/13/2015 - 1:57pm
We might have self-driving cars before fast trains. I wonder what that will do to commuting patterns. Get in car, open newspaper, fire up teakettle...
If they make automomous only
By anon
Fri, 11/13/2015 - 2:31pm
If they make automomous only lanes then it will probably become the fastest way to get anywhere.
As noted above, I agree with both of these ^ comments
By issacg
Fri, 11/13/2015 - 10:01am
n/t
No, those cities are just fine for the most part.
By anon
Fri, 11/13/2015 - 7:55pm
Regular people need somewhere to live, too. Well-to-do/comfortable people can live basically wherever they want. You can "put up" with high rents. Nice to have that option, isn't it? Poor, working class, and lower middle class folks live where they can. I'm a little flummoxed by you including Portsmouth in the discussion since it's one of the nicest towns/cities in all of New England, but, you're probably new. "Changing those cities' fortunes" has all to do with outsiders getting "a bargain" on rents, and driving people with less money farther, and farther away from opportunity. Now, if you want to help the current residents with skills training, so that they can compete with you for a computer job in Cambridge/Boston or on the 128 belt, then that sounds like a good deal. Of course that won't happen. That never happens. Or at least it hasn't happened in the past.
I live in a town on 495. It
By Costanza
Fri, 11/13/2015 - 9:52am
I live in a town on 495. It's too late. It's already this way. The only construction is for new homes (minimum of $530k) or 1-2 BR condos (start at 300k)....The homes baby boomers live in go for $350-400k. So it's expensive for a family of 4-5 to live here if they want a 3 BR home with a yard to play in.
what isn't said...
By anon
Fri, 11/13/2015 - 9:53am
There are a number of factors that the Boston Foundation would never bring up in this all Democratic City (spoken as a Democratic)
1) Corruption/BRA/lack of zoning code/NIMBY. Because the City is old and has no real zoning code or rules and all sorts of odd size lots the politicians have pounced on this to make it a byzantine process to get a permit to build anything. What it means in reality is that you need to have a connected lawyer (See McDermott, Quilty & Miller, LLP) or politician or best of all a Mayor on your side to get things to 'slide through' the BRA and the ZBA. Campaign contributions help. (Look at who contributes to political campaigns: builders and lawyers. Not doctors and accountants) No legitimate businessman wants to have to do business that way. If the powers that be like you, you can slide by. If they don't they can throw regulations, community groups, etc. at you to delay or cancel your project. That is expense that has to be passed on.
2) Building costs and restrictions have gone up, up, up. The State Building Code has been revised and revised a number of times in the last 15 years or so. Energy codes have become stricter and stricter. Electrical and fire safety has become more and more expensive. One example: now you have to put GFI or arc fault breakers in on every circuit. This adds perhaps $600 to $1000 to the cost of a unit for no real reason (virtually every building built in the last 40 years has standard circuit breakers and there are not rashes of electrical fires every day. You can't build rooming houses any more.
3) Since the cost of just getting a permit and building to the basic code is so high, it is a tiny upgrade to go from linoleum countertops, rugs, and white appliances to granite, engineered hardwood and stainless steel and call your place 'luxury'. If it costs you $300,000 to build a unit, what is another $10K ???
Solutions:
1) Redo the zoning code for the city to allow many of the main arteries to have commercial on the first floor and 3, 4, 5 floors of housing above. Have the rest of the city defined so that builders can build as of right and everyone will have a fairly even idea of what can be built on a piece of vacant land or neighborhood. Design this zoning to allow easily for another 100,000 or so housing units.
2) Audit the BRA and the City! The BRA by their own admission own hundreds of properties, the City does as well. Both of them should put these properties up for sale so builders can build on them. (unless there is a long term plan or use for such properties such as a school or public transportation use
3) Organize the building department so that you are guaranteed turnaround times and hearings within a set amount of time. When you apply for a permit you should be given a definite date when it will be returned or reviewed by. You shouldn't need to call in a chit to move the process along.
Unions
By anon
Fri, 11/13/2015 - 11:13am
Stop using ridiculously overpriced union labor and prices will go down - you can't build affordable housing when you have people getting paid $60+ per hour to put cement in a wheelbarrow. A crew of five at $60/hour working full time for three months is over $150K - and that's just labor, not including materials.
Typical nonsense.
By bulgingbuick
Fri, 11/13/2015 - 2:26pm
The "soft costs" associated with building exceed that working, taxpaying, union members wages. You need look no further than the design and engineering of some of these proposed residential developments. We have architects and builders looking to build housing in Boston neighborhoods that is equivalent to Boston waterfront development and blaming labor on the project costs. I call BS on you analysis.
Nonsense?
By anon
Fri, 11/13/2015 - 2:40pm
It takes several months to build a small single-family house, let alone a multi-family structure. Factor in ridiculous union labor cost and it does make quite a difference, probably at least 15-20%.
Yeah. No.
By whyaduck
Fri, 11/13/2015 - 2:30pm
You really need to re-read the Globe article. The issue is more with snob zoning and/or the general lack of build-able land.
Nice story, bro
By SwirlyGrrl
Fri, 11/13/2015 - 6:14pm
Please explain how attacking the wages of people in the middle class is going to make it more possible for people in the middle class to buy housing.
Take your time, and remember to use logic and facts.
In this area, the cost of the land has controlled the price of things for some time. HOWEVER the extreme EROSION OF WAGES relative to the cost of housing is the reason people cannot find affordable housing. While the price of housing went up, wages stagnated.
Put simply so your mind can digest this: when wages kept pace with housing costs, this wasn't a problem. Now that wages have not kept pace with housing costs, we have a problem. Therefore ATTACKING WAGES IS NOT THE ANSWER.
Indeed; making stuff is the answer
By Roman
Fri, 11/13/2015 - 9:02pm
Build more. Make the pie bigger. Have a look at a satellite map of the metro area. It's either all urban or all rural. Not like other metro areas in NY NJ PA MD where there's this happy middle ground called the suburb. There's huge tracts of land not but 10-20 miles from the city limits that are completely undeveloped.
You can build tens of thousands of new housing units out there, using both union and nonunion labor because there'll be enough work to go around.
Now you do need something resembling an adult in charge, because you also need to build roads and (electrified) rail lines to make these new developments a solution to the housing shortage instead of an additional traffic problem.
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