Maybe people can help me understand something.
There are those who say that we shouldn’t be building “luxury” or high-end condominiums, that we should be building “affordable” housing, instead of or in addition to these buildings. (In this case, affordable housing isn’t a colloquialism for public housing projects, it’s a colloquialism for middle-class housing, meaning, housing large enough for a family (two parents, children), below some benchmark of cost.)
1) Why do you feel this way?
2) Is this practical?
3) Is this preferable?
4) Who are you to say?
An editorial appeared in last week’s South End News which said this:
“We are creating … housing not for the young families and middle class so necessary for a healthy economy. We’re putting up luxury condos. ‘We are building more of the housing for the demographic we are becoming – age-restricted for retirees and smaller apartments for young singles and couples before they have children … ‘.”
The editorial was accompanied by an article written in response to the release of “The Greater Boston Housing Report Card 2005-2006: An Assessment of Progress on Housing in the Greater Boston Area”, put out by the Center for Urban and Regional Policy (CURP) at Northeastern University.
CURP is the organization run by Barry Bluestone, the guy who keeps telling the story about that mythical orthopedic dental surgeon who was fleeing Boston with her husband to North Carolina, in search of a lower cost of living.
First, the data CURP draws up upon is inaccurate (from the US Census Bureau). It is also woefully incomplete (the only research CURP did to determine median rents was to search the Boston Globe for two-bedroom apartments, as if that were an accurate measure of the rental market).
In addition, it’s inaccurate to say “Boston” has expensive rents. If you look at the chart accompanying the newspaper article, it shows Back Bay, Beacon Hill, the South End, and “Central Boston” as having median rents over $2,200, per month.
The next most expensive neighborhood is Charlestown, at $700 less, per month.
Dorchester and Hyde Park are $1,200 less, per month.
Here’s one solution if you think $2,200 is too much to pay in rent for a two-bedroom apartment – rent a one-bedroom, instead. Or, don’t live in Beacon Hill.
Please explain to me why some people think that building high-priced condos has had a detrimental effect on anyone.
Because, that’s what you hear. That we don’t need to build anymore high-priced condos, that we need to build “affordable” housing, either instead, or in addition to.
You see, here’s how it really works. Some wealthy people live in Boston. As new construction comes on board, they sell their old condos and buy new condos. (Or, if they rent, they do something similar.)
This causes a domino effect – those lower on the income scale are now able to buy nicer, bigger, and better condos (due to the increase in supply). Doesn’t adding to the overall supply help, not hurt?
Doesn’t everyone just move up a notch? Doesn’t this mean things were going well?
I guess basically what I’m saying is, it’s not like housing was taken away. While there may have been a good number of three-decker homes, etc., converted from rentals to condos, no one moved into or out of the city because there were no longer apartments to rent or buy.
Any additional housing built was to accommodate 1) people who moved here and wanted newly-constructed homes (condos) or 2) people who already lived here, and wanted to move up.
Therefore, to say that we’re building the “wrong” kind of housing is kind of silly.
You know, if you asked a person who feels that way to describe what they’d prefer, I guess they’d say this:
I want there to be new housing (condos) built with three bedrooms (one for my husband and me, one for the toddler, one for overnight guests / in-laws, or to use as a study), two baths, with on-site parking, within walking distance to the Public Garden, and a dog-run nearby, with a supermarket and shopping nearby, with easy access to the highway, outdoor space, and with low condo fees. And, I want it close to downtown, in a safe neighborhood, say, in the Back Bay, or on Beacon Hill.
Oh, and I want it for less than 25% of our household income, which is equal to the mean earnings in Boston, $73,980 per year (which comes to about $1,550, per month).
Suppose you were a builder, and you did build that. Suppose it was possible (it’s not, because of the cost of land and materials).
What would any new owner do?
Well, he’d sell this new condo, as quickly as possible! I mean, wouldn’t you??? You’ve got a three-bedroom apartment in one of the hottest neighborhoods, and the mortgage is so low, you’re only paying $1,550 a month??!!! That puts the condo’s cost at around $200,000!
Which is why builders build what they build.
If they didn’t, they’d be missing out on the extra income, they could’ve earned, while the new owners cleaned up.
So, what do you want to do? Build “affordable” housing? For everyone? With limits on what you can buy it for, and what you can sell it for?
In the middle of the city.
Does that seem practical??? Does that seem reasonable? Does that seem preferable?
No. No. And, no.
There is housing for young families and the middle class. These are the condos that are sold off by those who lived there move up to the new, luxury condos.
It doesn’t make any sense to say, “We’re building the wrong kind of housing.” It’s only because of that new housing, luxury housing, that the cost of buying hasn’t gone up, even more! By increasing the housing stock, of any kind, it increases supply, which is then disbursed over a (in Boston, at least) declining pool of buyers.
I mean, doesn’t that seem obvious?
Regarding the whole “Boston lost population” and “Rents and condo prices are too high”, here’s what I think.
In New York City, the resident population increased from 8,008,278 to 8,143,197 and the city gained 100,000 owner-occupants (read, buyers), between 2000 and 2005, according to the US Census Bureau.
Data shows that, during this same period, NYC gained 75,000 new units of housing, presumably high-end, if not luxury, condos. Therefore, you can extrapolate that the city absorbed new arrivals by housing half of them in newly built homes. The other 50% had to settle for pre-existing housing. Presumably, this put added pressure on housing prices, as you had more demand than supply.
Contrast that with Boston. The US Census Bureau released data, earlier this year, that purportedly showed Boston losing 30,000 of its residents, between the years 2000 and 2005 (from 589,141 to 558,394 residents). This was 5% of our population.
(I don’t believe the estimate is accurate, by the way. Nor does our esteemed mayor, who this week formally contested the Census Bureau’s numbers.)
According to the Census Bureau, during this same time, we gained 2,000 housing units, 251,935 – 253,532 (did these tend to be high-end, if not luxury, condos?)
If we lost 30,000 residents, wouldn’t you think the cost of housing here would have dropped, as well? I mean, 30,000 people! That’s a lot of empty apartments. A lot of condos going up for sale.
But, prices didn’t drop. In fact, sales prices increased, over 30%, during those five years, while rental prices barely budged, going down, at most, 10%.
If people have been leaving Boston, over the past five years, then how come condo prices skyrocketed? If there was less demand (lower number of potential buyers) and supply stayed constant (it actually went up, due to more conversions and new construction), shouldn’t prices have dropped?
If people have been leaving Boston, over the past five years, then how come rental prices moderated, but didn’t plummet?
They didn’t because there was still a pent-up demand.
A demand that, even with the slower market, still exists, as evidenced by stubbornly constant condo sales prices and higher and higher rental prices.
We need more discussion on this whole issue, but we need to hear more from people of all points of view, not just those who make the most noise.