Recently Tory Bullock, of snow day freestyling fame, posted a funny and entertaining video where he looks at the luxury apartment and condo buildings going up in Boston and asks who they’re for. He points out that someone would need an income of over $100,000 a year to afford these places and the rents in the older buildings nearby are rising as well. He also talks about how these high rents are driving young professionals out of the city.
Well, it’s driving them, it seems to me, mostly into overcrowded and substandard housing (knock on crumbling drywall) within the City since a lot of Boston’s suburbs are just as or more expensive than the city itself.
But why? It seems complicated, but it actually really isn’t.
There are a number of factors, ranging from the cost of land to the prevailing wages of construction workers and the sheer amount of time consumed by navigating the complex, if not outright hostile regulatory and political environment of the region. But it ultimately comes down to three numbers: 150,000; 55,000 and 274.
The 150,000 is the approximate number of people who moved to Greater Boston between 2010 and 2014. The 55,000 is the approzimate number of housing permits issued by the cities and towns of Greater Boston between 2010 and 2015. The 274 is the average total development cost, in dollars per square foot, of a new unit of housing in Greater Boston (these numbers all come from the 2015 and 2016 Greater Boston Housing Report Cards, which are issued every year by The Boston Foundation and the Dukakis Center at Northeastern University).
Not only is Greater Boston not building enough housing to keep up with its population growth, but the cost of that new housing is very high. It would cost $232,900 just to build one 850 square foot unit of housing and almost $500,000 to build a 1600 square foot apartment. At those sorts of costs, spending an extra few thousand dollars on granite countertops and stainless steel appliances in order to charge more for rent or sale is pretty sensible. Since the housing market is impossible to predict more than 18 months in advance, getting new housing stock rented or sold profitably is paramount.
The result is that the luxury market has been overbuilt — the luxury apartments and condos are for buyers who don’t actually exist. Maybe some of them will get snapped up by investors or be used by wealthy people from out of the country to park money in, as happens in London and New York. Maybe some of them will be leased at lower rents while the market recovers.
Luxury housing is not built for anybody. It’s built because the cities and towns in the Boston area have a planning that is doing what it was intended for: maximize the homevalues of existing homeowners and so the only housing that can be built must be expensive, simply to keep the developers in business. To add insult to injury, community development corporations and other affordable housing developers are just as affected by high costs and regulations as the market-rate builders, but have no money.
To fix this, Boston needs more housing and less parking. The “character” of housing stock in neighborhoods and suburbs like the North End, Beacon Hill and Back Bay, South End, South Boston, Dorchester, Hyde Park, Allston Brighton, West Roxbury, Roslindale, Jamaica Plain, Brookline, Newton, Cambridge, Quincy and Somerville is currently held sacronsanct. A neighborhood of detached triple deckers or single families must remain a neighborhood of triple deckers for not adequately explored reason. Well, the way to build housing that’s affordable from the get go is to allow for the replacement of detached homes and surface parking lots with rowhouses and townhouses.
Boston is less a girl breaking up with a boyfriend and more like one whose parents have grounded her and forbidden her to see him.