‘Affordable’

I’m on the BRA’s affordable housing email list. Here’s the latest:

Unit Size: Three studios, three one-bedrooms.
Price: $1,724/month for studios, $2,008 per month for one bedrooms.
Maximum Household Income: One person HH: 120% at $79,300; two person HH, 120% at $90,600; three person HH, 120% at $101,950.

That’s right, a studio that costs $1724 is listed as ‘affordable’. I guess I won’t be living in Boston in the near future.

Boston celebrates having less affordable housing

I’m always mixed about projects like this:

The Old Colony public housing development, an icon of the old South Boston, is undergoing a dramatic facelift, and officials celebrated completion Tuesday of the first phase of the redevelopment, including a large new apartment building, a learning center with a library branch, and rows of three-story townhouses that Councilor Bill Linehan said “look like they should be in a seaside resort.’’

On the one hand, public housing has been a mess for a long time and anything that improves its conditions is a good thing. Also, mixed housing is better than a concentration of poverty. On the other hand, these redevelopments always seem to have a common denominator–they have less affordable housing:

“But times are changing for the better,’’ said Nick Collins, a state representative from the neighborhood. “It’s less dense, there’s more space, and the quality of life is going to drastically improve on day one.’’

Phase one includes 116 new affordable rental units, which replace 164 distressed units that were leveled along Columbia Road and Old Colony Avenue.

I’m sure this is great for the people who get the new units, but what happens to all the others who are trying to get into housing they can actually afford?

Boston housing

The Boston Globe has an article about all the new rental units being built in Boston. This is a great thing according to them, of course:

The heightened demand for rentals goes beyond downtown Boston, with large new complexes also going up in Somerville, Cambridge, Cohasset, Weymouth, Andover, and other municipalities. Real estate specialists said the increasing supply will eventually help to moderate prices.

“If I’m a renter, I’m encouraged by this,’’ said Gregory Vasil, chief executive of the Greater Boston Real Estate Board. “It’s been a very long time since we’ve really produced a lot of apartments like this, and the increased supply will help address the problem’’ of ever-rising rents.

Real estate specialists said the current market is particularly unusual because it is fueling rental construction at all price points, from luxury units in the Back Bay and downtown, to mid-priced apartments in the suburbs, to scores of affordable homes being built in Chinatown and at the Charlesview Residences in Cambridge.

There are two problems. First, developers have been saying that new construction will bring prices down for 20 years (ever since statewide voters decided that Boston, Cambridge, and Brookline shouldn’t have rent control) and it hasn’t happened yet:

In the quarter that ended Sept. 30, average asking rents in Boston climbed to $1,773, making the city the fourth most expensive rental market in the country, according to Reis Inc., a real estate research firm.

That is putting more pressure on the apartment market, causing average rents to increase by $124 per month, or 7.5 percent, since 2007, according to Reis.

Second, the reason the developers have to say that the new construction will eventually bring down rents is that almost all of it is either ‘market rate’ or ‘luxury’, in other words expensive. Even the affordable housing is problematic, it can apply to units that are directed to people making up to 120% of the median income of the Boston area and a 1 bedroom unit in that group is $2093 a month–I don’t think many people would consider that affordable.

In some sense, this is an update of this earlier post. I tried to give a new breakdown of affordable housing by income limit, but there is no affordable housing rentals available at either the BRA or the DND. Yeah, the city of Boston is doing a great job keeping Boston affordable.

Affordable housing and investing

This is interesting:

However, Google and other  companies know something that others don’t: Rental and low-income housing projects are now among the most lucrative investments available, with  businesses from Apple Inc. to Sherwin-Williams Co. buying millions in government tax credits used to finance affordable homes in Massachusetts and other states. These companies use the credits to significantly reduce their tax bills, while builders get desperately needed funds to provide affordable housing to low- and middle-income families.

I support anything that increases the amount of affordable housing in the area, but doesn’t this seem a roundabout way of doing it? The fact that this money is in the form of tax credits, doesn’t change the fact that the government is giving a lot of money to corporations. If Google and the other companies are making so much money from this, that probably means it would be cheaper for the government to build themselves. That no longer seems to be an option though–you know, governments are bad.

Affordable housing

Since I started receiving emails from the BRA about affordable housing opportunities in Boston, I think about it more. I have concluded that the current set up will lead to less affordable housing. Under Mayor Menino the city pushes for projects to have 10 or 20% affordable units which sounds good until you look into it and think about it.

  1. There is a wide range of affordable housing, rated by the percent of the area’s median income of potential renters/buyers: some is directed to people who make up to 50% of Boston’s median income; some 60%; all the way up to 120%. Each of these limits has a different maximum rental/sales price (the numbers are here). It’s then all lumped together as affordable. This means a unit directed towards a person/family up to 120% of the median income is included as affordable even though it’s directed at people who make up to $75,750 (or $108,250 for a family of 4). This leads to crazy things: a 1 bedroom apartment that rents for $2058 can be considered ‘affordable’. Given that, I think the number of affordable units as counted by the city is greatly exaggerated.
  2. The policy is designed to make things worse, because the percent of new units designed for most of the population (since ‘affordable’ housing is directed to people making up to 120% of the median income) is at most 20%. This means that most of the new housing is being occupied by people making more than 120% of the median income which means the median income in Boston will increase. As the median income increases, the maximum price for ‘affordable’ income will also increase and an increasing price loop ensues (you’ll notice that all the affordable housing is usually at the maximum price allowed under the given guidelines).

One thing that could help is rent control (obviously not for sales), but people in the state decided it wasn’t an option in 1994. I found this to be very annoying: three communities had rent control at the time (Boston, Cambridge, and Brookline) and all three voted to keep rent control.

To get an idea of the breakdown, here are the numbers for all 19 current opportunities:

Rental:

50%: 2 studios, 20 1 bed, 6 2 bed (these are all in one complex)

80%, 90%, 100%: 1 1 bed in each class

Sales:

80%: 2 studios, 15 1 bed, 9 2 bed, 1 4 bed

90%: 4 2 bed, 1 4 bed

100%: 1 studios, 9 1 bed, 7 2 bed, 4 3 bed, 1 4 bed

110%:  1 2 bed, 1 3 bed, 1 4 bed

120%:  2 2 bed, 3 3 bed

Affordable? For Whom?

I’m a little confused. I’m on a email list to get affordable housing opportunities in Boston. Here’s a link to one. Notice this bit:

1. Up to 80% of Median Income
 
Maximum Household Income: $48,050.00 for one person
  $54,900.00 for two people
  $61,800.00 for three people
  $68,650.00 for four people
Two Bedrooms: 1 Unit
Price: $1,545/mo.

Affordable housing is defined to be housing that costs at most 30% of your income which means two people would have to earn $51,500 for this two bedroom to be considered affordable. Not a lot of leeway is there (and the 30% is supposed to include all costs that go with housing not just the rent)?

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