Sadly, this is the type of housing being built in Boston:
The penthouse in Millennium Tower Boston just went on the market for $37.5 million, among the priciest properties in the state. Due to open in summer 2016, the 625-foot skyscraper will be the first ultra luxury high-rise to be constructed amid a building boom that is attracting an influx of wealthy international buyers and billions of dollars of investment.
The claim is that somehow this housing will trickle down to the rest of us, but this is one reason it probably won’t:
“The wind is at their back,” said Blair, the firm’s president. In addition to local residents, she said, luxury units in Boston and other US cities have become a popular investment for international buyers looking for a place to store their cash.
With real estate prices rising, Boston is seen as a safe haven for those buyers, as well as an increasingly attractive place to own a slice of the skyline.
Mayor Walsh has said some good things:
Boston needs to build 53,000 housing units by 2030 to keep pace with rapid population growth that is already increasing prices and squeezing out low- and middle-income residents, according to a city report.
The report by Mayor Martin J. Walsh’s administration, previewed by city officials on Wednesday, calls for $21 billion in private and public construction that would increase Boston’s overall housing stock by 20 percent over the next two decades.
Walsh wants to limit further real estate price inflation by creating 20,000 units for middle-income residents, largely built by private developers. His plan would loosen zoning restrictions and provide financial incentives to encourage construction of taller buildings in outlying neighborhoods. It would offer developers tax incentives and other assistance to help reach that goal.
He also wants to increase annual city funding for low-income housing by 65 percent, to $51 million, and require developers of downtown luxury complexes to pay more and build affordable units at other locations.
Sounds ok, but there are some problems–one note the amount targeted for low-income housing and notice it’s not much more than the one condo for sale at the new luxury place. You can see the full report is here. In it we get:
The City is defining its middle class as households with incomes between $50,000 and $125,000. The range begins at $50,000, reflecting Boston’s median income of $53,000. Household income of $50,000 is also the level where eligibility for most government-assisted housing ends, so market-based solutions become critical.
Boston still has a sizable middle class, representing 34 percent of its households. Compared to the region, however, Boston’s middle class is smaller, younger, and has a lower homeownership rate (43 percent) compared to the region (69 percent).
Middle class households face unprecedented difficulties in accessing the market. Today, a household with an income at the midpoint of middle class range ($80,000) can only afford the bottom 23 percent of the homeownership market in Boston, and is priced out of seven of Boston’s 15 neighborhoods. That same $80,000 income is currently enough to afford 51 percent of the rental market; however, rents are rising at five times the rate of income, making the rental market increasingly unaffordable as well.
So, they are defining middle class as households that make more than the median–seems a funny way to define it. In any case, remember that when you see tables such as:
Production Source New Units
City Assisted Low-Income: Non-Senior 6,500
City Assisted Low-Income: Senior 1,500
Middle-Income Inclusionary/Assisted 4,000
Middle-Income Unassisted: Non-Senior 11,000
Middle-Income Unassisted: Senior 2,500
Middle-Income Units Released via Dorm Production 5,000
Market-Rate Unassisted: Senior & Non-Senior 18,500
Market-Rate Units to Support Market-Stabilizing Vacancy Rate 4,000
You might notice that 8000 are for ‘low-income’ households which make up about 50% of households in Boston right now. Compare that to the 22,500 for market-rate (read luxury) units.
That’s better than what we’ve been getting:
Without financial incentive, the mayor’s report concludes, developers will continue to focus on building luxury complexes that command the highest rents and offer the best returns. More than 8,000 new apartments are expected to be completed in Boston during the next three years, but the vast majority are expected to rent for $3,500 a month or more.
but still not good enough. And now let’s look at the mayor’s comments to another luxury building:
In a statement, Walsh praised AvalonBay’s project. “We are getting the mix of housing that we really need, and it’s coming in the form of a signature high-rise that will be a great addition to the area’s historic buildings and all of our new parks,” he said.
Yeah, I’m not holding my breath that Walsh will actually follow through on his plan. If you go to the BRA’s page listing affordable units available you will find there are none.