A recent article in the Boston Globe about a boom in luxury housing in the city found that over the next three years, more than 8,000 high end apartments will be built in Boston — doubling the supply of luxury units for rent. These apartments come with yoga rooms, roof decks and rent for as much as $4,000 dollars a month for just one one bedroom.
The Globe quoted one developer who said, "This kind of residential construction hasn't been seen in Boston since the 1800s, when the Back Bay, Beacon Hill and the South End were built." Which raises two big questions: first, is this luxury housing boom sustainable?
Second, and arguably more important: what about the need for less expensive housing for middle and working class families? Rents in an around Boston are already high, averaging $1,800 a month.
And they're rising — up almost ten percent in the past four years — outpacing many families' ability to afford them. A big majority of low-income renters spend more than half of what they earn on housing.
So what has to happen to increase the stock of affordable housing in cities like Boston? If market forces have unleashed a luxury housing boom in the city, are there policies and incentives that can light the fuse of an affordable housing boom or boomlet?
Ed Glaeser, Fred and Eleanor Glimp Professor of Economics at Harvard University.
- "The competition for luxury renters will probably become even tougher over the next few years. About 1,250 units are expected to hit the market this year, followed by more than 3,100 others next year and another 3,660 in 2016."
- "Housing availability in Boston has been a particular passion for Mayor Thomas Menino, who is fast-tracking developments across the city during his final four months in office. It’s part of his last push to address a housing affordability crisis that’s been a persistent problem for Boston during his tenure."
- In order to afford this level of rent and utilities – without paying more than 30% of income on housing – a household must earn $4,174 monthly or $50,090 annually.
- "Not only is the city among the least affordable in the country, but it saw a steep rent increase between May 2012 and May 2013."
- "With the exception of 2009, asking rents as well as effective rents (taking into discounts such as a rent-free month) have increased every single year since 2003. Between 2009 and mid-2013, the average asking rent in Greater Boston increased by 9 .1 percent while the average effective rent rose by 10 .8 percent, reflecting fewer discounts."
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