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Wu proposes using federal recovery money to help the non-wealthy buy homes in Boston
By adamg on Tue, 04/26/2022 - 1:30pm
Mayor Wu today announced she will use $60 million in federal Covid-19 relief money to build or buy affordable houses and condos, bolster down-payment assistance programs and expand a city program that reduces interest rates on mortgages.
On top of that, Wu has proposed spending $46 million in city funds over the next three years for expanding affordable home-ownership opportunities, in part by adding $10 million to the city budget fro home-buyer assistance programs to the $36 million the city was already planning to spend on 312 new income-restricted units across 19 developments.
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"...to help the non-wealthy"
From https://money.usnews.com/money/personal-finance/family-finance/articles/... :
"Respondents to Schwab's 2021 Modern Wealth Survey said a net worth of $1.9 million qualifies a person as wealthy. The average net worth of U.S. households, however, is less than half of that."
There's too much irony here to digest. (Not from you, Adam...but from this "initiative".)
I fail to see the connection...
Do you really think that the definition of "non-wealthy" according to some unrelated Schwab Wealth Management survey is at all related to how Boston is tackling the home affordability issue, or are you just purposefully obtuse?
It's obvious that the eligibility requirements for the currently active assistance programs are nowhere near your quoted "$1.9 million" definition of wealthy.
https://www.boston.gov/departments/housing/find-financial-help-owning-home
My issue is...
...I (and my extended family) don't personally know of one person in the state who is considered either "wealthy" by this standard, or even reaches a significant percentage toward this figure. And for those that are, what portion of residents does this reflect?
The concept of "affordable housing" irks me, as the phrase reinforces the presence of the opposing "non-affordable housing". And by judging the new mass of granite countertop & stainless steel appliance luxury apartments popping up in which their rent typically meets or exceeds a mortgage payment, this is the standard problem this state's residents have.
The whole housing market here seems to be less about "affordable housing" & more about "what level of hardship are you willing to reside amongst".
Home equity counts in net worth
Considering the price of real estate in this area, along with how many neighborhoods there are where values have sharply shot up over the last 15-30 years, it isn't hard to have $1.4 million in equity in your home. There are many many folks in this area with average jobs who bought property for $100,000 in the '80s or '90s whose home is now worth $1.5 million (or depending on neighborhood and time frame, $500K ---> $2 mil, and so forth). Plenty of teachers and social workers and whatnot have a net worth of $1.4 million in the Boston area.
Mind you, this still requires a certain sort of stability, and most of these are white folks who have some degree of generational wealth. I'm just reminding people though that home equity does count toward net worth. We in this area tend to forget that.
My home is worth about $600K, and I owe about $200K on it. This makes me very solidly middle/upper-middle class. I could sell it in a weekend and move to Albany or somewhere, buy a house with cash, and still have a huge chunk in the bank. Mind you, I have no desire to do anything of the sort, but I am very much aware that just by virtue of being privileged enough to own a home in a super desirable area, I'm not at risk of being homeless despite my cash flow being well below the area median. We in high COL areas tend to forget about this while we focus on how hard it is to buy a home in this area. Both things are true though; it's unjust that people are being priced out of the area and that people, especially people of color and other marginalized folks, can't buy a home in their community. But for those who do own any sort of property here, we're automatically quite wealthy on a US scale and really wealthy on a world scale.
Try to get that deal work in
Try to get that deal work in thus market, the lenders will not finance a market rate Boston Property and the sellers will not wait for you to the paperwork.
This money is earmarked 5013c bankroll!
So replace "non-wealthy"
with something else, but certainly folks with a net worth of $850,000 should not be included in this plan either. If you own a home at all, which is the way people usually get a net worth of any size, then I don't think you need to be a part of this plan. But obviously there is a need for such a plan in Boston.
How about...
"lower class", as the outdated term is hinted at here? Because 1) if you're "wealthy" you don't have the issue, and 2) if you're the "middle class", you're too wealthy for consideration yet too poor for reasonable affordability.
This plan is a truly colossal
This plan is a truly colossal waste of taxpayer money. I'm all for programs to help make housing more affordable, but this 'golden ticket' mentality of helping only a few at massive expense is absurd. Hosing costs what it costs. It's absurd to spend so much money to permanently subsidize housing for only a few.
We know that for a variety of reasons (primarily the cost of land & high cost of union construction workers) that it simply doesn't make economic sense to build anything but higher-end condos in downtown Boston. Since that's the case, I'll never understand why the city doesn't put wealthy residents (who they badly want for tax revenue) into two buckets:
1. Those who live full-time in Boston
2. Those who essentially park their $$$ in a unit and only stay a few weeks a year
Since #2 isn't paying state income tax or state/local sales tax because they're never here, why not increase their taxes? This is different than taxing all expensive properties, because we should want rich people to live in Boston--it helps the tax base.
For years I've suggested increasing property taxes but then more than offsetting by increasing the residential exemption. This way, those who are simply 'parking their wealth' in a unit don't benefit from the exemption and we take that new money to build high-density housing around T stops in Mattapan, Dorchester & Roslindale.
Residential exemption
If you don’t claim a property as your primary residence, you don’t get the residential exemption.
https://www.boston.gov/departments/assessing/filing-property-tax-exemption
I know. I'm suggesting
I know. I'm suggesting increasing property taxes but more than offset that increase for everyone who gets the residential exemption.
Property taxes are a percentage of assessed value
So these people that are parking their money in $15M+ places are paying a massive property tax bill every year. They’re most likely a large part of the reason Boston is able to give a residential exemption to us lowly property owners.
It's already there. Any City
It's already there. Boston residential property tax is currently 1.1% of the assessed value. Any City of Boston residents who live in their owner-occupied home can claim residential exemption and get a serious break; the first $300k of property valuation are exempt of taxes.
If like me you own/live in a condo assessed at under $500k (and tax assessment is typically bellow actual market value), you end up paying less than $2k per year in RE taxes. I'd say that's a pretty good deal. Even though I would stand to benefit, I don't think it would be fair for people like me to pay less taxes than that.
https://www.boston.gov/departments/assessing/how-file-residential-exemption
Yep, our modest condo is $650k+
And we pay $3500 a year(!) in property taxes. Meanwhile I pay $6k a year for a 500k rental not in Boston.
Eh?
Is average household net worth really close to $1M?
cant afford
I work for the city but cant afford to live in the city
I work for the city but cant
And?? This type of comment is frustrating.
I really do hope this person is able to use their government pay to save up, and move into the city if they want. That's how it is supposed to work. We just need to make sure the earning opportunity is equitable!
I guess I'm fucked
The problem isn't that poor people can't afford anything. It's that there's nothing for them to buy even if they could.
All subsidizing housing for the worst off will do is increase the number of people who can afford what already isn't available. The result will be that people like myself who can just barely afford something (which isn't even available), will either have to compete with a much bigger pool of applicants or watch as prices rise up to meet the demand (thus negating the point of the subsidies anyways).
Yea.
It seems the way to own property has almost reversed the past 20 years. If you want to live in the city in your 20s you are better off sucking it up, buying a home in Franklin for a few years and then take the train into the city for your job. Then in 5 years or so you can sell and be in a slightly better place than you were before. There simply isn't renting and saving in Boston anymore. People seem to either have 125K saved up for their starter home or they have 800K ready to pay in cash for it. 125K isn't going to get you much either way.
Or live with roommates
I know it's not ideal for everyone, but it can be a way to save money while you live in the city.
I wonder if there is some way for the City to provide subsidized rentals where you pay $2000/month but some portion of it goes into some sort of tax-advantaged down payment savings plan. Or something. Just thinking out loud.
“There simply isn't renting
“There simply isn't renting and saving in Boston anymore.”
You can say that again!
Certainly not for ordinary working folk anymore. Not for a long time. Not since the loss of rent control.
People need to suck it up and
People need to suck it up and just push to build more. The best way to fix this problem is supply and demand. Just really pull in supply.
At the same time maybe we should stop offering subsidies to older people to stay in their large homes they bought for 45 cents in 1972 with 8 bedrooms.
I agree when we just pour money into subsidies it is not actually lowering prices and in many cases may make them rise.
The city helps old people who
The city helps old people who own property worth a ton of money yet young people who have nothing get no help. These same old people are almost always greedy selfish NIMBYS too.
You’ll be old some day
And I am assuming that you have no offspring to look after you.
Good luck with that.
Spoken like a true ten-speed, trust-fund zealot.
Shouldn't you be out recording yourself yelling at drivers over perceived grievances?
Build what and where?
Do you have any idea just how many units would have to be built to reduce rents across the city?
You're talking about subsidizing a Chinese-megacity scale of a project.
An "Alphabet City" in Boston or on the outskirts only guarantees us future generations of "working-poor" citizens and would eliminate any "affordable housing" quotas within the city itself.
While John Fish would get the bulk of the cash.
IF ONLY we had a functioning transit system.
There needs to be more senior
There needs to be more senior housing built. The general housing stock in Boston is horrible for people aging anyway - multiple stories and steep stairs, narrow doorways you can't get a chair or walker through, old bathrooms with high cast iron tubs, etc, etc. But people don't want to leave their neighborhoods and certainly don't want to move into "institutions". I don't understand why the "noise and poor people and children leeching on our school systems" NIMBYs don't support building senior housing as a way to fulfill their required amount of social housing that they all skip out on anyway. Worries about stress on the EMT system, maybe?
I live near a Boston Public Housing complex for seniors and it's FANTASTIC - quietest neighbors ever, no trash everywhere, no parties, just a nice calm area. Build more, incentivize people to move out of their family homes so actual families can move in.
I am basically broke but when
I am basically broke but when I looked into filing for bankruptcy. there are fees and if you don't have a lawyer, outcomes are way worse. So, I can't afford bankruptcy.
I also can't afford to ever buy here in eastern Mass. The further out you move, your commuting cost to Boston goes way up. A commuter rail pass for zone 8 through 10 are 378 - 410 plus what it costs to park there. That eats up what you will save to move out there.
Damned if you do and damned if you don't.
Cool.
Now tell us how you're going to make Boston affordable for the middle class.
This.
We need housing for low income people. Not debating that, it is 1000% accurate and important.
But a lot of people just assume working professionals can automatically afford any of these fauxury buildings going up all over town. Spoiler alert: a lot of us can’t.
It has been shown that even
It has been shown that even building "luxury" units will bring down rents. When someone rents in these "luxury" units. they generally come from the lower units to move up. So that until becomes open. We do not have enough housing. If we don't build, it will never go down. We need to build. There are very few housing proposals that I am agaInst.
What really galls me, is that suburbs touching Boston, will not step up and do their part to help the housing station. No building in my precious Milton or Dedham.
"Luxury" is a misnomer since it is a made up marketing word. Half of them are way overpriced and not luxury.
It seems to me it’s always only luxury housing…
… developers that claim that trickle down theory is valid.
And yes, “luxury” doesn’t mean much anymore. It’s nice to have a washer/dryer in your unit but so what, if it’s tiny and the walls are paper thin.
It seems to me you think there's a "luxury housing" market
In fact, there is just a housing market with overlapping segments. The people who can afford to pay for "luxury housing" are ultimately competing with everyone else for a roof over their heads. Can't find a place in your price range in the Back Bay or South End or Beacon Hill? Maybe you end up in Eastie or Southie or Rozzie or Dot. Gentrification happens because people accept substitutes when they can't find housing they can afford in the places they actually wanted.
It matters not whether the housing built is "luxury" -- as long as the housing doesn't go vacant because the asking price is too high. Someone renting a $5k/month apartment in the Seaport ends up not competing with someone who pays half that in Dorchester. Someone buying a "luxury" condo downtown ends up not taking a less pricey condo in JP.
There are two ways to fix the housing affordability crisis: build a crapton of new housing, or make the city a less attractive place to live. We could take pointers from Detroit on the latter.
Like I said ….
…. trickle down.
that's a weird definition of gentrification
like it's some force of nature that "just happens" only because people are "settling" for something they didn't really want.
that's not what I've seen happen to East Boston. Jeffries Point was targeted by developers and sold as something very particular, and now rents are up across the board.
I continue to be boggled by how apparently popular the notion is that there is a fixed number of renters (when, in fact, development and marketing draw more of them in) and that any lower priced housing will magically remain lower priced.
And no one who can afford a 5k apartment in the Seaport is "competing" for a 2500k apartment in Dorchester. It's not even on their list of possibilities.
"it has been shown"
can you point to this information somewhere?
all I see in Boston is luxury housing raising the median rent for an area and making it impossible for people to stay, since it will always be more profitable to sell to someone who will flip a building to "luxury" or just raise rents. It can't possibly alleviate pressure on current housing stock if it actively encourages even more people into a certain neighborhood who wouldn't have moved there before. They go expecting luxury units, more luxury units are built, and the cycle continues.
again, do you have information to substantiate this? if this person was in a place they could afford before, it doesn't seem logical that they could all of a sudden afford a luxury unit just because it came into existence. And once they move out of your "lower" unit, that unit's rent will almost always go up - particularly if it is now surrounded by luxury units.
the Portside and Clippership developments in Jeffries Point are a great example: tons of new units.. where is the rent relief for the rest of the neighborhood?
these developer talking points are getting really old, not just because they're repeated so often, but mostly because they're just not true.
We’re talking about buying here
Nothing is being built for middle to lower income people to purchase in this city. And the burbs aren’t much better the past few years. Buying a house or condo should not be a “take what you can get” scenario where people are overpaying, waiving inspections, etc. and getting in over their heads. Luxury investment properties are a big part of the problem.
Nothing is being built
For lower- or middle-income people to buy in Boston, without a heaping load of government subsidy, because it literally cannot be done without the builder/developer losing money. Real estate and construction costs are too high.
“MBTA Communities” are newly required to build
More at https://www.bostonindicators.org/article-pages/2022/january/mbta-upzonin..., https://www.mass.gov/info-details/multi-family-zoning-requirement-for-mb..., etc
Today's luxury housing is
Today's luxury housing is next decade's middle class housing, too. Plenty of bigger apartment buildings that were put up in the 70s that were high class and fancy at the time are now really affordable alternatives. Problem is Menino refused to let anyone build for 30 years so now we've got a big gap in the natural lifecycle of aging housing.
Waste of inflation
The way these pandemic funds were porked out and now arbitrarily spent. Particularly after pummeling many of the needy with similarly arbitrary rules in the first place.
If Wu wanted to do something she’d use the funds for a rainy day or to incentivize building and deregulate zoning so more people could have options at all price points. Or hell get a 21st century education system in place so generations of kids can’t be similarly sacrificed to the teachers unions.
Instead more lottery minded nonsense that will help very few and do little for the long term.
Great to appear like you care or are doing something though, and typical for progressives in gilded cities these days
pouring money into the boston
pouring money into the boston school systems would be a good thing.
lots of people in our situation (upper middle class, property owning) left boston because the schools are a hot pile of garbage. our condo was bought by some real estate investor, ended up listing it for rent at double what our mortgage was, and while our building was solid, it certainly wasn't luxury. if the schools weren't trash, we would have strongly considered staying in Boston before starting our family.
Federal money cannot be put
Federal money cannot be put away for a rainy day. They give you X amount and a timeline and anything that's not spent in that timeline goes back to Washington. There's also no guarantee that the funds will keep coming so putting it into a long term improvement project that's going to rely on that money for perpetuity is a bad idea. She has to pick a project that'd accomplishable in a certain amount of time and can be finished with that amount of money
What I would support
(And this may be some of what is being proposed....)
They say that the only new housing that is profitable to build is luxury units. So use the money to subsidize some new developments so that the builder can afford to afford to put up non-luxury apartments/condos and still make a buck.
$60M
Will get us 20-30 small no-frills units at best once all the right palms are greased and all the right pockets are stuffed.
Maybe she should hang onto
Maybe she should hang onto this money. The Biden administration is saying that we could have another round of variants in the winter and is looking at Congress for more funds. WHY should Congress give more covid funds to states if they haven't spent the funds they already got?
The fairmount line
One idea is to make the fairmount line a light rail line. This line currently runs through the most affordable part of the city. If the line was a subway rather than a commuter rail maybe more people would wanna live along it and many of the vacant land along the line can be developed into more housing- check out the Blue Hill Ave initiative that is turning city owned lots into housing along BHA.
Also section 8 has jacked up the market rate rent amounts on the lower end of the spectrum by inflating the price point for lower cost rental units due to such high demand - and working class folks are forced to compete with guranteed rents.
And last but not least two and three family prices have shot through the roof with all the investors buying properties in the last 10 years. Families used to buy a two or three family making them affordable to live in by renting out the other units, why don't we bring back more of that housing and deed restrict it to owner occupants?
And three cheers for residential exemptions, it saves us personally a Lotta money every year and keeps us living in the city despite the schools, which is a whole different issue for another day.
Light rail, no
There is no plan to convert the Fairmont line into light rail, and it will never happen because CSX still has rights to haul freight on the line and has no plans to sever the last remaining rail connection to the seaport. Amtrak also has vested interest in keeping the line as actual rail as it is an important bypass to the NEC if something happens.
What is in the plans is electrifying the line and running EMUs (electric multi units) which essentially function as heavy subway cars but on rail lines. Should give 5-15 minute rapid transit like headways.
Of course, though, this is the T, and a low hanging fruit project so who knows how many decades it will take alone with electrifying one stop to TF Green to allow EMU service on the providence line, too.
Re: the Fairmount line
HUD only increased the Section 8 Fair Market Rate to keep some sort of segment of the market available to very low income households.
As recently as 2018, the FMR was below $1500/mo for the Boston area. Do you know how much more competition there was for the handful of units at that price point? It was stupid.
Property owners are much more likely to raise their rents just above the FMR to ensure they can exclude voucher holders. I see this literally every day in my work. It's one of their tricks to avoid violating fair housing law while still actively discriminating against some fictional subsidized bogeyman. Medium-income tenants, such as myself are collateral damage in this game.
Non-wealthy?
I’m far from wealthy and I bought a piece of property in the City. How many non-wealthy units are down the Seaport?
Here’s an idea, stop development of luxury units.
"B is for bubble!"
"Bubble! Bubble! Bubble!
B is for bubble!
Bubble! Bubble! Bubble!
B is for bubble & bubblegum!
And B is for Bridge-loans when you need one!
And B is better than any letter for bubble-gum!"