Hey, there! Log in / Register
Stats on residential construction continue to point to Manhattanization of Boston
By adamg on Tue, 07/07/2015 - 8:26am
The Herald reports city stats show Boston continues to experience a building boom and that while permits for low- and moderate-income housing increased, 57% of the permits were for "unrestricted market-rate housing units in the Hub’s higher-end neighborhoods."
Neighborhoods:
Free tagging:
Ad:
Support Universal Hub
Help keep Universal Hub going. If you like what we're up to and want to help out, please consider a (completely non-deductible) contribution.
Comments
Hub's higher end neighborhoods?
Most of the approvals I am seeing are for medium sized developments generally west of Mass Ave. (long overdue and needed). Part of the problem - higher end neighborhoods now describes about 80% of Boston's developable land area.
As I said on another post - good on Mayor Walsh - seems like he's prioritized citywide development to a much greater degree than Menino.
The effects are being felt everywhere
I've spent nearly a month apartment hunting, and even the rents as far out as Malden and Eastie are ridiculous on anything that is relatively nice as far as these developments go. Interestingly enough, a lot of them have horrible reviews from residents on Yelp, etc. Even what they're asking for "regular" apartments is laughable in many cases.
Hmmm....
The Mayor's goal?
Please stop saying
Please stop saying "Manhattanization." Boston would have to be wall to wall skyscrapers everywhere within 128 to even get close to Manhattan density. Even if we kept this pace for 50 years, that would never happen. Manhattanization is a scare tactic term that just has no basis in reality.
Yes, we're not getting towers everywhere
But I was thinking of the income gap: Manhattan has very rich people and very poor people. It has almost no middle class. I find that kind of scary.
You should look that the percentage
You quoted, 57% full market rate does not equal Manhattan.
Maybe you just won't be happy until a lifelong welfare leach lives in the penthouse of a new DT skyscraper.
The poor in Boston have it better than most US cities.
Who's talking about the poor?
I'm talking about teachers, nurses, letter carriers, small businesspeople - the people who keep this city functioning while the Masters of the Universe are jetting off to the Alps and Montserrat.
Much respect for you Adam for
Much respect for you Adam for bringing attention to this issue. I've been living in eastie my whole entire life and love it. Unfortunately living here is now unaffordable. My only issue with moving out of the city is my whole family relies on the T. If we all take the commuter rail from let say a town with decent real estate prices (brockton/bridgewater) we're looking at 1200 plus just to commute into town.
Or...
To Boston for the Olympics!
Well, most nurses I know make
Well, most nurses I know make over 100k, and BPS teachers can get up that high, too. As for the post office, I have no idea on their salary rate, and I suppose it would really depend on the small business. Maybe they can't afford Beacon Hill or the Back Bay, but that is enough to go to many other neighborhoods in the city.
No they can't
Or, if they can, the won't be able to for long. And that's exactly the point.
Boston teachers make a lot of
Boston teachers make a lot of money. The whole "underpaid teacher" thing is largely a myth, especially when you consider they only work 9-10 months out of the year. Earning over $100k may still not be common for them, but they're earning more than most of the population: http://www.btu.org/contract-highlights/for-teachers
No.
If you think teachers only work 9/10 months out of the year, you're a blithering idiot. Also, you don't know any teachers.
Income doesn't occur in a vacuum. MA median income is ~$70k. That's everyone in the entire state, not just college graduates, and all teachers have at least a BA. I'm sure if you look at median income in MA for people with MAs (many teachers have MAs), it will be closer to $90k. That makes Boston teachers' salaries eminently reasonable for an expensive metro area.
Median income is based on household income, not an individual's.
Sooo, teachers do pretty darn well. The average person in this state, does not make around $70Gs a year. However, the average household does make around $70Gs a year.
Yes they can, starting in
Yes they can, starting in their 8th/9th year, provided they keep up with their continuing education. Minimum starting is in the 50s, and by the 3rd year they are into the 60s. They can also get nice little bonuses that scale to how long they have worked. Also, the pay scale has a mandatory increase of 3% every year, so it keeps up with COL. See the link that Ryan posted. BPS teachers are pretty well taken care of, as they should be.
Who's talking about the poor?
I'm talking about teachers, nurses, letter carriers, small businesspeople - the people who keep this city functioning while the Masters of the Universe are jetting off to the Alps and Montserrat.
They can't commute here from Jersey
Perhaps Malden, Brockton, Lynn, Randolph, and Attleboro.
Jersey is much too far. Manhattanization is a bad term because it implies many things besides housing that we don't have here like 4am bar hours, 24-hour convenience stores on every block, 24-hour public transit, great pizza everywhere, yada, yada, yada.
What's a "leach"?
I know many poor people who don't have it so well here that know how to spell. Can't you wait until three to sell that crap on the Howie Carr show?
a real rags-to-riches story
Archibald Leach?
Brian Leetch?
NHL Hall of Famer and former BC Eagle Brian Leetch? He was a hell of a player.
Apparently a "leach" is...
Someone who receives transitional assistance or lower rent housing. No one else is a "leach" though. Not those who, drive on public highways, use transit, have a tax subsidized mortgage, receive clean drinking water, put several kids through the public schools, receive police, fire and other public safety services, receive gas, electric, or other utilities. No one who lives in rural areas or the suburbs, where the delivery of services is done at a far greater expense than it is in urban areas is a "leach". No, the costs of those are not underwritten by everyone through taxes and costs related to providing those services (IE real estate for shopping center parking lots, the costs of stringing up and maintaining electric wires, of laying pipes for water and district gas, the cost of paving the roadways, the cost of building quality schools, libraries, parks and local social services and paying municipal staff to operate them, the expense of bringing utilities to suburban and rural areas, etc). Everyone pays their own way in proportion of the services they receive. Correct?
I think if the expenses of our society were truly paid in proportion to their actual cost by the individuals who use them, we'd be surprised as to who the real "leaches" are.
Careful...
You would never want be thought of as one of those sensible Warren/Sanders voters, would you?
It's a drain field element.
Old school home water waste systems once had 'leach fields' where a deep layer of porous crushed rock stuff functioned as a filtrate for the leachate.
They still have a role in industrial systems like mining.
Not just "once had"
I haven't heard of any commonly-used replacement for the ubiquitous septic tank/leach field systems in rural areas or much of suburbia.
And that is the fault of
And that is the fault of development and rent control policies which grossly distort the housing market. When people can't people can't build enough housing to meet demand prices go up. When people can't make a profit building except for the high end or being subsidized to build for the low end of the market, prices have no where to go but up.
Ending snob zoning and extortionist development policies which drive up development costs are the only things which will fix the problem. But that would require politicians and bureaucrats to give up immense power and they will never do it.
Rent control?
Where?
Having "affordable units"
That have income restrictions is a form of control.
In 2015 you have to be either poor or rich to live here, the middle class are the ones suffering the most.
Reading comprehension fail:
Reading comprehension fail:
NYC has rent control. You should know as a New Yorker.
Oh, sorry
I thought we were talking about development in Boston here, not New York. I wasn't aware rent control in NYC affects development here. Do go on.
But since you mention my birthplace, you might want to Google what's happening with rent control there, even aside from how the scum that passes for developers there have gotten around it.
Continued reading
Continued reading comprehension fail:
The first paragraph is about Manhattan's loony RE market. The second is about Boston. Boston suffers from almost the same regulatory strangulation on new construction as NYC. The stifled pace of construction and inflated cost of construction never allows the market to catch up to demand.
Plenty of Construction - Of The Wrong Kind
But there is TONS of construction of housing in Boston. It's just that it is the wrong kind of units being constructed as they cost too much. They don't cost too much because the construction was expensive. They cost too much because they amount the developer wants to charge ON TOP of the construction cost is too high. They feel justified in doing this because nobody has told them it is a sin to be rich. And because some [far away] investor will buy it, making them feel justified in setting such high prices.
It's a sin to be rich??
Huh??
That's pretty far outside
That's pretty far outside standard usage. I'd suggest some sort of clarification or different term (Parisification?). Manhattanization is used by NIMBYs who think anything over 2 stories is going to ruin Boston.
If It Fits
It's not about the skyscrapers it's about the ridiculous rent/price per square foot ratio. We wish we did have any kind of density in the suburbanesque outer neighborhoods of Boston because maybe then there at least would not be a housing shortage. The theory that such density would make prices go down is probably a pipe dream however. That will only happen if the city is taken over by a strong dictatorship with myself having life or death powers over evil real estate people.
We'll never get density in
We'll never get density in the suburban outlying neighborhoods until we get rapid transit out there. It's just not reasonable to live in several parts of Westie, Hyde Park, certain parts of Rozzie, without a car, and a lot of density (rightly, in the places it's happening) relies on eliminating large amounts of parking, walkability, etc.
"Manhattanization" sounds
"Manhattanization" sounds like a humblebrag. "How did we become so popular?"
Why is this a bad thing?
Other than people who can't afford to live in the city having a little longer commutes, why is this so bad?
Here are some positives:
1. Lower crime in boston.
2. people that bought their homes back in the day are now sitting on a fortune and can enjoy their retirement or hand it down to their grandkids.
3. Boston will be a destination for people all over the world, giving it a strong economy and jobs.
4. You get more for your money outside the city. Lower income residents had to live in small places in the city. now with them moving out, they will get more space for their money, maybe even a yard.
5. eventually, better school options will be available in Boston.
Remember that ...
When your trash pickup is delayed a few days because the hauler can't find anybody findloval to work the trucks.
Anyone ask for Robots?
Anyone ask for Robots?
That's just silly
are all the surrounding communities now also being completely gentrified? Chelsea, Lynn, Revere, Everett for starters are probably going to remain pretty solidly blue collar for the near term. Even here, are Hyde Park and Mattapan about to be overrun with juice bars? I don't think so.
Poorer neighborhoods with poorer access to public transportation aren't going to become enclaves of the wealthy any time soon.
Chelsea still has some
Chelsea still has some inventory with low prices.
They are being bought by people who unsuccessfully attempted to buy in Eastie.
Chelsea is the next hot neighborhood with just 1 mile from downtown Boston.
Hopefully there will be some kind of real estate development in the future where the salt mound is located along the lovely Chelsea creek.
I disagree
I would like to respectfully disagree. As the above commented mentions there are plenty of affordable areas outside the city. It's not like people will have to commute in from Canada to work.
Another benefit:
6. Some people that do these commutes won't own cars, so they will use public transportation. That will help the environment and hopefully put pressure on the MBTA to improve and maybe even create new commuter stations.
Yes
...because the MBTA and the state put such a high priority on the needs of blue collar workers...like in the case of housing....or controlling fare increases (they're currently talking about repealing the recently hard fought and won fare hike cap). And they wouldn't pay more attention to commuter services that cater to say oh...Hingham and other towns down on the Greenbush line, than they would to someplace like Lynn (Blue Line extension...I swear it's comin'!).
Yes...
Because when you're cleaning offices or doing hospital laundry or mopping floors or washing dishes in a restaurant it is soooo easy to hop on a bus at 1am to travel 45 minutes home.
Seriously. Talk to anyone who runs a restaurant and ask them about how this affects their employees.
Whoo.......
....ooooosh!!!!
Not sure if troll....
Talk about an appropriate username.
uh-huh
Cause that big cheap house in the burbs has such low transportation costs too. *rolls eyes*
Will it ever hit a wall?
Is there a reliable stream of customers or will there eventually be inventory overhang?
And what of the luxury projects that fail in this multi party gamble?
The overhang problem was a significant hazard in the aftermath of 2008. There was lots of shadow inventory from an extend and pretend dodge banks used to avoid entering losses onto balance sheets.
It's also interesting to think about changes in the agreed definition of luxury. It's like a sticker realtors slap on any remotely applicable thing and it's a field that is notoriously and intrinsically full of shit all the time.
At a certain point meaning drains away other than basics like appliance configuration..
And why the frenzy? Is it a scramble to beat interest rate rises?
What will become of the 2000 or 1990 versions of luxury. Are they downgraded? Is that where affordable comes in?
No shortage of fools
You will see asking prices go down if a unit has not sold in a long time. But we are not at that point. Units are still selling rapidly and above their asking price [via offer bidding wars]. But even if they go down its going to be in increments that are too small to be significant. So a Back Bay, $500,000 studio might drop to $490,000 after a few months on the market. But not to the $100,000 it should have been at in the first place.
"not to the $100,000 it should have been"
Huh? So you decided that a studio in the heart of a major city should cost $100k? Where'd you come up with that?
Inflated Price Before Even More Ridiculous Inflation
That would have been its price in the 1990's when real estate in Boston was still expensive but not Fantasy Island expensive. As wages have not risen since then prices should not have either.
False premise
Real estate nationwide over the long term in the aggregate has to approximate wage growth (which is why historically American real estate in general slightly outpaces the rate of inflation). However, your argument fails to account for a major issue - scarcity and wages on the local level. 20 years ago we had a small downtown tech/software sector - now it is enormous. Education has also grown enormously and many of those salaries have substantially outpaced inflation Our public service worker salaries have also significantly outpaced inflation. Biotech and finance similar story. On top of all this, now you have a trend where many of these people that used to decamp for the suburbs don't - plus many who did want back into the city. I'm guessing outside of 495 real estate is barely keeping its head above water - if that. Many of the less desirable burbs (Kingston for an example I am familiar with) have not recovered from the housing crisis. If you pictured Mass as a topographical map relative to prices - this demand - and the high paying jobs in the city/Cambridge would show a profile of spiking mountains in the Boston area - surrounded by many plains and valleys - with a few hills in places like Lexington, Hingham, Winchester and Wellesley.
Even with just inflation,
Even with just inflation, that would be around 180k from 1990 to now. Add in that Boston is no longer the backwater shit hole it was then (peak of homicides at 152), and it is right downtown. Also the city has attracted more and more companies that require highly skilled labor (medical, tech, bio tech, finance, education, etc) that pays very well, so wages haven't exactly become stagnant. Basically, Boston is a much different place than in the (especially early) 90s, and it is not realistic to get a 100k studio in the Back Bay at all. You could get a studio for that (or much less) in Hyde Park, Mattapan, maybe Eastie, and other parts of the city, though.
The 90s were great here.
If you weren't some fastidious yuppie fuck looking to gouge a status premium out of property speculation.
Why to these swine always think their resource misallocations and rapine encroachments are somehow an 'improvement'. An improvement for what, their bank accounts?
The 90s were great here...
yep, if you were into drugs, racism and other crimes...i am sure it was a fabulous place.
No, the 70's were great here for that...
now all of the good crimes take place in office buildings.
Probably sooner rather than later
Most of the projects coming to market now were actually approved pre-crisis. The financial problems actually saved us from overbuilding and we went into 2008 with very little on the market (I think about 3 projects - which took 5-6 years to sell out). Those projects are now almost fully sold/rented. What we are seeing now are projects approved since 2010 or so - and with the number of high end units coming on. The scramble is that they all know a downturn is coming and they want to get in and out before that happens. This time around I think will be more like what happened coming out of the dot com bubble when we had a massive overhang of commercial real estate - only this time it will be luxury housing. The high end is only so big a portion of the market - and that slows down when the stock market and its associated wealth slows. YTD the Dow down and the S&P is up less than 1%. One thing that could save us is a continued flight to safety from overseas buyers.
A few responses to anon
The impending interest rate hike is just one reason for the frenzy. Others include increased demand for a variety of reasons outlined elsewhere (local wage increases, expansion of the higher education and medical/biotech fields) as well as demographic shifts including a growing younger/millennial population (22-35) who cannot or prefer not to buy urban condos or suburban/exurban houses, and empty nesters. This is at least what the research would tell you.
The other relatively new external force is the influx of foreign, largely Chinese capital. To oversimplify, these investors are seeking stable returns and safe harbor for their cash, so do not mind "overpaying" and receiving lower yields, rather than seeking the lowest purchase price and therefore higher potential yields of your typical real estate investor. For foreign capital sources at Pier 4, see:
http://www.wsj.com/articles/boston-project-draws-chinese-insurance-firms...
This is easy - the Class A buildings obsolesce, and 10 to 15 years out will be considered Class B (probably more like Class A-minus) until the current owner or new investor institutes a capital renovation plan and brings the property back up to true A-caliber. Big buildings depreciate just like your house does, and in 2030 we'll be talking about the new luxury/Class A developments elsewhere, as Chinatown, Seaport and Ink Block are no longer the projects of the moment.
Supply and Demand
You realize that more units will eventually push down rental rates, right?
The fact that new housing is being advertised at "unrestricted market-rate" doesn't mean that it is the cause of the increased rents for the broader metropolitan area. It is a response to the high demand and high prices. But as more units come online, housing trends and demands will shift, unlocking lower rate units.
We've been behind on the housing construction curve for way too long and our residents are feeling the pinch, but with this "building boom" enough units should be in the pipeline to help increase vacancy rates enough to drive some rents/purchase prices down.
Vagueries and uncertainties.
The shills love this 'eventually' stuff, the more eventual, the better, so the gouge fest can continue apace.
Of course no one 'realizes' it, cause there is nothing real. For those stuck having significant income confiscation to prop some greed figment up, eventually couldn't suck more.
They are building what banks will easily finance, not what is in hot demand. Banks love high end cause they can extract more interest... duuh.
It's another mechanistic look at human nature.
Won't the bag holders with a high end inventory backlog want to hang on by their fingernails for as long as possible?
Or will they just collectively shrug and say... "ooops... we fucked up.. guess we'll have to dump these 750k dumps at 600k and call it a wash." That fails the plausibility test.
So affordable becomes like that buck on a fish hook ever chased by an immersed infant one sees on the Nevermind cover.
so close to half and half (57
so close to half and half (57/43) equals a disappearing middle class to you?
Imagine how high the 43% could have been if it wasnt for your NIMBY neighbors in the outer neighborhoods that try to knock down the size of every development that comes up.
You cant have it both ways, although you do try your best.
section eight housing is a big part of the affordability problem
Does anyone know how how much of the cities rental units on the cheaper end of the spectrum are going to section eight and other subsidized housing....I believe it's about 18% ? That means the affordable housing is being significantly used up on those that don't work and creates pockets of low rent areas that those who work and pay out of pocket don't want to live in? I believe this is the quickest way to address affordable housing.....to reform the section eight and other programs to limit it to those who really need it and add a reasonable work requirement.......it would free up many affordable units.....but also keep in mind Boston is seeing global demand to live here and not everyone can fit so the most desirable parts of the city are going to be a premium to rent there.
Could you please explain what Section Eight is?
What its eligibility requirements and restrictions are and who it serves?
Section 8
Generally available to those making 30% or less of Area Median Income, in the case of Boston that's the Boston-Cambrige-Quincy Metro Statistical Area. There are likely other restrictions involved but this is the biggest. Tenants under Section 8 pay a monthly out-of-pocket rent equal to 30% to 40% of their gross income.
There are generally two kinds - project-based and mobile vouchers. Project-based Section 8 subsidies (Housing Assistance Payment (HAP) Contract) remain property specific so incoming tenants must qualify before being accepted. Mobile vouchers are tenant-specific and the tenant may use their voucher wherever they are accepted. HUD subsidizes the difference between the tenant's rent contribution and the "market" rent, as defined by the HAP contract (in the case of project-based subsidies) or 90% to 110% of Fair Market Rent (FMR) in the case of voucher tenants (as determined by local housing authorities).