Luxury Housing And The Rental Crisis

By Danielle Dreilinger

Oct. 31, 2011

south boston apartments

This Boston apartment building is pretty — but can you afford to live there? (l.e.o./Flickr)

BOSTON — It's harder than ever to find an affordable place to live in greater Boston — and a research institute chalks it up partly to growing income inequality.

The Dukakis Center’s ninth annual Greater Boston Housing Report Card, released October 25, confirmed what many locals already thought: Rents are the highest they’ve ever been. The average monthly rent for a one-bedroom apartment in the Boston area in 2010 was $1,583. 
It’s classic supply and demand, study co-author Barry Bluestone of Northeastern University said in an interview. The number of renters has gone up: graduate students flocked to the area, many young people are continuing to rent instead of buying and foreclosed owners are back in the rental market.
At the same time, housing production has slowed to a crawl. According to the report, greater Boston has been on a six-year path toward ever-lower production levels. If rates continue, developers will pull permits for fewer than 4,500 new units of housing in 2011. That would be the lowest number in two decades.

Barry Bluestone talks about the Greater Boston Housing Report Card.

Compounding the affordability issue, the limited housing growth that does exist has occurred “primarily among luxury units,” Bluestone said.

Anyone who’s checked the real estate ads has seen plentiful loft-style condos, brand-new kitchens, cathedral ceilings and other fancy features — for a premium. In 2010 this reporter walked into a house for sale to see the owner installing a new marble kitchen countertop in the hopes, he said, that it would increase the sale price.
Somerville’s Maxwell’s Green development, for instance, is creating 184 new rental apartments in a complex that will include a yoga studio, theater room, wireless workspace and a club suite with chef’s kitchen. In a January 2011 presentation, the developer said rents would start at $1500 for a studio.
Bluestone attributed the trend towards high-end housing to “the dramatic increase in income and wealth inequality.” He pointed to a new Congressional Budget Office report that found the upper economic echelons controlled a larger share of the country’s wealth in 2007 than in 1979.
In the greater Boston housing world, that means the wealthy are “about the only folks who have the wherewithal to consume, and they’re buying bigger units, more luxurious units with more amenities, “ Bluestone said. “And developers of course are responding to that demand.”
To help stabilize rental prices, the Northeastern researchers recommend creating multi-unit housing “villages” for graduate students and turning bank-owned foreclosed units into rental housing, among other suggestions. 

Check out the Greater Boston Housing Report Card buzz on social media.

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