http://www.boston.com/news/local/massachusetts/articles/2005/09/08/report_rates_boston_most_expensive_city/ says the following:
Propelled largely by high housing costs, Boston is now the most expensive metropolitan area in the country, outpacing Washington, D.C., San Francisco, and even New York City, according to a report that will be released today.
The report found that last year, a family of four living in the Boston area needed $64,656 to cover its basic needs. This was $6,000 more than in New York City, and about $7,000 more than in San Francisco. Living expenses, which include healthcare, child care, and other basic needs, were $44,000 or less in Austin, Texas; Chicago; Miami; and Raleigh, N.C.
The third annual ”Housing Report Card,” produced by the Boston Foundation and the Citizens’ Housing and Planning Association, concludes that even an uptick in housing production could not halt the relentless climb of Greater Boston’s housing prices, which are increasing far more rapidly than are wages.
Should we be concerned that housing prices are so high? In some ways it is depressing that government here is so restrictive that even rich people are forced to live in 120-year-old wooden slums. In Cambridge, for example, it is illegal to tear down an old structure and rebuild something decent of the same size; the new house would have to conform to modern zoning setbacks and height restrictions so that if you tore down the typical 2-family or 3-family 4500 square foot slum you’d only be able to build a dollhouse to replace it. On the other hand, perhaps we should feel good that people love it here so much they are willing to pay $2500 per month for a small apartment. On the third hand, maybe it is only because most of the rest of the country has become such a sprawl-ridden wasteland that Boston seems comparatively attractive.
I was driving up Route 1A the other night to visit a friend in Marblehead. The route goes past wooden slums hard by the highway all through Everett, Revere, and Lynn. One’s gut feeling about such an apartment is “they would have to pay me to live here”, especially since the daily traffic jams getting in or out of the slum are horrific. Yet compared to the rest of the country these apartments rent and the slum houses sell for far more than a nice comfortable place of equivalent square footage almost anywhere else in the U.S. I guess I’m not surprised that people would be willing to pay a premium to live in beautiful Back Bay or among the intelligent wanderers of Harvard Square but why are the prices in the slums of Everett so high?
One thing to note about the study is that it was conducted by a group with the following mission statement:
CHAPA’s mission is to encourage the production and preservation of housing that is affordable to low-income families and individuals. CHAPA pursues its goals through advocacy with local, state and federal officials; research on affordable-housing issues …
The aim of this group is to obtain lots of money from the government for subsidized housing. I am not saying there is anything wrong with that, but it does give them an incentive to make housing costs in Boston sound as dire as possible. Getting news headlines that include the words “Boston Most Expensive City” creates political pressure for housing subsidies.
However there is a question of where subsidized housing should end and the market should begin. In San Francisco we had a housing subsidy proposal put before voters that would include money for households in the six figures.
Development interests argue that requiring them to build a certain percentage of affordable housing (often called “inclusive housing” laws) in their developments or charging them “impact fees” (above and beyond property taxes) all results in higher prices to the consumer and thus less affordable housing.
Developers would love to build lots of condo skyscrapers here in SF and that would arguably drive down housing costs but there are so many political obstacles that it is just not happening. Existing residents do not want to see their city grow like that. The city prefers to scale down projects and charge developers lots of fees, which is fine but this WILL grow housing costs.
Of course, the more controls cities like SF and Berkeley try to put on housing, the more people move far out to homes built on some of the best agricultural land in the world and then burn gallons and gallons of fuel commuting in every day.
This study can’t be right. You can rent a Cape in Lexington, MA for 1,600 per month. No way can that be done in a desireable suburb of San Francisco or New York. Not to mention that Massachusetts has cheaper gas and food and better public schools (thus, no need to pay for a private one.)
A $2500/month apartment is a slum? Wow, by that standard my one-bedroom (in Los Angeles) for $670/month must be a cardboard box…
Yeah, we can blame govrnment and their utopian zoning laws. Zoning boards should be virtually disbanded. All they do is drive up the cost of housing.
They say these statistics are fueling a “Brain-Drain” out of beantown.
Given the high oil prices, which most likely are just getting higher in the future, the prices of suburban and exurban houses are going to crash. Nobody wants to live tens of miles from office. And nobody has money to heat and cool large houses.
So, your problem is transitory. The “slum” will get cheap soon enough.
Steve, as a former resident of Houston, I can assure you that eliminating zoning laws does, in fact, seem to drive down the cost of housing. It also seems to drive out lots of potential residents who don’t feel like living next to strip clubs and firecracker stands!
Actually, Matti has a point—I was talking to a friend in Berkeley who was observing that housing in the hills were starting to lose value as people started wanting to walk to a coffee shop instead of driving.
Also, something seems skewed about the article (perhaps the fact that they’re looking families and probably making a lot of assumptions about the family’s behavior, the article doesn’t have enough detail to actually know of course). From personal experience (I moved from Somerville to the Bay Area last year) my living expenses have actually increased.
Phil, in the future please don’t use the title of your entry about an article as a direct link to that article. FireFoxes users who get live bookmark updates see an entry title (like this one), click directly to the title and go directly to the article — missing your blog entry altogether! Just a suggestion…
My guess is that most people in Everett/Lynn/Revere bought in the early 90’s when places there were still relatively affordable. By now those folks are sitting on a small fortune; the same thing happened in my old stomping grounds in Brockton. I also think your perspective may be skewed, driving from one fabulous neighborhood to the next. Anything looks like a slum compared to Marblehead…but I would bet that a good percentage of those “slums” have been fixed up and are quite nice inside, and that their owners are happy to live within a stone’s throw of the city
Greg Beal
According to Robert Shiller’s Irrational Exuberance (the second edition, anyway), Boston, along with other major US cities, is right now in the middle of a huge (one of the biggest in history, anyway) speculative real estate bubble. He also tries to explain why this is so, but ends up asking more questions than providing answers.
“maybe it is only because most of the rest of the country has become such a sprawl-ridden wasteland that Boston seems comparatively attractive.”
According to the EPA, the worst per capita sprawl in the U.S. is found in Boston. Land use has been growing at 7 times the population growth, contrasted to Los Angeles where land use grows at a rate of .8 the population growth.
http://www.epa.gov/region1/communities/sprawl.html
Want a shock? Check out house prices on realtor.com in places that are livable but a few hours’ drive from a major city, like upstate NY, anywhere in Pittsburgh (isolated from other cities) and places out west.