The Case Shiller Housing Index was down 18 percent between October 2007 and October 2008 (source). Boston was down only 6 percent. Should we celebrate Yankee ingenuity and work ethic? We did almost as well as Charlotte, North Carolina (-4.4%), which has a favorable business environment and very strong job creation.
I am more inclined to credit the fact that it is almost impossible to build a house in Boston. Most of the land close to the city center is already occupied by a wreck of an old structure. Due to zoning regulations, that structure usually can’t be torn down and rebuilt. The old structure is too big for its lot under the law, but the city won’t force a tear-down. Once torn down, however, the lot is subject to current zoning law and you’d be lucky to put up a dollhouse in place of the old 4500 square foot three-family. That is assuming you had the money and patience to work through a year or two of historical, planning, and zoning board meetings. Once you get your approval you’ll find that construction costs per square foot here are close to double what you’d pay in parts of the country where houses are routinely built. Should you be forced by zoning laws to rehab an old structure rather than start from scratch, the costs can go up even more. An old wreck of a house in Boston is thus worth a lot more than an old wreck in Atlanta, but mostly because it is easy and cheap to build a nice new house in Atlanta.
A Boston Globe story, subtitled “Boston lags others in adding homes”, adds a bit of weight to this theory. There are ever-fewer jobs in the Boston area, but the housing stock, mostly made out of wood, is deteriorating at least as fast as the job market. Those folks who have high paying jobs therefore compete intensely for the few nice houses in nice neighborhoods.
Given the energy-intensive nature of life in New England, with its cruel winters and increasingly hot summers, it would be nice if the zoning and planning process could be streamlined to allow the construction of double-walled German-style houses, built starting in the early 1990s but finally entering American consciousness in 2008 (nytimes story). Perhaps we need a state law that says anyone wanted to tear down a drafty old New England wreck of a house and rebuild a German-style house-within-a-house can do it without local approval as long as it is within 15 percent of the same above-ground exterior volume as the old house. That would create a lot of jobs here in Massachusetts and a local industry with expertise that could be marketed outside of the state.
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