Boston luxury market booming, middle class gets squeezed
Yawu Miller | 4/2/2014, 10:50 a.m.
While activists in Roxbury debate whether the 44.9 percent of units designated affordable there have concentrated too much poverty in the neighborhood, real estate developers in downtown Boston are grappling with a radically different problem — a boom in the construction of $4,000-a-month luxury units that may soon result in a glut.
In between either extreme, middle-income families looking to buy or rent in Roxbury or any other Boston neighborhood are grappling with their own problem: a scant inventory of moderately-priced housing. And that scarcity is pushing housing prices farther out of reach for many Bostonians.
Boston leads the nation in its production of affordable housing, with nearly 22 percent of its housing stock receiving subsidies, mostly from the state and federal governments. But the city’s production of affordable units is not keeping pace with the need for affordable units, according to Joe Kriesberg, president of the Massachusetts Association of Community Development Corporations.
“We have more need that most other cities because the market here is so high,” he said.
Compare the latest addition to the city’s affordable housing stock, 39 units of elderly housing near the Roxbury Crossing stop on the Orange Line, to the hundreds of units opening up in the glass and steel luxury apartment towers rising in the Back Bay, Downtown Crossing, Chinatown and the South Boston waterfront.
The numbers tell the story. Of the 8,598 units of housing under construction in Boston since 2011, 69 percent are in the upper market, 19 percent are affordable and just 12 percent were in the middle of the market, according to statistics compiled by the city’s Department of Neighborhood Development.
Affordable units are generally for households with incomes under $50,000 and are deed-restricted. Middle income units are not deed-restricted but are defined as middle-income affordable because they are located areas where the current market price is affordable to a household in the $50,000-$99,000 income range. Upper income units are affordable to households with incomes of $100,000 or above.
Underlying the vast inequities in the city’s real estate market is a growing gap between the city’s wealthiest residents and its poorest. While the bottom 20 percent in Boston averages $15,000 a year, the top 5 percent earns $220,000. That spread has earned the city the ranking of the fourth in the nation in income inequality.
And while most workers in the United States have seen their incomes stagnate or decline, the rich are indeed getting richer.
“If you look at gains in income in the last 10 to 20 years, the percentage of those gains that have gone to the top 10 to 20 percent of earners, it’s extraordinary,” notes Northeastern University Economics Professor Peter Enrich. “The result of this is that you have a very small, very wealthy group. Now they’re increasingly wanting to be back in the city.”
In addition to its status as a leader in income inequality, Boston now is leading the country as the most rapidly gentrifying city, according to a study by the Federal Reserve Bank of Cleveland. That trend is putting more pressure on the lower-income end of the city’s workforce. According to a Harvard University study conducted last year, one in four Bostonians spends more than half of their monthly income on rent.