Boston luxury market booming, middle class gets squeezed
Yawu Miller | 4/2/2014, 10:50 a.m.
“You have an increased demand for high-priced housing,” Enrich noted. “It’s bound to cause displacement. There’s a wealthy class that is much more prominent than they were 30 years ago. The wealth they are accumulating accounts for the fact that everyone else isn’t doing so well.”
Corporate executives, lawyers at white-shoe firms, investment bankers and tech industry executives are among the moneyed class driving real estate development — and displacement — in the city, according to Enrich. Other professions — teachers, public servants, business owners, even doctors — have seen their wages stagnate in recent years.
The gulf between high-income earners shows up in the per-capita income of the city’s neighborhoods. At the low end, in Roxbury, the per-capita income is just $17,579. At the high end, the Back Bay per-capita income is $89,658.
“The median income of blacks, Latinos and Asians is way below the area median income for Greater Boston,” notes Kathy Brown, executive director of the Boston Tenant Coalition. “And they’re the majority population of Boston.”
The median income for black, Latino and Asian families in Boston is $43,800 a year, according to statistics Brown provided that were compiled from HUD and U.S. Census data. The median income for white families is $111,500.
The building boom has increased the real estate inventory in Boston in recent years. But because the for-profit housing market has become so heavily skewed toward the top income earners, the private market is suffering from a lack of inventory, pushing prices up on the city’s housing stock.
“That market is really tight,” Kriesberg said. “The challenge for the city is how we build housing at different price points to maintain economic diversity.”
While there are federal and state dollars allocated to the development and preservation of low-income housing, there are virtually no resources for moderate-income buyers.
“All the federal money is for lower third of the market,” Kriesberg said. “If we don’t want to have rapid gentrification and we don’t want vacant land to lie fallow, we have to have a strategy to build moderate-income housing.”
Even with the city’s building boom, inventory is not keeping pace with regional demand, according to Marc Draisen, executive director of the Metropolitan Area Planning Council.
“Housing prices in Greater Boston are too high,” he said. “The main reason for that is we’re not building enough units.”
The luxury building boom in Boston notwithstanding, many suburbs have enacted restrictive laws on new development. For the Greater Boston area to keep pace with real estate demand, the area would have to produce 14,000 units a year, according to Draisen. But housing production in Greater Boston has ranged from 4,000 units a year to 9,000 units.
As expensive as rent has become for middle-class buyers and renters, the working class — families of four earning $45,000 or less — has it harder, Draisen says.
“There are tens of thousands of families paying more than 50 percent of their income on mortgage or rent,” he said.