Boston Area Housing Boom Leaves Out Affordable Options

A recent study conducted by Harvard's Joint Center for Housing Studies and the Brookings Institution named metropolitan Boston a "hot market" for housing construction.

"People who live in and around Boston know that the real estate market is booming," says Alexander von Hoffman, a senior research fellow at the Joint Center for Housing Studies and the author of the report.

"Boston is doing very well, as are its surrounding neighborhoods," he says.

Others are not so sure.

Some non-profit groups have faulted the study for not differentiating between luxury and low-income housing and have challenged its optimistic tone.

They charge the housing boom has only served the wealthy and has contributed to the affordable housing crunch and gentrification in Cambridge and surrounding areas.

"We're not doing nearly enough for moderate or low-income buyers or renters," says Harvard Vice President of Government, Community and Public Affairs Paul S. Grogan, who spearheaded the University's initiative to provide $20 million in loans to create affordable housing in Cambridge and Boston.

Gordon N. Gottsche, executive director of Just A Start, a non-profit community development corporation based in Cambridge, says the report does not address the key issue of affordability.

"If you just look at the building permits around the state, sure there's a boom going on, but that's not the issue," he says. "The issue is who it's being built for."

The Boston Boom

The Joint Center's report, published at the end of 1999 and titled "Housing Heats Up," examined homebuilding patterns in the nation's 39 largest metropolitan areas, including Boston.

The study's conclusions were optimistic, reporting that cities have created a large amount of new housing over the past several years.

"[Home construction] has been very steadily growing for some years now, and more recent reports indicate that it continues to do well," von Hoffman says.

But this growth was not uniform. According to the report, suburbs gained the most new homes, more than 80 percent of the total constructed.

In addition, not all regions of the country experienced growth evenly, as the report showed some cities doing better than others.

Boston emerged as a clear winner.

Named a "hot market" for homebuilding, Boston ranked fourth out of 15 cities whose geographic area encompassed less than 100 square miles.

In 1998, Boston issued about 16 new housing permits per square mile, trailing only Seattle with 48, Orlando, Fla. with 41 and Miami with 27.

Boston outdistanced such cities as Washington, D.C. with 7, Pittsburgh, Pa. with 4 and Providence, R.I. with 2.

The report termed Boston's ratio of permits to area "remarkable."

Not All Homes Are Equal

The report treated all new home construction equally--whether luxury condominiums or affordable housing--and did not differentiate according to price level.

"We don't have figures on that," von Hoffman says.

But von Hoffman says most of the housing construction has taken place in the higher levels of the market.

"We know just from knowing real estate that most building goes on in the upper portions of the market," he says. "I see more luxury condominiums and upscale housing developed than low-cost housing."

Von Hoffman says developers focus on building luxury housing, which has the greatest potential for profit.

"The real estate industry by and large serves the upper levels of income," he says. "They won't develop low-income [housing]."

But von Hoffman says he stands by the optimistic stance of the report. He says the housing boom is a product of the current period of economic prosperity and job growth, which creates a demand for additional homes.

The Boston housing boom is a product of the area's strong economy, he says.

"These numbers reflect the economic health of Boston and other hot cities, so in that sense, yes, it's a good thing," he says.

Von Hoffman acknowledges that the increased housing demand has not benefited all equally and that rising demands can drive up housing costs.

He says this especially holds true for desirable communities like Cambridge and Boston.

"There are enough people with money who want to live here that the demand is skyrocketing," von Hoffman says. "It makes it difficult for those people that don't own their own houses."

Getting Squeezed Out

Community development groups fault the report for not examining the type of housing being built and for its positive outlook.

They say the housing boom has only benefited those high up on the socioeconomic scale.

John J. Woods, a housing project planner for Cambridge's Community Development Office, says the housing produced by the current boom is priced too high to alleviate Cambridge's lack of affordable housing.

"Some of the economic forces that are driving the market have produced a lot of housing units. Unfortunately, most of the units are addressing a population higher than that we're dealing with," he says.

Gottsche says he has noticed a similar phenomenon.

"The markets we serve aren't benefiting from this boom. At the top shelf or highest income group, yes, but certainly not at the level of working people," he says. "For people of low or moderate or even middle-class income, the housing crunch is pushing people farther and farther out."

Gottsche says Just A Start regularly gets 100 to 200 applicants for every unit of affordable housing they are able to advertise.

He says the housing created in the current boom lies far beyond the price range of the people that the organization tries to help.

"There are buildings going up all over the place--[houses with] three-car garages, eight to 10 rooms, four bathrooms and conversions to condominiums," he says. "The blue-collar population just gets priced out."

Woods says the proliferation of luxury housing, often converted from existing low or moderately priced housing, has led to the gentrification of the Cambridge community, where lower-income people can no longer afford to live in the city.

"One of the things that's made

Cambridge a great community is its economic diversity, and people in between are getting squeezed out," he says.

The House That Harvard Built

But Grogan cheers the economic boom and supports the building of upscale housing, as he says the creation of any housing will ease overall demand.

"I support wholeheartedly the program to build market and luxury homes in Boston," he says. "In the long run it will take the pressure off the market."

He also says it is important to draw more people from the higher end of the socioeconomic scale back into the city, to boost taxes and civic and cultural institutions.

"It's a mistake to decry the gentrification of Boston," he says.

Gottsche says he disagrees with Grogan's arguments. He says the current housing boom, with its focus on the upper end of the housing market, will not create enough units to fully satisfy demand.

"Supply-side economics doesn't work when it comes to housing," he says. "They never build enough housing to satisfy demand.... There's no filter down."

Gottsche says cities need to develop more affordable housing to adequately deal with the housing crunch.

While Grogan says he does support the creation of high-end housing, he also sees the need for affordable units.

"Both kinds [of construction] are a contribution," he says. "There's clearly a need to step up the program of affordable housing."

Grogan, who has a background working with non-profit community organizations, says Harvard's $20 million loan program will "lubricate" the creation of affordable housing in Cambridge and Boston.

Van Hoffman agrees, but it cautions against expecting too much.

"While I applaud what Harvard's doing, I also think we should understand that it's a very large problem that won't be turned around easily," he says.

"It is a final paradox, as long as Boston and Cambridge are desirable places to live, they will continue to be in demand."