^^ One Canal Street : succulent and enticing, but not at all affordable, and guaranteed to be Boston’s present and future.
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Spare me the mouth bleeds of candidates — and current office holders — who promise we the people “affordable” housing any time soon. It isn’t happening. Frankly, I’m losing my patience for hearing such horse smoke emit from the throats of those — including my friends — who seek my vote.
Here’s why I call BS on the whole “affordable” housing layer cake :
( 1 ) what gets built these days is either huge megaliths of overpriced, miserably made “units” or go-for-it luxury condo blocks with every hotel-like amenity and a price to set the hearts of trip-advisor a-flutter.
( 2 ) new-era McMansions continue to be built in the outlying neighborhoods of our wedding party city. Leonard DeCaprio and Kate Blanchett — and there’s plenty of them right now with fat wallets — would fit right in to these million-dollar, even two million dollar Titanics.
( 3 ) land costs doubled when, in his 2013 campaign Marty Walsh announced his intention to build 53,000 housing “units,” a number which, as Mayor, he later raise to 69,000, at which point land costs doubled again. That initial mistake has never been made good. Its impossible to buy a lot of buildable land in Boston for less than half a million. Just ask the Ascolillos of East Boston who acquired the old Lynn and Boston railway right of way for about $ 50,000 sixty years ago and who today are asking a developer to pay at least $ 2,000,000 — a price which is actually a bargain now, given the size of the four plots.
( 4 ) As Tom O’Brien of HYM, the developer building out the 10,000-dwelling Suffolk Downs colossus notes, it now costs at least $ 500,000 to build a “unit.” That’s the bare minimum. Add in the price of union labor and some better-than-basic fixtuers, and you’re north of $ 600,000. Now add in broker fees, advertising, inspection and closing, and a ten percent profit, and your “unit” probably costs $ 700,000. Minimum.
( 5 ) the City’s “affordability” covenant, by which builders of more than a nine-unit project must offer one unit, of every ten, at an “affordable” price, worsens the problem, because the money that the developer loses on the “affordable” unit must be made up by jacking the price higher of his market-rate units. Yet some candidates and office holders think it just ducky to demand that big develoipers offer one “affordable” uhit for every five they build: which of course raises the price of the other four even higher !
( 6 ) rent control, now touted by candidate Michelle Wu — and which is illegal in Massachusetts for very good reason — does not change the market but merely impedes it, deflecting its values from owner to tenant (and thus constitutes a taking of property without proper compensation or pursuant to eminent domain laws, which require a public purpose anyway), a situation which, when rent control was last tried., saw tenants renting out rooms in their apartments for more money than they were paying in rent ! And of course owners, unable to acquire the rise in values which the market created, simply stopped doing any upgrades to their buildings and no repairs except under Court order. At its worst, rent control led to owners burning their loss-leader properties for the insurance money. Lastly, rent control required an entire City bureaucracy, a burden to every taxpayer – who, in our City, is the property owner !
( 7 ) We are told, by the painted warblers seeking our vote, that the answer to the “housing crisis” (more about that later) is to build more housing. Yet fact is that the more housing that has been built, the higher that rents and buy prices go.
( 8 ) “affordability” will only come when the housing market tanks. Yet who the heck wants that ? Economic hard times are hardly the solution to the present real estate bubble. Nor is such a burst to happen any time soon. The salaries of high tech folks, education bureaucrats, financial whizzes, and health care executives continue to rise, and the rush by them to live in center-City shows no signs of reversing — even the onset of Covid and working from home couldn’t stop it.
( 9 ) lastly, what does “affordable” even mean ? Affordable for whom ? When I was younger,. living in a more rational world, we used to opine that a family’s housing costs shouldn’t be more than one-third of their take home income. Today, the median family income in Boston is about $ 95,000; which means a take-home income of about $ 68,000 and thus a monthly rent or mortgage payment of no more than $ 1900 a month. Good luck finding an aprtment6 for that cheap, or a mortgage payment that low ! And that is for a median income family. What of the families that take home less, even much less ? Apartments for $ 1600, $ 1400, and $ 1200 don’t exist except in Federally subsidized housing.
( 10 ) even if we continue to use the absurd “affordability covenant,” an “affordable” home is available for only one of ten, or one of five dwellers. yet there are at least 200,000 families living in Boston whose take home incomes fall below the median.
The situation gets worse every day. In East Boston, where demolition of the entire community in favor of megaliths and condo blocks has touched almost every street, long time owners are selling their small houses for $ 600,000 to $ 750,000 and their triple-deckers for $ 1,200,00 to $ 1,800,000 ! I do not begrudge these sellers their great luck; they stuck it out through horrible real estate times and some community dysfunction. Yet the result is that the new dwellings that will be built, or the condos that will be converted to, out of such huge buy prices are NOT going to be anywhere near affordable. They are going to be very, very pricey.
One answer that might mitigate the present real estate bubble would be to raise the wages of “affordable” families’ workers by at least 50 percent if not more. And why should not a merchandiser, an airport worker, a hotel room keeper, an office attendant, waiter, cook, or outreach worker earn more than $ 16 to $ 19 an hour ? In Boston that level of wage requires families to double up in order to pay even a minimum rent — and many families are doing exactly that. Granted that $ 16 to $ 19 an hour is a lot higher than people were earning as recently as six years ago; yet rents and buy prices have risen much more in those six years than wages. So where are the candidates who call for a $ 21/hour minimum wage ? Nowhere that I can find, at least not among those who have any chance of winning. And I understand why. Candidates for office today must raise a ton of money. An at-large Council race costs at least $ 200,000; a Mayor candidate needs about twelve times as much., Where to get such money if not from the business community, which views an enormous line worker wage as economic collapse.
As for the so-called “housing crisis,” what is it, really, but a debt crisis ? 60 years ago, homes sold for $ 12,00 to $ 20,000. Buyers took a mortgage for 80 percent of the purchase price nd put down the other 20 percent. Those mortgages were issued by a community bank with which one had a personal relationship. Banks kept, their mortgages; there was no such thing as “selling a mortgage in the secondary market.” Owners paid off their mortgages and owned their house outright. Payoff day used to be a big day in those days ! I well recall my own parents;’ payoff day. We celebrated !
But now what ? You buy a $ 700,000 house putting down maybe five percent — $ 35,000 — if you have a 720 credit score (If you have a lesser score, you’re screwed) and the remaining $ 665,000 is borrowed, maybe in two mortgages. Guess who profits from that borrower borrowing $ 665,000 ? Not the borrower, that’s for sure. Lose her job and foreclosure awaits; and so she is at the mercy of her boss, whose “evaluation” of her job performance spells the difference between making a $ 4000 mortgage payment and…not making it. Then who DOES profit from the debt indenturing of thousands of borrowers of overpriced buys ? You might say the lending bank: but you would be mostly wrong. Yes, that bank gets an “origination fee”; and maybe some interest, but as soon as at the very closing, that $ 665,000 mortgage is sold to an “investor” — usually a hedge fund or pension fund or even a huge commercial bank, which then bundles it with 10,000 similar mortgages and submits them to trading in the bond and stock market, where “sovereign wealth” funds owned by Mideastern sheiks (including the murderous MBS) and similar autocrats can bank some arbitrage or finance some weapons purchases for terrorists, or perhaps fund a few Chinese and Indonesian sweatshops.
Nice going, America.
Thus we see that the “housing crisis” is, as I said, a debt crisis. Of course those who were lucky enough to own a home from 1990 or earlier can now sell out at a vast price and receive actual cash money. But what of the buyers today ? What do they get after paying $ 875,000 for a fairly decent 1960’s house in the City but decades of debt — mortgages are no longer twenty years, they’re 30 or even 40 years — a working lifetime — lashing them to a career which had better not fall afoul of a bad business or employment event. No wonder that linkedin is filled with people who are “open to work” seeking this bureaucratic “job” or that “good fit.”
Given the indentured life of $ 665,000 mortgage borrowers, it’s no wonder that they have little understanding of the freedom that America used to mean : because in the truest sense, they are NOT free. Not free and likely won’t BE until they’re 70 years old.
In addition to a debt crisis, we have an employment crisis. Linkedin is filled — as is indeed — with paper pushing, Microsoft Office-requiring, “jobs” which produce nothing, not even actual service, but which do satisfy “:equity and inclusion” politics or university pig-lipstick; human resource staffs policing sexual conduct in the office and overseeing speech; online application magicians who post corporate aerosol out to potential customers, etc. Naturally, the majority of such instagram influencers, corporate gaslighters, and internal affairs spies want to live as close to their paychecks’ gleaming skyscraper as possible, right ? Because a 75 hour work week makes commuting to a suburb or exurb hell to pay.
Meanwhile, actual skill jobs go socially unappreciated, and in any case, most such workers don’t live in Titanic City.
The candidate for Mayor who I am supporting, Annissa Essaibi George, says this about housing in her current hand-out card : “
“Make it possible for everyone to call Boston home. Annissa will create better pathways to homeownership, relieve pressure in the market that lead to higher rents, and build more affordable housing.”
I love Annissa; I think she has a more masterful, realistic handle on Boston’s big issues than any others who sought this year to be Mayor. Yet I can’t see any way that even her very measured statement can do what it seeks and many ways in which it will worsen the problem. I think the pathways to ownership of which she seeks are very few; that there is no way to relieve the rental; pressure; and that building more “affordable” housing is a paradox at best. And if Boston’s most realistic current candidate has good words but no real answer, how worse the blather and doodle-bugging one reads from her rivals and from various City Councillors and would-be’s.
We are lashed to the masts of economic prosperity as tightly as Ahab was lashed to his Moby Dick obsession. Ahab at least had Starbuck to warn him; who is warning us ? The future of our Pequod at sea is as a high-income playpen and 75 hour work weeks serviced by a host of helots living sardine-packed while the playpenners bask in amenity heaven where a $ 5,000 rent or a $ 4,000 mortgage is no problem at all because all the money in the City economy goes to those who can parse the technology systems and to those who educate them, care for their health, and invest their 401(k)s.
And I am Ishmael.
— Mike Freedberg / Here and Sphere