It’s the suburbs, not the towers, stupid
Every couple of months there’s yet another report or article about how new “luxury” are responsible for the housing crisis. They tend to employ the same bad data, long discredited NIMBY arguments and jumps to conclusions while ignoring the behavior of suburban homeowners. The recent furor over the Institute for Policy Studies’ report on 12 buildings and 1800 units is just more of the same.
Authors Chuck Collins and Emma de Goede claim that new housing being built in Boston increases prices and displacement while not being used for housing. Unfortunately, their reasoning is specious and their methodology is suspect. The study also demands that it be given its NIMBY cake and eat it, too: paradoxically claiming that new luxury condos are vacant so that the global elite can park their money and are bringing more millionaires and billionaires to Boston at the same time.
The study contains so many errors it’s hard to know where to begin, so with a blind, stab in the dark I’ll go with luxury. “Luxury” in housing is primarily about marketing and means next to nothing about quality or cost. For instance, many Bostonians rent in homes assessed at over $1 million in value, but these are hardly “luxury” units. Basically, the authors are complaining about new homes in towers in Downtown Crossing and Back Bay, like One Dalton or the various and sundry Millennium Towers.
“The 51 condominium units above the Mandarin Oriental Hotel in the Prudential Center, for instance, sold for an average of $6.5 million” Collins wrote on the Institute for Policy Studies’ blog, but this isn’t a huge outlier for Back Bay, where older condos are assessed in the $3 million.
The authors, lacking data, sadly attempt to insinuate the existence of something nefarious:
“City officials are failing to understand how such towers play a key role in the global hidden wealth infrastructure, a shadowy system that’s hiding wealth and masking ownership, all for the purpose of helping the holders of private fortunes avoid taxes and oversight of illicit activities. Many Boston luxury properties are functioning, in effect, as wealth storage lockers for global capital.”
They counted 1,805 properties in 12 projects worth an average of $3 million. About 35 percent are owned by LLCs and 40 percent of those are registered in Delaware. As explained at Lydia Edwards’ City Council hearing several months ago, owning through LLCs is very common because it reduces liability. Delaware is also the easiest state to file incorporation papers in.
But more importantly, the laws and policies of the United States, the states and cities are expressly designed to encourage homeownership as a “wealth storage locker”. The mortgage interest deduction subsidized homeownership to the tune of billions of dollars a year while measures like Proposition 13 in California or 2 ½ here in Massachusetts limit taxation and onerous zoning codes inhibit development and make what does get developed very expensive to begin with. That’s why homes in Greater Boston increase in value almost $17 an hour for every hour worked.
Focusing on a handful of units in this study, like The Globe’s absurd “Time to tax the swankturies” editorial ignores that the vast majority of speculators, the people who are really driving the region’s housing crisis, are homeowners in Brookline, Newton — where the median home price exceeds $1 million — and other suburbs of Boston. Malden has a moratorium on new apartments near their Orange Line station and other communities want to follow suit. Rank and file homeowners in Massachusetts have been using their votes, their voices at public meetings and even their legal representation to block new homes, make themselves millionaires and exempt themselves from taxes for decades and we wonder why we have a housing crisis.
Another problem with the study is its focus on inequality. The authors apparently blame the presence of the new towers and their billionaire residents for the plight of Boston’s poor. While it is certainly true statistically that more rich people moving in increases inequality, it does not follow that a more equal population would have more affordable housing. Rust Belt cities like Cleveland and Akron, for example, are very equal — but the people are equally poor and housing continues to be unaffordable.
Last, but not least, the 1800 units considered in the study would, if they were all home to four people, be home to about 7200 residents. They were all built over several years while about 10,000 people a year are moving to Boston.
As long as building new apartments continues to be difficult, drawn out, subject to arbitrary actions by city council members and illegal in most of the metropolitan area, than yes, new buildings are going to be expensive to rent or buy in.
We must build more Boston in order for there to be a Boston for all. This so-called study merely proves the old adage that a lie can run around the world before the truth can put its boots on.
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