Wednesday, April 10, 2019

Massachusetts Undersupplied with Demands for Low-Income Housing

The housing outlook for low-income residents in Massachusetts is beginning to look bleak, as new reports reveal Massachusetts is seriously undersupplied when it comes to housing for its low-income market. Massachusetts has less than half the needed apartments extremely low-income households can afford, and the Federal Reserve Bank of Boston expects the gap to widen in the coming years if the affordable housing policy does not undergo serious changes. The low-income category is defined as households earning less than $29,150 for a single family of three, or $22,650 for a single person.

According to recent reports by the Boston Globe, Massachusetts currently has 274,842 extremely low-income households, but there are only 128,037 apartments in the state with rents they can afford. The low-income renter segment of the Massachusetts population has grown since 2011, but not as fast as the higher-income segments. The number of residential units low-income residents can afford without being rent-burdened has declined, and the situation is only expected to grow worse. Being rent-burdened is defined as spending more than a third of one's income on rent.

Furthermore, over 9,000 subsidized residential units are expected to lose low-income subsidies in Massachusetts by 2025. This means more than 25 cities and towns across Massachusetts wouldn't have any subsidized housing at all. Numerous municipalities have looked into buying or refinancing the units with expiring subsidies, however the federal government forecasts it could cost between $843M and $1B annually to maintain and develop affordable housing in Massachusetts by 2035.

Overall, affordable housing solutions have become a much-discussed concern for Massachusetts policy makers and real estate developers. Boston lawmakers are revising changes to its Inclusionary Development Policy that would require market-rate developers to create affordable residences in developments with 10 or more units. In addition, municipalities have set targets to build more housing to bring down high prices.

How Does Boston Rank in Terms of Affordability for Home Buyers?

Boston has consistently ranked as one of the most expensive cities to rent a home in the United States, so how does the city rank in terms of affordability for prospective home-buyers? According to a newly published report from RealtyHop, Boston is still ranking high in terms of affordability. The listings and research site analyzed data on property prices and taxes as well as median household income, and then compared the 100 most populated U.S cities. According to their research, Boston ranked as the eighth least affordable city in the United States for buying a home.

According to the RealtyHop study, buyers in Boston have to spend 56.34 of their monthly income on home-ownership. That is one of the highest shares in the eastern United States. California cities accounted for half of the 10 least affordable cities. Los Angeles ranked as the number one most expensive city for home-ownership, followed by Miami, New York, San Francisco, Oakland, Jersey, Irvine, and Boston. The median household income in Boston is listed at $62,021, while the median home price is $625,000.

Boston ranking high in terms of affordability is no surprise. Thus, the increased legal efforts to bring down or freeze housing costs to make buying and renting in Boston more accessible will most likely continue to grow.

Friday, April 5, 2019

Boston Lawmakers Are Considering Implementing Rent Control

As rental prices continue to skyrocket in and around Boston, Boston lawmakers have revisited the idea of rent control. In January, Cambridge state representative David Rogers proposed a rent control bill that has since been passed to the Housing Committee. Most recently, the Boston Globe reported that other state lawmakers are intending to propose another law which would include other ways to assist tenants, including rent control. 

State representative Michael Connolly spoke about the issue to the Boston Globe, stating, "The burden of renting in so many of our communities has become so extreme. People are asking what can we do about it.”

Boston currently holds the title for the fourth most expensive city to live in throughout the entire United States. In April, the median rent for a one-bedroom apartment is expected to be about $2,400 per month.

Is rent control the answer to Boston residents struggling with high housing costs? Governor Charlie Baker disagrees. Charlie Baker believes rent control will slow down the production of new housing, which will ultimately have a negative affect on the Boston housing situation. 

What exactly is rent control? Rent control is a legal precaution that stops property owners from being able to raise rents or puts a cap on how much rents can be raised. The goal of rent control is to ensure affordable housing and prevent landlords from profiting off of extreme market pressure. 

Although the goal of rent control is to protect affordable housing, it often has unintended negative consequences on those who manage or own the properties. Some consequences include rents being higher for apartments that are not regulated, owners failing to maintain their buildings properly because the lower rents aren’t enough to help pay for maintenance costs, and renters staying in apartments because of the affordable cost, even though the home may no longer meet their needs. Although in the short term rent control appears to assist in affordability, it poses long-term affects included decreased affordability down the road, encourages gentrification and poor property management, and lowers the value of neighborhoods overall.