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| Report rates Boston most expensive city Housing drives up cost of living | Thursday, September 8, 2005 | ||||||||||||||||||||||||
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| Scott Greenberg | The Boston Globe | ||||||||||||||||||||||||
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Propelled largely by high housing costs, Boston is now the most expensive
metropolitan area in the country, outpacing Washington, D.C., San Francisco,
and even New York City, according to a report that will be released today.
The report found that last year, a family of four living in the Boston area needed $64,656 to cover its basic needs. This was $6,000 more than in New York City, and about $7,000 more than in San Francisco. Living expenses, which include healthcare, child care, and other basic needs, were $44,000 or less in Austin, Texas; Chicago; Miami; and Raleigh, N.C. The third annual "Housing Report Card," produced by the Boston Foundation and the Citizens' Housing and Planning Association, concludes that even an uptick in housing production could not halt the relentless climb of Greater Boston's housing prices, which are increasing far more rapidly than are wages. The result: In 2004, there were only 27 Boston-area communities in which a household whose members made the median income could afford the median-priced home in that city or town. By comparison, in 2003 there were 59, and in 1998 there were 148. In 2004, the median price of a single-family home in Greater Boston was $376,000, up 9.5 percent from 2003, the report says. The median price of a condo was $282,000, up 9.3 percent. Even though Massachusetts was the only state to lose population last year, prices continued to rise because demand is still higher than the supply of many types of housing. The price increases in the Boston region slowed in 2004 relative to other parts of the country; the national rate was 12.5 percent. But home prices in Massachusetts have increased more over the past 25 years than in any other state; they remain among the highest in the country. The high cost of living is prompting many residents, especially younger ones who can't afford to buy into the housing market, to decamp for other states, the report said. It is the latest to warn that such an exodus could have dire consequences for Massachusetts, which was the only state to lose population last year. "Continued out-migration may solve the housing problem by reducing demand," the report concludes." But, the cost to the Commonwealth's long-term prosperity of losing its workforce is practically incalculable. Much more housing, appropriate for young working families, must be produced if this is to be avoided." Barry Bluestone, coauthor of the 64-page report, heads the Center for Urban and Regional Policy at Northeastern University. Bluestone described the study as a compilation of data from a variety of sources, including the US Census and real estate firms. The cost-of-living ranking comes from the Economic Policy Institute, a nonpartisan Washington think tank Bluestone helped start. In addition to housing, the institute weighed the cost of healthcare, child care, taxes, and other necessities. Bluestone said the report has "strong warning signs" for Massachusetts. "Dealing with housing costs is absolutely integral to the economic development strategy of the state," he said. "It may be, in the long run, the most important thing we can do." If the state doesn't do anything, it is at risk of losing thousands of people like Lynn Walder.
Walder, a 27-year-old Watertown resident who owns an engraving business, grew up in Connecticut, but fell in love with Boston while attending Northeastern University. She and her husband, who owns a record store, would like to stay, but they've given up on trying to buy a house. Three years ago, she said, the couple had $60,000 for a down payment, but were outbid on three houses in Dedham and Canton that were probably too expensive for them, anyway. For the time being, they are renting in Watertown and have decided to delay having children. When they can't delay any longer, they say, they may have to leave the state. "To get anything affordable, we're talking about being an hour to two hours away," Walder said. "At that point, I might as well move back to Connecticut and be near my family." Jennifer Norris, a 34-year-old Medford resident, said the struggle to buy a house is a wrenching topic of conversation. Norris, who works for an environmental group, and her husband, employed at Harvard Law School, make a combined salary that exceeds $100,000. But that isn't enough to buy a house near their jobs, they say, and for five years they have rented a two-bedroom apartment. "At every gathering of people our age, this is the topic of conversation we inevitably end up on, and we all get depressed," Norris added. "It's something we're all angry about and obsessed over." Boston-area renters are also under strain. The report notes that even though there were 34,000 fewer rental households in 2003 than in 2000, 19,000 more rental households were paying more than 50 percent of their incomes for rent in 2003 than in 2000. The federal government recommends that families spend no more than a third of their income on housing. "There's a close link between adequate affordable housing and economic competitiveness in the region," said Aaron Gornstein, executive director of the Citizens' Housing and Planning Association. "We continue to lag behind," Gornstein said, "and although we have made some modest progress on increasing housing production, it's still falling short for many moderate-income families who can't afford a home and are, therefore leaving the state or considering leaving the state." The report does note that in 2004, there were 13,556 building permits issued in Greater Boston, the highest figure since 1987. And for the first time since before 1998, both single-family and multifamily production were up. The authors also praise state lawmakers for approving a measure last year that rewards communities for relaxing their zoning to make way for mixed-income housing near transit stops and in town centers. Many people contend that overly restrictive zoning, rather than a scarcity of land, is the cause of the state's high housing prices. But Finley Perry, president of the Home Builders Association of Massachusetts, said there are still barriers to producing single-family homes. "There is no incentive for the home-building industry to do anything at the starter-home level," Perry said. "Land is so expensive, you can't really afford to put an inexpensive house on it." |
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