Future Of Boston: Expensive Housing Market Puts Squeeze On Workers
BOSTON (CBS) -- Boston is world renown for innovation, education and hard-working people. But the city and region are still facing some big challenges. For many families, finding an affordable place to live is a struggle, whether buying or renting.
It was the pursuit of more for their money that took Eric Jenson and Rose Chau across Boston Harbor a year and a half ago. "For what we could get and for what we wanted to pay, it was such a more amazing value in East Boston," Chau said.
The couple just moved into their second place in East Boston. It's a close-in, one bedroom for $1,400 a month. But they nearly lost it to someone offering to pay more rent sight unseen.
"We knew the market was competitive at the time and that it was going to be really tough to find a new place," Jenson said. It's the same thing Jensen says he's heard from friends. "They're moving farther and farther outside the city because it's getting too pricey."
"It's really the law of supply and demand," said Tim Warren, CEO of the Boston-based real estate data tracking firm The Warren Group. When it comes to sales, the summer and early fall saw price increases in the double digits, Warren said.
"We think that somewhere in the vicinity of 35 to 40 percent of properties are selling for over their asking price and getting multiple bids," he said.
At Keller Williams Realty in Boston, agents Lisa Loveland and Mark Bernardino say there's just not enough to choose from.
"First time homebuyers are losing out to cash deals. People are taking off mortgage contingencies and inspection contingencies," Loveland said.
According to the Massachusetts Association of Realtors, inventory has declined for 22 straight months. The lack of homes on the market is especially problematic in certain price ranges, for buyers who may want to stay below $400,000 or $500,000. "Inventory is absolutely an issue, and that's even included in the suburbs," Bernardino said. "I've run reports recently on towns like Winchester and Brookline and some of these outlying areas, and they are in the same boat as we are in the city," he said.
Bernardino has had clients move their search farther out, to say Billerica, to get what they want within their budgets.
"Why aren't more of the four hundred, five hundred and six hundred thousand dollar homes available? I think it's basically because people aren't selling and buying up," Bernardino said.
Maybe people are worried about their jobs and don't want to take on more debt. Another issue is how much more they might have to pay for their next home.
In Massachusetts, we're just not building enough, said Marc Draisen, who heads the Metropolitan Area Planning Council. The agency provides land use planning to cities, towns and state agencies, focusing on 101 communities inside the Interstate 495 loop. "We think between now and 2040, we're probably going to need 400,000 new homes to be added to this region," he said.
Draisen applauded Gov. Deval Patrick's goal of adding 10,000 multi-family units to the statewide housing market annually. In Boston, there's an initiative supported by former Mayor Tom Menino to add 30,000 new housing units by 2020.
One solution to the Bay State's housing needs, Draisen said, is for communities to get out front on development.
"We say get control over it. Decide where you want to grow -- what you want that growth to look like -- and then allow it to happen quickly," he said.
Draisen cited Quincy's efforts downtown and in the city's Wollaston neighborhood. But a portion of what's built needs to have three bedrooms for families and still be affordable, he said.
"Usually, we consider an affordable house, no matter what kind of home it is (rental or ownership), to be one that is affordable to people earning less than 80 percent of the median income without paying more than 30 percent of their income for housing costs," he explained. "In this region, the median income for a family of four is around 65,000 a year in income."
Housing that's consistently too expensive can come with a price, Draisen said. "The Boston region needs to recognize that it's competing with regions all around America and all around the world for talented young workers," he said.
When first-time homebuyer Peter de Andrade began looking, he quickly discovered that where he'd lived for years as a renter, his cap of $425,000 didn't go far enough. "There were two in the South End and they were the size of this room with a Murphy bed," he said. "I think the challenges really are what you can really get for what's out there."
He ended up moving his search to other areas, such as Jamaica Plain and South Boston. In Southie, he found a property well below his max price and one he thinks will be a great investment. "You have to compromise with yourself, you know. What you think may be necessary may not really be necessary," de Andrade said. "I feel like this is where I was supposed to be."
Back in East Boston, Rose Chau and Eric Jenson feel the same about their neighborhood. Like so many renters and buyers, their better deal also came with a little compromise. "We had to be flexible," Chau said.
"You've got to have your checklist. You've got to say what's most important to you, rank it and go from there," Jenson said.
All this week in its Future of Boston series, WBZ-TV is exploring issues that will shape the future of the city and the region.
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