Business

In Boston, a surge in affordable housing

“It clearly shows a bit of a trend happening here in the affordable and middle-income area of housing,” Mayor Martin J. Walsh said.
Kayana Szymczak/Globe Photo/File
“It clearly shows a bit of a trend happening here in the affordable and middle-income area of housing,” Mayor Martin J. Walsh said.

Boston is experiencing a surge in construction of housing units that low- and middle-income residents can afford, countering a trend toward luxury home construction, figures to be released Tuesday show.

In the city — one of the most expensive real estate markets in the country — nearly half of the 2,461 apartments, condos, and homes permitted in the first half of 2015 fall into either the affordable housing category, for low-income residents, or will be priced as middle-class units.

“It clearly shows a bit of a trend happening here in the affordable and middle-income area of housing,” Mayor Martin J. Walsh said in an interview.

Advertisement

The report also shows that Boston has for the first time approved construction of more than $1 billion in housing in a six-month period. The total value approved so far in 2015 is $1.65 billion.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

Walsh said real estate developers are finding they can make money building lower-cost housing because of the city’s growing population and strong local economy.

“They’re seeing demand for it,” he said. “People are looking to stay in the city of Boston.”

Around 43 percent of the housing permitted are non-luxury units.

“This represents a much more diverse housing mix than some of us have feared,” said Joseph Kriesberg, executive director of the Massachusetts Association of Community Development Corporations. “But ultimately, we need much more affordable housing, given the incomes of people who live in Boston currently.”

Advertisement

Others cautioned that despite the economic boom, housing costs are still likely to climb, given growing demand and a strong economy. They warned against reading too much into such a small sample size.

“Even with improved production, which I celebrate, it’s still not at a point where it’s going to do much to soften rent increases,” said Barry Bluestone, a Northeastern University dean who has spent decades studying the housing market. “We just don’t have enough supply to put downward pressure on prices.”

Bluestone said public housing and nonprofit owners will be able to preserve units for low-income residents. The problem, he said, is accommodating middle-class workers who earn too much to qualify for subsidies but cannot afford luxury units.

“What we’re ending up with is a city which has a missing middle,” he said.

For its analysis of the housing approved this year, the city separated the non-luxury units into two categories: 18 percent of the total is deed-restricted housing, which have capped rents and by law can be leased only to residents who certify that their incomes are below certain levels; another 25 percent, meanwhile, will be market-rate housing in neighborhoods where rents are generally lower, and aimed at residents making between $50,000 and $100,000, depending on household size.

Advertisement

To gauge whether some of that market-rate housing would be affordable, the city used approximate rent figures from developers; for the rest, the city simply assumed costs would be in the 75th percentile of those in the neighborhood. However, it’s unclear whether those units will truly be affordable when they come on the market.

‘Even with improved production, which I celebrate, it’s still not at a point where it’s going to do much to soften rent increases.’

Barry Bluestone, Northeastern University 

“Obviously, the question long-term is whether the non-deed-restricted units stay affordable,” Kriesberg said.

Just a few neighborhoods continue to dominate much of the new construction: South Boston and the adjoining Seaport District accounted for 915 of the permitted units in 2015; another 374 were permitted in East Boston, an area increasingly seen as a refuge from higher rents downtown.

But officials said the high cost of land downtown — and the expense of constructing the large buildings necessary to recoup that cost — are pushing developers to work on small and medium-size projects in outlying neighborhoods where even market-rate units go for much less.

The Walsh administration said it has been pushing developers hard to propose such projects.

“We’re pleased more housing is being built in non-downtown locations that are more affordable to Boston’s middle class,” said Sheila Dillon, head of the Department of Neighborhood Development. “I think there is something new going on.”

On Monday, for example, the Boston Redevelopment Authority said that a team of developers led by a nonprofit had proposed an 92-unit project in Uphams Corner that would include 40 affordable units.

In part, Walsh credited the development boom to newly streamlined processes at the Inspectional Services Department, which issues building permits. Officials said the agency has cut in half the time it takes to process building permits and to rule on zoning appeals by extending its hours, installing digital kiosks for submitting applications, and forming a separate committee to review minor home renovations and additions.

One long-overdue improvement: a pilot program that will eventually eliminate the need for developers to come to ISD offices and fill out zoning appeals on an old-fashioned typewriter.

Walsh has set a goal of building 53,000 units of housing by 2030, which the city would easily surpass if it keeps up the pace set so far this year. But city planners said the target includes ample allowances for “peaks and valleys” in the economy between now and then — and indeed, few observers expect the current hot market to continue uninterrupted.

So far in 2015, the city has permitted 450 units for low-income families, up 25 percent from the same period last year.

Walsh administration officials said they will continue to push for the development of more non-luxury housing.

The BRA announced Monday that it would begin planning studies around several key corridors in Jamaica Plain, Roxbury, and South Boston with an eye toward encouraging large residential developments near MBTA subway stations. The city is also pushing legislation at the State House that would let it offer developers who build such housing substantial property tax breaks.

“Our population is growing, and if we don’t develop additional housing, we’re going to continue to see rents rise,” Dillon said. “The need for more affordable units is great.”

Dan Adams can be reached at dadams@globe.com. Follow him on Twitter @DanielAdams86.