Washington Street used to be shorthand for stagnation in Boston. Now, it’s a snapshot of a city in the middle of a rapid transformation. In the short span from the old Combat Zone to the pit at Filene’s, nearly 600 housing units are under construction, with another 600 in the queue. It’s the same story across the city, and beyond. Construction cranes working on housing projects are fighting for elbow room from South Boston to Chinatown to the Back Bay. Developers are advancing new apartment plans from East Boston to the Fenway. Close-in suburbs like Quincy and Somerville are pushing mega-developments that rely heavily on new housing.
Boston is in the middle of the kind of concentrated burst of construction activity the area hasn’t seen in several years. Real estate observers have begun openly wondering about when, not whether, a housing glut will appear and derail the whole party. This nervousness is born of a particularly Bostonian breed of pessimism — the assumption that everyone who wants to live and work here already does. But anyone who thinks the Boston area is racing toward a housing glut is selling the city far short.
The boom in housing construction matters because it’s not just an effort to rebalance a brutal housing market. It’s also about giving the local economy the breathing room it’s been begging for. That’s a task far bigger than a couple thousand apartment units. If anything, the region needs to crank up its housing production even more.
Roughly 4,400 apartment and condominium units are under construction in Boston, Cambridge, and Somerville. Another 8,000-plus housing units are in the development pipeline in the three cities. And the pace of activity is accelerating: Boston greenlit over 1,100 housing units in a single night two weeks ago. Some, like the massive Kensington tower on Washington Street in Boston, are pre-recession holdovers getting steered back on course. But a large number, like the apartment buildings now rising along the Seaport as well as the recently approved 625-foot Filene’s tower downtown, are post-crash developments, projects designed and permitted at the market’s bottom.
Developers are building because there’s good money in it for them. Boston-area rents rose throughout the recession, and now stand at an all-time high. Rents climbed over a steep recession for the same reason that new developers will be able to cash in without worrying about an apartment glut: Massachusetts is digging out of a two-decade-long lull in housing construction. The state has been bad at building housing, especially dense urban housing, for a very long time. This lack of activity inflated home prices during the housing boom. And artificially high housing prices have dragged down the local economy by pushing workers out of state.
Developers are building because there’s good money in it for them.
Massachusetts weathered the recession better than most other states, mostly because the areas the state does well in — software, biotechnology, education, and health care — didn’t take the hard fall that some other businesses did. So we should be a magnet for other states’ skilled workers, as well as the scores of Massachusetts-educated college graduates who typically grab their degrees and then head elsewhere. High housing prices have long helped to push skilled, educated workers out of Massachusetts. A relatively healthy jobs market should get the state a second look from these crowds. But if the state can’t create housing to shelter new workers, it’s not going to get many new workers.
That’s why it’s so important to approach the current Boston apartment-building boom as a long-term economic development strategy, instead of a short-term business cycle. The region might be building its way into a glut if renters moved around in a vacuum, and the only potential customers for the new apartment buildings rising now lived elsewhere in the city. The market is more fluid than that, though. Building new housing relieves some of the pressure on current residents caused by the region’s existing housing shortage. But new construction also gives some elbow room to growth that wants to happen already. Businesses can’t grow if their workers don’t have anywhere to live. So if the state is serious about adding jobs, cities and towns, which control local zoning, have a lot more work to do.