The last couple of years have been a good time to own a house in Greater Boston. Prices have soared. Interest rates are low. The value of what is most people’s biggest asset has never been higher.
But what if you want to buy your first house?
That’s a different story. In April, the typical single-family home in Greater Boston cost $765,000, up 24 percent from two years ago. Inventory is scarce. Bidding wars and quick cash offers are common. That’s leaving many would-be buyers on the sidelines, stuck paying rent and watching the prospect of homeownership slip further out of reach by the month.
There’s a growing consensus that the good times for some people — current homeowners with lots of equity — represent a serious challenge for the region as a whole. Boston has long been a pricey real estate market, but it keeps getting worse. Housing advocates, business groups, and even Governor Charlie Baker have signaled a growing willingness to finally tackle the region’s perennial shortage of housing and the high prices it fuels.
“This is a huge problem,” Baker said, in an impassioned monologue on the topic at a news conference this month. “It makes huge differences with respect to where people can actually afford to live here in the Commonwealth, whether or not they can stay, and where they make decisions about where to start a family.”
And it plays out in many ways.
It’s a drag on the economy: Any company that wants to grow in Greater Boston has to reckon with the cost of housing. That often means paying higher wages than it would in less-pricey cities, which can result in a firm adding fewer jobs in Boston and more elsewhere.
Yes, there are lots of tech and life science companies, in particular, that will pay more to attract the talent that spins out of our many universities. But when choosing where to locate their largest operations, businesses often choose slightly less costly locales that also have a fair number of well-educated people. That’s one reason Amazon picked the Washington, D.C., area for its vaunted “second headquarters,” and why Apple barely looked at Boston for its recently announced East Coast campus. That expansion is bringing 3,000 jobs to to Raleigh, N.C., where the median price of a single-family home is about $325,000, according to the National Association of Realtors.
It chases people away: Boston-area business leaders will tell you they have a hard time keeping talented people in their 30s. That’s prime home-buying age, a time when many people leave behind the gritty charms of city life to buy a house in the suburbs, with decent schools and room to roam.
And when those people can’t find — or afford — that house in the suburbs of Boston, many keep going farther out until they can. Some land in Rhode Island or Central Massachusetts or southern New Hampshire, even as they still work in Greater Boston. Some go all the way to Minneapolis or Nashville or another growing city that has good jobs and houses that sell for far less than they do in Boston. Those people never come back.
It’s rocket fuel for inequality: Much has been made of the staggering wealth gap in Greater Boston, where a 2015 Federal Reserve study found that the typical white family in the region was worth nearly $250,000, while the typical Black family was worth $8. Much of that is driven by a homeownership gap that is nearly as stark: White households here are almost twice as likely as Black households to own their home.
That means white households have accrued most of the wealth generated by the booming market, while Black and Latino families — and lower-income families of all races — continue to rent. They’re unable to tap home equity for college tuition or money to start a business. Add in the reality that the region’s highest-rated public schools are often found in its priciest towns, and the space between the affluent and the struggling only grows wider.
It’s bad for our health: It’s no accident that COVID-19 hit hardest in communities such as Chelsea, Lawrence, and Lynn, where working-class families, often immigrants, squeeze into small, rundown apartments. As the pandemic wore on, overcrowded housing — more than population density itself — emerged as one of the key determinants of community spread. It’s hard to quarantine when you share a three-bedroom apartment with nine people.
Pandemic aside, there’s a growing body of evidence that having a stable place to live is key to so many other aspects of life, from education to health outcomes. That’s one reason that major Boston hospitals are starting to invest more directly in affordable housing and homeownership programs. Their money will help, but lowering costs across the board ― partly by building more housing ― would take a lot of the pressure off prospective home owners.
It just makes people’s lives harder: A home, of course, is about more than economics. It’s where you raise your children, where you plan your dreams, maybe where you grow old. All those things become more difficult when it costs a small fortune to have a place of your own.
The price of missing a child’s bedtime because you have to commute so far to work is tough to quantify but real. Not being able to save for college, or splurge on a vacation, because your monthly mortgage payment is so big matters, too. And living far from the grandkids because your adult children move away to a place where they could afford to buy a house is a heartbreaking reality for families all over the region.
The high cost of housing in Boston warps life here in all sorts of ways. Yet it just keeps going up. That’s good news for some. But for many others, it’s a dire problem in desperate need of a solution.