MA Real Estate is CRAZY (Boston, Somerville: apartments, new construction, good schools)

[bjimmy24]

Originally Posted by timberline742

Do you actually see any shortage of building in city? It's all I see, and all people I know who visit from outside comment on... the tremendous amount of building everywhere. It's like every available square inch is being built on, and plenty is being torn down and built bigger on too.

I guess I'll rephrase: I don't see a shortage of construction, I see a shortage of housing units. I'll see if I can find an article today that I know I've read, detailing how all this construction (not just Boston, nationwide) is disproportionately "luxury" for a shockingly small amount of people. It's not a big enough dent to effect housing cost for anyone else (i.e. really not enough people are moving into these new buildings and leaving their old ones for the middle class, in fact I've seen cases in NYC of people just now owning 2-3 different units across the city! Not to mention foreign real estate investors).

[timberline742]

Originally Posted by bjimmy24

I guess I'll rephrase: I don't see a shortage of construction, I see a shortage of housing units. I'll see if I can find an article today that I know I've read, detailing how all this construction (not just Boston, nationwide) is disproportionately "luxury" for a shockingly small amount of people. It's not a big enough dent to effect housing cost for anyone else (i.e. really not enough people are moving into these new buildings and leaving their old ones for the middle class, in fact I've seen cases in NYC of people just now owning 2-3 different units across the city! Not to mention foreign real estate investors).

But the "luxury" units aren't luxurious (from what I've seen of them). They're just regular old new construction apartments, and that tag is slapped on them. Why build places target working classes when you can spend the same amount, call in luxury, and try to charge more? If they're not renting at those prices, presumably (if people really believe in the market) the prices will come down in time.

[BostonMike7]

Originally Posted by timberline742

But the "luxury" units aren't luxurious (from what I've seen of them). They're just regular old new construction apartments, and that tag is slapped on them.

That tag does get throw around without regard to the apartment actually being luxury. You throw in some faux "hardwood" (vinyl) flooring, some cheap stainless appliances and some decent countertops....and now you have a Luxury apartment by some odd standard and can ask higher rent.

[timberline742]

Originally Posted by BostonMike7

That tag does get throw around without regard to the apartment actually being luxury. You throw in some faux "hardwood" (vinyl) flooring, some cheap stainless appliances and some decent countertops....and now you have a Luxury apartment by some odd standard and can ask higher rent.

Yup. Who is going to build a brand new building for say, I dunno, $10 million, then call it "not luxury affordable apartments" when they can spend 10.5 or 11 million and call it "luxury apartments" and try to charge 50% more? Everything else is the same.

[mwj119]

Originally Posted by timberline742

But the "luxury" units aren't luxurious (from what I've seen of them). They're just regular old new construction apartments, and that tag is slapped on them. Why build places target working classes when you can spend the same amount, call in luxury, and try to charge more? If they're not renting at those prices, presumably (if people really believe in the market) the prices will come down in time.

A great point.

It's simply market value that's driving the high ppsqft. Luxury is just a nice term to use. You could build the very most basic high rise, with zero amenities, and target the "middle class", and rents would inevitably start at $2600 for a studio. I'd assume because of the demand, the competition and cost to bid on these properties is off the charts.

[bjimmy24]

I'm not saying the luxury units are good (I find them all, without exception, very tacky) but they are high end on the price range. That's the main point.

[timberline742]

Originally Posted by bjimmy24

I'm not saying the luxury units are good (I find them all, without exception, very tacky) but they are high end on the price range. That's the main point.

Well of course, buildings are expensive to build. Why spend X amount and charge Y, when you can spend X and charge 150% of Y?


If they rent for 150% of Y, then that's what people will charge. If they aren't renting, then, presumably (all other factors being equal) the prices will come down over time.

[mdovell]

Originally Posted by timberline742

But the "luxury" units aren't luxurious (from what I've seen of them). They're just regular old new construction apartments, and that tag is slapped on them. Why build places target working classes when you can spend the same amount, call in luxury, and try to charge more? If they're not renting at those prices, presumably (if people really believe in the market) the prices will come down in time.

While that is very true at the same point if owners can

There's three other things that contribute to housing demand via public policies.

1) Height restrictions - mostly in DC but if you can't build up that means it's hard to expand horizontallly. I've never heard of an expansion with deeper basement apartments. Maybe Montreal might try but it's just too much now.

2) Residency requirements for local government employees. In Boston about 30,000 might fall under this. Say a unit in quincy is $150 less a month. Well they can't move. Luckily NYC has phazed it out.

3) Rent controls - these don't work. Property owners adjust to inflation by cutting services, new potential units aren't made and current renters end up subletting apartments. The book Power Broker detailed this in NYC back in the 70s.

4) Historical commissions that artificially raise construction costs. I'm all for preservation but I personally know of facades restoration quoted at 150K that then went to 750K

Tyler Cowen had a comparison of the northeast to say Texas that has hardly any zoning. It's interesting but it also has ramifications on quality of life.

[bjimmy24]

Originally Posted by timberline742

If they aren't renting, then, presumably (all other factors being equal) the prices will come down over time.

I can only hope people find some taste (dignity?) eventually and this comes true.

[timberline742]

Originally Posted by bjimmy24

I can only hope people find some taste (dignity?) eventually and this comes true.

I doubt they will, personally. I know taste is a (little) subjective, but I don't find that people who can generally (generally, not a rule) can afford $3k one bedrooms have much of either.