On Tuesday, July 7, Boston Mayor Martin J. Walsh announced a surge in affordable housing construction in the New England city. Even though Boston is one of the most expensive real estate markets nationwide, 43% of all new housing built in 2015 is either affordable housing or middle-class housing and rental units, representing a rare exception to the national rule.
Luxury home prices may never reach the inflated levels they experienced prior to the Great Recession, but they are trending upwards again at a slow, albeit steady rate. In major U.S. cities like San Francisco, New York City, and Washington D.C., more and more land is being turned into high-end luxury housing.
Increasingly, even middle-class young professionals have been priced out of cities like San Francisco and have needed to move. In New York City, demand is so high that prices actually kept rising during the recession, and now luxury properties are even being sandwiched between public housing projects. Much of the demand comes from extremely wealthy foreigners and U.S. buyers looking for investment properties, leaving actual New York City residents priced out of the market. Manhattan, Brooklyn, and now Queens are full of luxury developments and high-rise apartments.
Luxury house builders usually define luxury housing as a home, apartment, condominium, or loft priced for at least $1 million. Not only that, but elite buyers have higher expectations for those properties.
Despite the national trend of cities and developers catering to the needs and wants of the richest residents, the city of Boston is trying a different approach, instead investing in low and middle-income housing for renters who can’t afford a 1% abode.
Boston Mayor Walsh said the key to the success of Boston’s new focus was showing developers that they can make money on non-luxury housing, too.
“They’re seeing demand for it,” said Mayor Walsh. “People are looking to stay in the city of Boston.”
But experts say Boston is hardly a model for tempering the luxury housing boom in major U.S. cities. Even the 2015 surge in affordable housing won’t create enough supply to place significant downward pressure on housing prices.