10 ms·

What seems unsustainable to me, as someone who is from Boston and lives in Boston, is how the hell is the supply going to meet demand? It's all luxury and nothi

What seems unsustainable to me, as someone who is from Boston and lives in Boston, is how the hell is the supply going to meet demand? It's all luxury and nothing else - and there aren't that many rich people in Boston. Plenty of condos are vacant near the seaport, because they are simply too expensive. I'm on the upper-middle class side of things and I had to buy an ugly, somewhat distressed property in order to enter the market. It's just insane and not sustainable, and yet I hear the mayor recently said there would be a housing shortage for at least the next decade, so it's just this odd combination of too much rich people housing, and not enough reasonably afforable housing, and yet rents and house prices are rising 10% a year in some places, which is just unthinkable. It's something you can see from 10,000 ft and go "there's no way this is going to last, but I want to ride the wave while it's still good and get out before it gets bad."

big_youth 10y ago
Downtown Austin TX is exploding in high-rises and I ask myself that same question. I mean if I, a single, mid 20's, tech guy, making 6+ figures isn't willing to spend $3k on a one bedroom apartment or $1.3 million on a condo(like the software dev in the article, wait what?!) then who is? I have a 2bd, 3 miles from downtown for $1k a month and newly built/refurbished homes in the same area are going for $600K. I just don't know who is buying in the towers. I have heard the vacancies are quite high and most of the buildings look empty from the outside.
- ghaff 10y ago
  In all fairness I'm not sure it's so much 20 something tech guys, even well-paid ones, who are the primary audience for these. I suspect it's far more empty nesters who don't need or want to deal with a house any longer. Or execs etc. for whom this is their in-city residence. That said, I'm not in real estate and don't have a good feel for how speculative all this is. The Seaport area in particular is apparently very hot right now in terms of real estate prices even though it's still something of a work in progress.
  - big_youth 10y ago
    Well the article starts by saying "affluent young professionals" and talking about "millennial-friendly extras" but I agree. The people paying $1.5million+ on condos are executive and VP types, but that still leads me to my question... Who is buying those? I work at and work with companies based out of the bay area, seems like most of those senior big money roles are not in Austin. But I'm not a real estate developer and don't know the entire Austin tech scene either...
    - ghaff 10y ago
      Well this is about Boston which has a fair bit of SV style tech but also lots of biotech, pharma, finance, GE is moving their hq there etc.
  - roymurdock 10y ago
    In Boston, its international students due to high density of colleges. Seaport is hot because it's becoming gentrified and GE is moving in.
hristov 10y ago
You are right ... but there are two things to consider: 1. New buildings are usually aimed towards the higher end of the market. New buildings tend to be more expensive, because building loans have to be repaid, so they tend to aim for higher rents/sale prices. If it happens, affordability tends to happen as older buildings lower their rents or just do not raise them as fast as inflation. 2. More supply of housing is usually a good thing regardless of price. Eventually, prices should align with demand. Nobody wants to own an empty apartment that just sits and leaks property taxes. Of course it would be better if builders actually built with view of the price sensitivity of actual potential customers instead of chasing imaginary millionaires, but even this is much better than nothing. As I have said before, the bottom is already falling out of the very high end of the market. This trend will probably continue downmarket.
Kalium 10y ago
Almost every unit was once luxury and priced accordingly. Adding supply at the top of the market reduces pressure other price segments. And if they stay empty, eventually things will crash and prices will drop. It's happened in other cities.
- ambicapter 10y ago
  Isn't this just trickle-down for housing?
  - Kalium 10y ago
    Trickle-down was that if the rich have more money, plenty will spill over to the poor. It fails because people who have more money will tend to keep it. With housing, there's a very low ceiling on consumption. Almost nobody lives in two apartments just because they can afford to. So without sufficient supply, you get people who say "I had to buy an ugly, somewhat distressed property in order to enter the market".
  - stale2002 10y ago
    Every luxury condo that gets built is 1 less rich person competing for less expensive housing.
- batbomb 10y ago
  > Almost every unit was once luxury and priced accordingly Which units? There's plenty of old housing stock which most definitely was not built as luxury housing.
wcummings 10y ago
New buildings aren't new forever. You're living in a cheaper, older building. In 20 years the new "luxury" buildings will be cheaper.
- Spooky23 10y ago
  A lot of newer style buildings start falling apart in 20 years. Too much glass, unpitched roofs lead to lots of leaks.
mahyarm 10y ago
"Luxury" housing isn't that luxury. It might be a difference of $30k in interior materials, but lets them set a far higher initial price point. The actual expensive stuff, like the building structure itself, foundation, elevator systems, etc still stay the same even if the apartment is luxury or not. What will happen if the units stay unsold is the price going down until they start getting buyers.
TYPE_FASTER 10y ago
People have a short memory. That new development where Filene's Basement used to be was a hole in the ground for a few years before the economy picked back up and it sold out.
qq66 10y ago
It might be similar to the way hotels are built. Nobody ever builds a "Sleep Inn" or "Motel 6" -- they build Westins, and old Westins become Hampton Inns, and old Hampton Inns become Sleep Inns, and old Sleep Inns become Motel 6.
acomjean 10y ago
The problem with Boston is you can't get around. Commutes average something staggering like a 10 mph average, and even from within the 128 belt to Boston can be 1 hour+[1]. If you are fortunate to own property near the subway, prices are going through the roof. (they've almost hit 900$/sf in my 1940, needs a new roof brick building in cambridge. 700,000$ for 800sf.). Nobody wants the hour+ commute. Add to that public transit isn't being improved in any serious way. Drive/train doesn't work as the lots are at capacity. The current growth is fueled by improvements in the big dig done years ago. This is an urban vs rural part of the state problem, were populations are decreasing and they don't have transit, so don't want to subsidize at the state level. I want the region to be great, but its lagging. I see smart people leaving all the time. At least they are building in the core... [1]https://www.bostonglobe.com/metro/regionals/2015/09/17/zocommute/6oAfphVXJRcUJYM4RAFTWK/story.html https://www.bostonglobe.com/metro/regionals/2015/09/17/zocom...
- mc32 10y ago
  Gotta agree there. The roads are horrendous --they are worse than bay area highways, with only I-880 coming close. Average speed seems slower and peak traffic lasts longer (there are hardly any lulls, except for well into the evening). I'd love to see more rail, but they need to widen their main highways (the occasional allowed extra shoulder does not cut it) or build new highways --and I'd wish they'd hire someone from Caltrans to spearhead the Mass-DOT, to modernize the way they do interchanges. They also probably need a Hy-128 rail corridor (rails is all in and out of Bos)

big_youth 10y ago

Downtown Austin TX is exploding in high-rises and I ask myself that same question. I mean if I, a single, mid 20's, tech guy, making 6+ figures isn't willing to spend $3k on a one bedroom apartment or $1.3 million on a condo(like the software dev in the article, wait what?!) then who is? I have a 2bd, 3 miles from downtown for $1k a month and newly built/refurbished homes in the same area are going for $600K. I just don't know who is buying in the towers. I have heard the vacancies are quite high and most of the buildings look empty from the outside.

ghaff 10y ago
In all fairness I'm not sure it's so much 20 something tech guys, even well-paid ones, who are the primary audience for these. I suspect it's far more empty nesters who don't need or want to deal with a house any longer. Or execs etc. for whom this is their in-city residence. That said, I'm not in real estate and don't have a good feel for how speculative all this is. The Seaport area in particular is apparently very hot right now in terms of real estate prices even though it's still something of a work in progress.
- big_youth 10y ago
  Well the article starts by saying "affluent young professionals" and talking about "millennial-friendly extras" but I agree. The people paying $1.5million+ on condos are executive and VP types, but that still leads me to my question... Who is buying those? I work at and work with companies based out of the bay area, seems like most of those senior big money roles are not in Austin. But I'm not a real estate developer and don't know the entire Austin tech scene either...
  - ghaff 10y ago
    Well this is about Boston which has a fair bit of SV style tech but also lots of biotech, pharma, finance, GE is moving their hq there etc.
- roymurdock 10y ago
  In Boston, its international students due to high density of colleges. Seaport is hot because it's becoming gentrified and GE is moving in.

hristov 10y ago

You are right ... but there are two things to consider: 1. New buildings are usually aimed towards the higher end of the market. New buildings tend to be more expensive, because building loans have to be repaid, so they tend to aim for higher rents/sale prices. If it happens, affordability tends to happen as older buildings lower their rents or just do not raise them as fast as inflation. 2. More supply of housing is usually a good thing regardless of price. Eventually, prices should align with demand. Nobody wants to own an empty apartment that just sits and leaks property taxes. Of course it would be better if builders actually built with view of the price sensitivity of actual potential customers instead of chasing imaginary millionaires, but even this is much better than nothing. As I have said before, the bottom is already falling out of the very high end of the market. This trend will probably continue downmarket.

Kalium 10y ago

Almost every unit was once luxury and priced accordingly. Adding supply at the top of the market reduces pressure other price segments. And if they stay empty, eventually things will crash and prices will drop. It's happened in other cities.

ambicapter 10y ago
Isn't this just trickle-down for housing?
- Kalium 10y ago
  Trickle-down was that if the rich have more money, plenty will spill over to the poor. It fails because people who have more money will tend to keep it. With housing, there's a very low ceiling on consumption. Almost nobody lives in two apartments just because they can afford to. So without sufficient supply, you get people who say "I had to buy an ugly, somewhat distressed property in order to enter the market".
- stale2002 10y ago
  Every luxury condo that gets built is 1 less rich person competing for less expensive housing.
batbomb 10y ago
> Almost every unit was once luxury and priced accordingly Which units? There's plenty of old housing stock which most definitely was not built as luxury housing.

wcummings 10y ago

New buildings aren't new forever. You're living in a cheaper, older building. In 20 years the new "luxury" buildings will be cheaper.

Spooky23 10y ago
A lot of newer style buildings start falling apart in 20 years. Too much glass, unpitched roofs lead to lots of leaks.

mahyarm 10y ago

"Luxury" housing isn't that luxury. It might be a difference of $30k in interior materials, but lets them set a far higher initial price point. The actual expensive stuff, like the building structure itself, foundation, elevator systems, etc still stay the same even if the apartment is luxury or not. What will happen if the units stay unsold is the price going down until they start getting buyers.

TYPE_FASTER 10y ago

People have a short memory. That new development where Filene's Basement used to be was a hole in the ground for a few years before the economy picked back up and it sold out.

qq66 10y ago

It might be similar to the way hotels are built. Nobody ever builds a "Sleep Inn" or "Motel 6" -- they build Westins, and old Westins become Hampton Inns, and old Hampton Inns become Sleep Inns, and old Sleep Inns become Motel 6.

acomjean 10y ago

The problem with Boston is you can't get around. Commutes average something staggering like a 10 mph average, and even from within the 128 belt to Boston can be 1 hour+[1]. If you are fortunate to own property near the subway, prices are going through the roof. (they've almost hit 900$/sf in my 1940, needs a new roof brick building in cambridge. 700,000$ for 800sf.). Nobody wants the hour+ commute. Add to that public transit isn't being improved in any serious way. Drive/train doesn't work as the lots are at capacity. The current growth is fueled by improvements in the big dig done years ago. This is an urban vs rural part of the state problem, were populations are decreasing and they don't have transit, so don't want to subsidize at the state level. I want the region to be great, but its lagging. I see smart people leaving all the time. At least they are building in the core... [1]https://www.bostonglobe.com/metro/regionals/2015/09/17/zocommute/6oAfphVXJRcUJYM4RAFTWK/story.html https://www.bostonglobe.com/metro/regionals/2015/09/17/zocom...

mc32 10y ago
Gotta agree there. The roads are horrendous --they are worse than bay area highways, with only I-880 coming close. Average speed seems slower and peak traffic lasts longer (there are hardly any lulls, except for well into the evening). I'd love to see more rail, but they need to widen their main highways (the occasional allowed extra shoulder does not cut it) or build new highways --and I'd wish they'd hire someone from Caltrans to spearhead the Mass-DOT, to modernize the way they do interchanges. They also probably need a Hy-128 rail corridor (rails is all in and out of Bos)