High construction costs and rising house prices continue to challenge affordability

With luxury properties being the center focus for most residential construction in today’s housing market, home prices have been rising at a dramatic rate, while inventory has faltered. One fear coming with such a strong luxury focus is gentrification out-pricing the current communities as new luxury projects go up.

Governing.com looked at Boston’s city data to determine where gentrification was setting in the worst, compared to where the market was in 2000. Areas of noticeable gentrification were:

7. Census Tract 1207, located on the north end of Jamaica Plain, has a median home value of $349,500, an increase of 49 percent from 2000.

6. Census Tract 907, off of the Southeast Express Way and Columbia Road, had a 50 percent increase, with a median home value of $346,000.

5. Census Tract 103 at Emmanuel College had a 63 percent increase, with a median home value of $305,700.

4. Census Tract 804.01, along Harrison Avenue south west of the Boston University Medical Campus, saw a 65 percent increase, with a median home value of $275,000.

3. Census Tract 102.03, in West Fenway, has a median home value of $299,200, which is also a 65 percent increase.

2. Census Tract 612, located along the west end of South Boston, has a median home value of $404,000, an 89 percent increase.

1. Census Tract 104.08, located in Fenway, displayed the most gentrification with a 112 percent increase in home value. The area had a median home price of $384,100.

High Development Costs Push Up Prices

Affordability has been a constant issue in Boston, with the Greater Boston Housing Report Card 2015 describing a dire situation, that, short of aggressive action, will only worsen.

One of the biggest reasons cited in the report was the high price of development. The average cost of development per square foot in Boston increased more than 30 dollars between 2008 and 2011, from $242 to $274 per square foot of development. The rent required to break even on a 1,600 square foot property at that price would be $3,215, a significant cost burden to most Boston-area families. As house prices continue to rise, with the median home price up 73.73 percent over 2000, those problems will only get harder to solve.

In order to address those problems, the Walsh administration has proposed a series of incentives as part of a plan to increase affordability in the city, including offering tax breaks or credits to landlords who charge below the market value for rent on properties. An additional $5 million was pledged to nonprofits to assist people in buying homes.

Photo Credit: Heather Gruber, Creative Commons Attribution-Share Alike 2.0 Generic, https://commons.wikimedia.org/wiki/File:2010_SouthBoston_4535161737.jpg