A Building Boom in Boston? | Hacker News Reader

A Building Boom in Boston?

wsj.com

37 pointsjseliger52 comments

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."

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.

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.

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...

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.

In Boston, its international students due to high density of colleges.

Seaport is hot because it's becoming gentrified and GE is moving in.

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.

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.

Isn't this just trickle-down for housing?

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".

Every luxury condo that gets built is 1 less rich person competing for less expensive housing.

> 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.

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

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

"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.

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.

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.

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/zocom...

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)

Maybe they're building more than they used to, but the rents make it extremely obvious that in absolute terms, Boston isn't building enough to meet demand.

Live in Boston, work in Boston, went to school in Boston, prices are already so high and its a cold climate city for the most part, I am thinking of moving to Oakland, the weather is nicer and I can take the train or uber pool to a higher paying tech job in SF

> After a computer-simulated house tour, he recently paid $1.13 million for a 24th-floor one-bedroom at Pierce Boston, a 30-story geometric glass tower now rising near Fenway Park that will open in 2018.

> As a condo owner, he will have access to a private sky deck with an outdoor kitchen and fireplace, and a glass-floored dining room. For an additional $300,000 or so, he can buy one of the building’s 12 private rooftop cabanas.

I'm not sure who this article is catering to. In the 10 years of working in the tech field I've only met a handful of people who could drop $1.13 million on a condo, not even a house (assuming this guy paid cash). How is this even affordable?

In Boston & Cambridge there are quite a lot of tech people making $200k, even as individual contributors. And there are many two-job couples with household income over $300k.

A million dollar mortgage will cost $6000 per month, which is only 36% of $200k or 25% of $300k.

So yes, plenty of people can afford it.

> assuming this guy paid cash

There's no reason to assume that, although there _are_ a surprising amount of cash buyers around here.

Where are you getting the $6k/mo on a $1M mortgage figure from?

If anything it is pessimistic. It amounts to 7.2% total annual costs, which would include a jumbo mortgage rate, real estate taxes, and condo fees.

>In Boston & Cambridge there are quite a lot of tech people making $200k, even as individual contributors.

Who are these, "quite a lot of people"? What percentage of the total population? How many individuals? Middlesex County (where Camberville is) has a median household income of $82,090. Suffolk, containing Boston proper, has $53,540/year.

Well, there are 1,200 Harvard faculty, average effective annual salary $274,005.

600 MIT faculty, average effective annual salary $249,509.

900 Google employees, of which quite a few are at least Staff Software Engineers, which average $200,418 based on Glassdoor's estimates.

Then you also have Microsoft, Akamai, Facebook, Twitter, and Amazon, all of which have pay grades for individual contributor software engineers that go over $200k, and staffs in the hundreds of engineers.

We can thrown in many hundred MD PhDs at the world-class research hospitals: MGH, Brigham and Women's, Tufts Medical, etc.

My point is that the Boston/Camberville economy has many institutions that compete globally. They bring revenue from around the entire world and concentrate it here, and they compete vigorously with each other over the most qualified people.

People from elsewhere don't often appreciate the way that this city punches above its weight. Only New York and San Francisco are really in this league, and they are both much larger cities.

So yes, a few hundred new luxury condos are hardly a blip. The median home price in Cambridge is now $1.6 million. During the 2008 crisis when real estate was falling nearly everywhere, it merely leveled off here. It's not hard to see why, when you consider the value of having neighbors with endowments of $37 billion and $13 billion who form a global skill vortex.

I thought the 1/4 - 1/3 rule referred to net (not gross) income?

> “It’s a 24-hour community within the confines of a building—you can choose to stay in the entire weekend and be happy and engaged,”

Excuse my language, but who the fuck wants that?

I know someone who lived in one of those places. They moved out because they found it too isolating from the surrounding environment.

I suppose the high rise thing is unavoidable to a certain degree in some cities but in the Boston metro area there are so many other options that seem more attractive to me--especially for anything approaching that kind of money.

Retirees, for one. Many retirement communities are structured in a way to allow that. It's appealing to that segment because walking (or using public transit) takes forever as you age, but driving kind of loses its appeal as one gets older.

I'm not sure what the appeal is supposed to be for young people, but then, I know zero young people who could afford one of these units.

So on the one hand they talk about a growing, thriving, city, and on the other, they're talking about retirees shutting themselves up in their apartments? I would think a retiree would prefer the calm and silence of being nowhere near a city.

Depends. Some certainly prefer to retire far from the crowds if they can. Others prefer not to be dependent on cars and to be near good culture, hospitals, and doctors. I wouldn't read too much into that everything available without leaving the building quote in any case.

> Later, as he sat on his balcony eating the dog, Dr Robert Laing reflected on the unusual events that had taken place within this huge apartment building during the previous three months.

Call it proximity bias to having just seen High Rise, but this sounds pretty Ballardian to me.

Exactly. It's 2016 already, I expect to be happy and engaged sitting on my couch. Elevators are so 20th century.

Bostonians. It's got a pretty workaholic city culture and people are somewhat cold and private compared to many other regions.

The cold, windy, rainy, changeable weather definitely discourages going outside and interacting much of the year.

Someone who's got a 9 degree blizzard outside their window.

I love Boston, I grew up here, went to school here, work here. The transformation taking place over the last 10 years has been incredible. Disregard people who want things to never change. At least Boston lets people build, unlike in SF. If you aren't a total pussy you can buy in JP or Roxbury and get an affordable place [0]. Everyone wants to live like their rich, and if they can't all they do is bitch. Yes, rich people have money and therefore buy nice things. There is still plenty to go around.

[0] http://www.zillow.com/homes/for_sale/Roxbury-Boston-MA/54232...

Not a total pussy because these areas are sketchy or because you'd be paying a high price?

Sketchy. That house for $125k in the Zillow list is a pretty good deal though.

"Not a total pussy" because you're willing to gentrify a formerly working-class, affordable area to get yourself on the property ladder.

I mean, I'm all in favor of new building. New building everywhere! For everyone! Yay! But calling someone a "pussy" because they'd rather not be taking formerly affordable rental housing off the market is pretty nasty.

pussy because people whine they can't live in the single most desirable part of the entire city, and are too afraid to live where they can afford

Parts have a real sketch factor. It's cheap-ish by Boston standards.

The advantage of the Seaport area is it was parking lots and industrial, so nobody cares if you rebuild. There's a ton of opposition to change in other parts of the city, but not there.

You'd be surprised. There are definitely building and appearance rules in the nicer old industrial area. Nothing like other places of course.

"If you aren't a total pussy..."

Grew up around Boston and I laughed out loud when I read this. Glad to be reminded every now and again of the reason why I fled to Brooklyn.

in a thick boston accent yah get the fuck outta here kid! ;-)

What is this, a frat house? "Pussy"? "Bitch"? You do understand that's sexist, right?

bitch is a verb, pussy is an adjective for someone who refuses to live in an area because it's "too dangerous"

Oh lord, you can't even identify the parts of speech correctly. Anyway, those imply that women are cowardly and whiny, and it's sexist. Now you're aware.

> all they do is bitch

verb

"pussy", as you used it, is a noun. I don't even know why I'm continuing this idiotic debate, the point is that it's offensive. You can deny that as much as you want, it makes no difference.

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