Boston city councilor Lydia Edwards’ call for a hearing on housing affordability in Boston is a welcome one. It will allow housing and tenant activists the opportunity to tell their elected officials what’s going on in the housing market. YIMBYs and tenant activists do not see eye-to-eye — YIMBYs promote development so that everyone can have a place to live, but activists are concerned about the rights and housing security of existing residents. Because they have different perspectives they pay attention to different things, so it’s good to hear from both.
But Edwards’s hearing order is heavily biased. On Twitter, she said “we can’t build our way out of this crisis” and the hearing looks to be only about “foreign speculation” — it quotes an organization called the Association of Foreign Investors in Real Estate claiming that “Boston ranks third in the nation for foreign investment in the real estate market” — short-term rentals and displacement. On Twitter she also blamed students.
But what’s the evidence? These criticisms are common among people who have already decided they don’t want more development or disbelieve the evidence for actual shortages. But the evidence that has been presented has generally been hearsay and anecdote. Few empirical studies have been done, either by the City or by a university. The Greater Boston Housing Report Card has only ever mentioned inelastic supply and student/young professional competition as far as can be recalled.
Let’s look at Airbnb and the rest of the short-term-rentals. Basically, everything about it is in dispute. According to CommonWealth, community activists estimate that at least 4,000 units have been removed from the long-term housing stock, while City officials believe that up to 2,000 have been removed, and Airbnb itself claims that only 300 units have been removed. Those are some widely diverging numbers, so let's put them in context. According to the U.S. Census, Boston had around 281,400 housing units in 2016, so even 4000 units would represent just 1.4 percent of the total stock. It’s also very likely that however many apartments were not Airbnb hotels, their rents would still be increasing, with the same sort of issues for long-term neighborhood residents and activists.
According to CityLab, concentrations of absentee Airbnb units can cause small rent increases: “Using rental and home price data from Zillow, the researchers found that for every 10 percent growth in Airbnb listings, a ZIP code’s average rent increased by 0.4 percent." According to CurbedNY, the average rent in New York City increased 3.9 percent each year between 2009 and 2017 — so 100 percent of a neighborhood’s housing would have to be converted to full-time Airbnb rental to equal the average yearly rent increase. According to the Greater Boston Housing Report Card 2017, the annual average rent increase was 6.9 percent between 2009 and 2016, so the influence of Airbnb on affordability seems to be minuscule. Moreover, New York and Boston are experiencing a slowdown in rent increases as new units come online, so the effect on rents can be offset by increased construction.
This is not to say that the City shouldn’t regulate them or tax them. The City can take whatever action it pleases — and there’s certainly an argument that someone running a hotel ought to be taxed and regulated like a hotel. It’s just that they shouldn’t expect the housing crisis to go away, even if they banned short-term rentals entirely.
The “foreign speculation” argument has a similar lack of data, and what data there is does not support Edwards’ contentions. Moreover, the claim that AFIRE ranks Boston third in the nation on such investment is unequivocally false: their top five are Los Angeles and New York tied at one, followed by Seattle, Washington, DC and San Francisco.
On top of that, much of the “speculation” there is data for could better be termed investment: the purchase of office buildings, or shares in a real estate investment trust. Purchase of residential property, much less keeping it vacant, appears to be much rarer. In addition, it’s unclear why the purchase of a $30 million penthouse by a Chinese person would drive up rent more than if it were purchased by an American citizen.
In Vancouver, the poster child of a city supposedly overwhelmed by foreign investment, the Province of British Colombia found that only about three percent of real estate purchases were by non-citizens of Canada, according to Quartz, and a 15 percent tax on foreign home buyers enacted in 2016 produced only a temporary cooling of the market.
According to the Sightline Institute, “in terms of rent, it matters little who owns an apartment building, because rents are primarily determined by what the market will bear… If anything, foreign acquisition of apartment buildings is likely to help cities that need more housing, because increased investor demand boosts the incentive to build.”
Boston does have a problem with speculation: the speculation of rank-and-file homeowners. For generations now, the default housing policy in the U.S. has been for middle class people to grow their equity and wealth through home-ownership. People in neighborhoods like West Roxbury, Jamaica Plain and Charlestown are seeing obscene increases in their net worth thanks to their ownership of property (it’s not just Boston: a few years back then-MIT grad student Matthew Rognlie discovered that nearly all of the growth in economic inequality detailed by Thomas Piketty in Capital in the Twenty-first Century could be explained by increases in property prices). One woman I knew in Brighton who was notorious for opposing new apartments was seeing increases in her home’s value by more than $100,000 a year. That’s much more than I or any of my friends in the software or pharmaceutical industries ever make.
This sort of speculation is really driving the rent crisis, since, like the woman I knew, homeowners have the incentive, the political power and the organization, through neighborhood associations, to significantly reduce, delay or block new housing developments. And they do. All the time. They are aided in this rent-seeking by the closed nature of many neighborhood associations, which have limited presences online and do not advertise their existences much or at all. Associations also tend to meet at times and places convenient for semi-retired white professionals who own their own homes, not for working young professionals, blue collar workers or people of color.
Not everyone who opposes new housing is doing so out of greed, certainly, but it is undeniable that every new home lost to community pressure means more competition for the existing housing supply. It’s also true that the behavior in Boston’s suburbs, like Newton and Brookline, helps drive gentrification within Boston and the city, unfortunately, has no control over them.
What of students and young professionals? According to The Greater Boston Housing Report Card 2017, it is true that young people compete with and outbid families for apartments in traditional Boston housing such as triple deckers. But again, the solution the report proposes is to build “millennial villages” — dense, mixed-use apartments of varying types with little to no parking near public transportation.
Perhaps we can’t build our way out of the housing crisis, but it would be nice if we actually tried, instead of posturing over an unbelievably tiny number of Airbnb apartments that aren’t being rightly used.
Matthew M. Robare is a freelance journalist based in Boston.
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