Who can afford to live in Boston or the 'burbs anymore?

Issue May/June 2016 May 2016 By Melanie Hagopian

On Jan. 26, 2012, Supreme Judicial Court Justice Ralph D. Gants led lawyers on a walk to Beacon Hill seeking additional funding for the Massachusetts Legal Assistance Corporation (MLAC). He delivered a resounding address citing reasons the legislature should approve additional funds for the MLAC. He began by noting that legal services ensure that the promise of "justice for all" is more than a promise. He ended by urging his colleagues to ask our elected representatives some variation of the questions asked centuries ago by Hillel: "What kind of commonwealth would we be if we did not protect the rights of those in need by providing them with adequate legal services? And if we do not protect the rights of those in need, who will? And if not now, when?"

Access to justice is a fundamental human right. Access to affordable housing (although not guaranteed under the U.S. Constitution) is considered to be a fundamental human right under national and international declarations. See Article 25 of the Universal Declaration of Human Rights, and Article XI (11) of the American Declaration on Rights and Duties of Man, among others. Declarations and covenants do not create obligations that are legally binding; however, the Universal Declaration is widely used as the primary source of what are considered human rights.

Whether or not you consider access to affordable housing a right, the current affordable housing crisis cannot be ignored. It's ironic that this crisis began at the end of the subprime lending "boom" and subsequent mortgage and financial crisis. Many of us who witnessed subprime lending practices such as "no doc" loans, 100 percent financing, negative amortization and high-capped adjustable-rate mortgages knew that the housing bubble wasn't sustainable. There had to be a correction in the market and an overhaul of lending and mortgage investment practices. As we know, there has been a dramatic shift in lending practices. Some would say the tightening of lending practices and loan underwriting has gone too far. Housing prices dropped for a brief time in 2008-2009, but now, rather than a slow, steady rise in values, we have another bubble. To add insult to injury, incomes have not risen to keep up with home values.

Now we are faced with the reality that fewer and fewer people can afford to buy or rent in Boston and the 'burbs and many other urban centers across the country. As residential real estate attorneys, we have borne witness to transaction after transaction where sellers have enjoyed choosing from multiple offers over asking price. Oftentimes the offers are cash transactions from well-heeled foreigners looking to put their money in real estate in the U.S. On the flip side, we have sympathized with our buyer clients who have been discouraged after losing bidding war after bidding war. Many of us have worked with buyers who have lost bids on multiple homes, sometimes over a period of a year or more.

The dilemma is that, the longer it takes to enter the market, the tougher entry becomes. In January, Standard & Poor's issued a report which estimated that home values (in the Boston area) will increase 24 percent by 2020. S&P's predicts home prices in the Boston area would still actually go up if another recession hits of the magnitude of the economic downturn in 2007.

To make matters worse, being forced to continue to rent puts would-be homeowners at a further disadvantage. In the Greater Boston Housing Report Card issued March 31, 2015,

Barry Bluestone notes that we are now at the point where it takes an annual income of $100,000 to afford Boston's median monthly rent.

With no foreseeable end to dramatic rises in housing and rental costs, is there any way to address the lack of affordable housing? Inclusionary housing programs may offer some solutions. These programs, as well as land use and zoning laws, are not new, and have evolved over the years, i.e., M.G.L. c. 40B, R and S. Known as The Comprehensive Permit Act, M.G. L. c. 40B was enacted in 1969 to allow developers of affordable housing to override certain municipal zoning bylaws. The goal was to encourage the production of affordable housing by reducing barriers created by local building permit processes, zoning and other restrictions.

In 2004, Massachusetts enacted the Smart Growth Zoning and Housing Production Act (Chapter 40R). Rather than focus on developers, Chapter 40R encourages cities and towns to zone for compact residential and mixed-use development by offering financial incentives and control over design. Chapter 40S covers the costs of educating school-age children who move into cities and towns that establish 40R districts.

The current crisis underscores the continuing and urgent need to address the lack of affordable housing. Could there be further amendments to our housing and economic development laws that would help to address the situation? Perhaps corporate benefactors could help. General Electric will be receiving huge incentives from Boston and the commonwealth to relocate their headquarters here. Maybe they could "spread the love" a bit by partnering with Boston and the commonwealth in developing affordable housing.

Cambridge-based Lincoln Institute of Land Policy has published reports on inclusionary housing policies that link approvals for market-rate housing to the creation of affordable homes for low and moderate-income households. One goal of inclusionary housing programs is to expand the supply of affordable housing. Could affordable housing requirements stand in the way of development? Not if there are sufficient incentives for developers to include affordable housing in new developments.

At the time this article was written, there were 934 luxury condominium units for sale in Boston, from the Financial District to Back Bay to the Leather District to the Seaport, Roslindale and Jamaica Plain. Prices ranged from $1.9 million to more than $12 million. It would appear that 98 percent of the population cannot afford to live in Boston anymore.

Practicing attorneys are not policymakers, but just as many of us walked up the hill with Gants to ensure access to justice for all, we must walk up the hill again to ensure access to affordable housing for all of our citizens. The MBA has a time-honored process of identifying and addressing legal and public policy issues in ways that promote solutions to pressing problems. The MBA must address affordable housing. What kind of organization would we be if we did not help the vast majority of the population who need affordable housing? And if we do not protect those in need, who will? And if not now, when?