Boston is in the middle of a huge real estate boom right now. If you haven’t already, check out our main page for information on acquiring a real estate license. It’s about time you took the next step in furthering your career in realty, don’t you think? But even as the market heats up, a major problem continues to plague the city: income inequality. And we need to talk about it.
The hard truth about Boston’s income inequality
As I mentioned in my last article, Boston ranks number 1 in America for city income equality. Just to reiterate:
In 2014, households earning near the top of Boston’s income distribution made made $266,224. Conversely, households at the bottom of that distribution earned just $14,942.
Now, granted, Boston hosts one of the largest student populations of any city in the country. This is bound to impact the numbers. But the fact remains, that in Boston the rich are getting richer while the poor are getting poorer.
Studying the divide
Last year, the Brookings Institution released a study that showed these dramatic findings.
According to the study, Boston’s “95/20’’ ratio was 17.8 in 2014. In other words, an individual at the 95th percentile, bringing in $266,224 a year, earned nearly 18 times more than a person at the 20th percentile — earning $14,925.
One major effect of this inequality is a narrowing of the city’s tax base — which weakens the ability of the Bay State government to address low-income needs. On top of that, the price of goods and services for poor households inevitably rises.
So where does real estate factor in?
Another major impact of income inequality is a lack of affordable housing. As we’ve seen with the Millennium Tower, Boston real estate has a sharp focus on luxury condos, houses, and apartments for the city’s top earners. Meanwhile the city’s impoverished are being left in the dust.
Well, okay, not completely.
Committing to a better future
Thanks in large part to the city’s building boom, Boston permitted more units of affordable housing in 2015 than any other year on record, according to city Mayor Martin J. Walsh.
In 2015, the city issued building permits for 1,022 apartments and condos with rents deemed affordable to middle- and lower-income residents. In 20 years of record-keeping, this is the largest issuance to date. On top of that, the city approved another 1,443 units but have yet to receive issue building permits.
“We are committed to creating a Boston that anyone, at any income level, can afford to live in,” Walsh said in a statement.
More than half of the new apartments arose from a city policy that requires developers of new buildings to either include affordable units in their projects or fund them elsewhere in the city. That program — which the Walsh Administration revamped in December 2015 — has played a huge role in the surge in construction.
On top of that, the city collected $23 million in funds to subsidize lower-income apartments.
Clearly, Mayor Walsh and his team remain committed to tackling the problem of income inequality in the city. According to a statement released in 2016, they want to add 53,000 units citywide by 2030. If they can maintain their current pace of production, Boston will eventually hit its target of 6,500 new affordable units.
Still more work to do
But, even with the Mayor’s efforts, the situation remains far from solved. Some say it’s getting worse.
“While some are doing very well, there are still too many who are not,” said Kim Janey, senior project director at Massachusetts Advocates for Children.
Take a look below at this map created by geographic information systems provider Esri. Each blue dot represents two households with an annual income greater than $200,000, while each yellow dot represents two households with an annual income less than $25,000.
Peeling back the layers
Even with seeming improvements in affordable housing, further examination demonstrates some deep-seated problems. For one, unemployment rates are substantially higher for black and Latino workers and for those with disabilities.
“If you look at the people in the bottom half, especially the people in the lowest fifth, you really see that they haven’t recovered much at all,” said Marc Draisen, executive director of the council, a regional planning organization that represents 101 cities and towns in the eastern part of the state.
According to the Metropolitan Area Planning Council report, the median income for black and Latino households is less than half the median income for white and Asian households. And while median incomes remained steady for white, Asian, and Latino households from five years ago, the median income declined for black households, from $45,800 to $43,600.
Moreover, the report showed that minorities, even wealthy ones, have a much harder time getting approved for mortgages than white people. An increasing share of older adults are continuing to work past age 65 and spend more than 30 percent of their income on a place to live.
“This housing cost burden issue is not only a huge social issue, it’s also a big problem for our economy,” said Draisen.
Moving forward, activists continue to try to shrink the gap in income equality. Critical to that, they say, is a 2018 ballot measure that would impose an additional tax on income over $1 million.