Demetrios Salpoglou
Boston’s housing supply shortage has reached a tipping point. Inventories of for-rent and for-sale properties are critically low. Prices for both real estate and apartment rentals hit all-time highs last year. The average rent price for apartments continues to escalate weekly. Meanwhile, the costs associated with the repair and maintenance of properties are still climbing due to a confluence of negative economic forces.
In 2022, Boston witnessed the lowest number of new housing units permitted over 10 years, according to the Boston Planning & Development Agency’s January figures. Even worse, Mayor Michelle Wu is preparing to dig up rent control from “the cemetery of failed ideas,” per Amir Shahsavari of the Small Property Owners Association. Price controls on real estate have never benefitted any housing stock nor increased consumer options in America.
Places that have implemented rent control have always ended up with fewer apartments, as well as the overall deterioration of housing quality. Capping rent fails to generate safe, affordable housing. Rent control significantly curtails development, which ends up raising prices. Any form of rent control hurts more people than it helps in the long run.
Increasing supply and unshackling private sector innovation can achieve the greater good for our citizens. Providing affordable housing requires a different mindset. We must have faith in the can-do spirit of our builders and the entire real estate community. We should not suffocate owners and builders with restrictive rent control and other job killing policies that endanger small business owners most of all. Having a vast sum of new and diverse housing stock is the only way to attract and retain talent here, while keeping Boston as one of the greatest cities in the country.
Provide Incentives and Maximize Living Space
There are untapped supply-increasing ideas that have been floated by builders and small multifamily homeowners for many years. These common-sense measures could quickly improve the housing supply crisis.
Two intriguing ideas would deliver the larger and more affordable apartments with higher bedroom counts that the city has desperately needed for years. These zoning improvements would help thousands of property owners make the most of their current real estate without changing the existing footprint of their structures.
First, by allowing landlords to add dormers to their properties to create additional living space, they would expand the city’s inventory of larger rental properties (three or more bedrooms), which are in demand from people looking to live with roommates given current rent prices. Second, the city and state could also incentivize landlords to maximize usable living area in basements. During the renovation process, they can add sprinkler systems and update electrical systems to bring older buildings up to code, which will improve the city’s rental inventory.
Easier zoning options for digging basements deeper and allowing dormers could add bedroom counts by connecting the top and bottom floors to the closest existing apartment. Fully realized on an older, existing property, a two- or three-family could end up adding four bedrooms per property. With over 30,000 of these properties in Boston, the potential, here, is clear.
Faster to Build than ADUs
Creating more of these large apartments would allow families and individuals to save money for homeownership. If this zoning were applied across Greater Boston and state-wide, tens of thousands of additional bedrooms could be added at a massive cost savings, rather than ground-up construction, which takes longer and is fraught with delays.
To its credit, Boston has tried to pave an easier path for property owners to create additional units on their properties via the additional dwelling unit (ADU) program. However, that program hasn’t been fully broadcasted or utilized to its full potential for various reasons.
The program itself is more complicated and takes longer than what we suggest here as an immediate solution. Adding bedroom counts and square footage, without adding additional units, is a faster and more efficient way to bring a more affordable cost per bedroom to the general public than ADUs. The next logical step is to apply the same incentives for landlords to be able to create additional bedrooms within the existing units already on their property.
Modifying our existing zoning code to create affordable housing is ideal for all parties involved. Renters will have access to better-maintained and higher quantities of large affordable apartments, which will help them save on rent prices. Landlords will increase the value of their properties and be able to update and deploy more resources to their investment. Cities will see an increase in property tax revenue thanks to higher tax assessments on the renovated properties.
This minor zoning improvement would also reduce the number of illegal units that are currently on the market. Apartment safety will also increase as landlords are incentivized to add sprinklers and upgrade electrical systems.
The time to start increasing our affordable housing improvements is now. These innovations would also spur thousands of jobs to help improve the economy.
Demetrios Salpoglou is CEO of apartment listings portal BostonPads.
