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**MARCH 30, 2022**
Kuttner on TAP
Inflation and Housing Gentrification
****
The price-gouging in affordable housing units has nothing to do with
other sources of inflation.
My hometown of Boston, weirdly, had one of the nation's sharpest
population losses during the pandemic. According to
**The Boston Globe**, citing the latest census data, Suffolk County
,
most of which is Boston, lost 28,850 of its roughly 771,245 people in
the 15 months between April 2020 and July 2021.
This seems both paradoxical and wildly improbable, since Boston has one
of the hottest housing markets in the country. Unlike Detroit, our
population is not declining because people are leaving town and leaving
behind vacant homes. So what gives?
I don't have the house-by-house data to prove it, but it's pretty
clear that what gives is pervasive gentrification. Neighborhoods that
used to be working-class are now trendy for affluent professionals.
Landlords raise rents, driving out larger families who are replaced with
one- and two-person households. In addition, gentrification takes the
form of large single-family homes that were converted to multifamily in
an earlier era being converted back into single-family ones. The people
who leave move out to shabby suburbs where housing is still cheap.
A good example is East Boston, known to locals as Eastie. For
generations, Eastie has provided cheap, decent rental housing, to
Italian immigrants and more recently to Latinos and Asians.
Even though it offered spectacular views of the Boston waterfront and
was just a few convenient stops from downtown on the MBTA, Eastie was
just too unfashionable to attract luxury development. But as Boston's
housing market heated up, that changed almost overnight.
In the past decade, about 2,300 new housing units
have been built along Eastie's shoreline, mostly luxury. Just 580 are
classified as affordable, according to the Boston Planning and
Development Agency.
As Eastie becomes trendy, landlords jack up rents, driving out longtime
tenants, typically with larger families than the newcomers. The median
home value in East Boston increased from $239,000 to $609,000 in just a
decade. Rents soared along with it.
Similar patterns are occurring in other hot housing markets such as
Manhattan, L.A., and Seattle, which also lost population. The inflation
in housing prices has nothing whatever to do with the general inflation.
The scarcity of affordable housing is its own long-term supply crisis,
reflecting decades of failed housing policies combined with gross income
inequality (and the buying power of the affluent), and adding to the
economic travail of working families. It is one more item of
long-deferred action on working-class Joe Biden's to-do list.
****
~ ROBERT KUTTNER
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