Real Estate Costs Pose Problems in Boston

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For those looking for a more affordable place to live in the Boston area, the Gateway Cities may present an attractive option. Generally struggling urban centers that serve as a gateway into regional economies, the Gateway Cities include Holyoke, Pittsfield and Springfield. In all, 11 cities have been identified as Gateway Cities in Massachusetts. Within these cities, residential property sold at an average price of $114 per square foot in 2014. In Boston, the median selling price was $444 per square foot.

An Interesting Contradiction

While the lower prices at the Gateway Cities may seem like something that would appeal to house-hunters and businesses, the reality is that the low cost of housing makes the area undesirable to developers. As such, these cities and their economies are not growing. To address this issue, Massachusetts invests a disproportionately large amount of money into Gateway Cities, but a new study has found that the state should invest in transformative development. Transformative development involves building projects meant to catalyze development in the surrounding area.

According to the study, the gap between real estate values in Boston compared to Gateway Cities has increased. While the assessed value of real estate in Boston grew by 28 percent between 2011 and 2015, the assessed value of Gateway Cities fell by 2 percent. The Gateway Cities also saw far fewer building permits being issued.

Between fiscal years 2009 and 2013, Gateway Cities received 40 percent of the state’s total investment in municipalities. This translates to $3.3 billion. Yet, these cities are home to just 25 percent of the state’s population. While most of those dollars went toward education, a significant amount also went to health, human services and courts and only 14 percent was spent on housing and economic development. By critically looking at how these funds are spent, some experts believe the educational needs of these cities can still be met while further addressing development. When building a new school, for example, transformative development calls for also improving the surrounding area to help increase private investment.

Rent High Despite Relative Stability

While rent costs have remained relatively stable in Boston for the past two years, a recent study found that Boston residents need to have a household income of $120,900 in order to afford a market-rate two-bedroom apartment in the city while still having enough left over to live comfortably. $2,821 per month of that income would go toward paying the average cost of an apartment in Boston. Renting an apartment in some of the nearby cities can potentially save a significant amount of money, with the household income only needing to be $59,143 per year to live comfortably in nearby Lowell. On the other end of the spectrum, two-bedroom apartments closer to Boston proper are far more expensive. Apartments in Cambridge, for example, are 7.4 percent higher than they are in Boston.

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