March 05, 2007
Boston is Expensive
We are cleaning up our house here in the suburbs of Philly to get it ready to sell. I don't think it is going to fetch a price comparable to what housing costs in Boston, though - Boston really is much more expensive.
Today I came across this graph that captures the situation well:
This was part of a report produced by the Pew Charitable Trusts comparing Philadelphia to the other cities in the chart. The report is an interesting read, providing a civic-minded take on the health of these seven old East-coast cities. They looked at the strength and makeup of the communities, trends in education, crime, and migration, and the state of governance and leadership.
Pew's summary on Boston: it is expensive to live there, the traffic is bad, and the gridlocked local governments make it hard to solve those problems. Otherwise, it is a fine place.
Posted by David at March 5, 2007 11:03 PM
For comparison, you might like to check out the "3rd Annual Demographia International Housing Affordability Survey 2007": http://www.demographia.com/dhi-ix2005q3.pdf. This rates housing affordability in many urban markets including Australia, Canada, Ireland, New Zealand, United Kingdom, and United States.
Here (Perth, Western Australia) we have the 11th WORST affordability over all these markets (ratio = 8.0). The least affordable housing overall is in Australia, where the national median ratio is 6.6. A ratio of 5.1 or higher is considered "severely unaffordable". The report calls the situation in Australia "the most pervasive housing affordability crisis" of all the surveyed nations.
I think part of the problem here is that the government offers generous tax concessions for people who buy properties as investments. This was initially intended to increase the supply of rental properties, but it has also increased the demand for property and now home buyers must compete with investors. Now that demand has outstripped supply house prices are going up, and rents are already starting to rise. The price boom makes the market seem even more attractive to investors, and many of the buyers in the local market are from interstate or overseas. There's some kind of horrible positive-feedback thing happening but I guess it has to stop eventually...
Anyway, good luck with the move! I hope it works out for you in Boston.
In Australia housing is averaging 6.6 times median household income, where the standard is 3.0 and 5.1 is "severely unaffordable". Sydney is 8.5, and Perth (where I live) is 8.0, mostly because of the mining boom. In California, LA/OC/SD are all above 10.
Some explanations for these high multiples are posited at http://www.abc.net.au/rn/counterpoint/stories/2007/1799419.htm
When I lived in Boston in the mid-70s it was even then nearly as expensive as New York City.
Plus ca change...
Boston is wonderful, and it's worth paying more for. When I lived there, I went -- for FREE -- to the talks of Noam Chomsky, B.F. Skinner, Stephen J. Gould, etc. Where else in the world can you do that? The excellence of the intellectual environment more than makes up for the extra cost of decent housing. Besides, the subway is superb and it's a great city for biking.
Signed, "envious in Frankfurt"