Between July 2010 and July 2012, the city of Boston experienced a population increase of 3.1 percent, and this influx of new residents has not slowed down. Due to this, Mayor Walsh has created an ambitious housing plan that includes building 53,000 more units in the city within the next 15 years. This is great news for incoming residents and real estate investors, and projected population changes by 2030 make it clear that these housing units need to become a reality if Boston is going to continue to grow.

53,000 Units: The Math behind this Target Number

At this time, there are already several neighborhoods that are difficult to purchase property within, including Beacon Hill. Experts predict that the city will need to have housing available for 91,000 new residents by 2030, and this will take Boston back to its population heyday of the 1950s.

The average household size in the U.S. is currently 2.54, and this represents a reduction of 0.08 during the last 15 years. If this trend continues, the average household will have 2.46 people in it by 2030. This means that at least 36,992 units will need to be available to house the anticipated 91,000 incoming residents. It is also necessary to have additional housing options available to compensate for smaller households and the people who will move into Boston after 2030. Therefore, building 53,000 units makes sense, especially because it will help remove some of the barriers that can currently make it difficult for home buyers to move into the city.

Distribution of Units

On December 18, 2014, the Boston Redevelopment Authority approved a plan to build three housing developments that will create a total of 178 new units spread throughout Dorchester, Hyde Park and Jamaica Plain. This is a good head start for Mayor Walsh's plan, and it highlights the importance of placing a diverse list of real estate options in various areas. For example, four of the 32 units that are slated for construction in Hyde Park will be affordable housing units. Jamaica Plain will gain 124 residential units, and they will be split between rental units, townhouses and condominiums. All 22 of the new units in Dorchester will be condos that are located above a 250 seat restaurant, but there will be three units reserved for tenants who qualify for affordable housing.

Mayor Walsh's plan specifically states three distribution requirements, and this should help people from various demographic and economic groups move into the city. The main focus of this plan, which is entitled "Housing a Changing City: Boston 2030," is on making housing available for middle class and low-income residents. In fact, 44,000 of the 53,000 units need to be designed specifically to meet the needs of members of the workforce who are aged 25 to 65.

There are some provisions in Mayor Walsh's plan to assist other demographics that fall outside of the workforce. This will make it necessary for developers to build 5,000 units for senior citizens, and there is also a stipulation that a surplus of 4,000 units should be created to help stabilize pricing and the housing market. In other words, if this plan comes to fruition, there should be a vacancy rate within the city. This will not last forever if the population keeps growing, but it will give developers time to begin working on new projects after 2030 without making it nearly impossible for incoming residents to find a home.

Student Dorms and Affordable Housing Units

Although the basic breakout for the 53,000 units showcases the need for middle class, senior and surplus housing, the plan also takes a look at the city's need to increase the available options for students and affordable housing residents. Therefore, Mayor Walsh is asking for an additional 16,000 dorm beds to be constructed within the city in order to free up approximately 5,000 middle-income housing units. Additionally, 6,500 of the new units will be allocated for low-income residents. Current projections estimate that 10,000 new low-income households will move to Boston by 2030, so building 6,500 new units to house them will be imperative.

Unprecedented Tax Incentives for Developers

Mayor Walsh is well-versed in the economic reality of bringing new housing units to life, and he has taken steps within his plan to encourage developers to bring his bold vision to fruition. Because of this, developers who get involved in this plan will have the opportunity to take advantage of many cost-saving measures such as tax incentives, zoning relief and increased usage of city owned land. There will also be modifications made to Boston's Inclusionary Development Policy, and the city will put permitting reform in place.

The Economic Impact to the City

Creating new housing to meet the current and future anticipated demand is a fantastic way to bring more money into the area, and this can have a long-lasting impact on the local economy. On a shorter-term scale, the next 15 years can benefit greatly from the estimated $21 billion that will be spent on developing 53,000 new units. During this time frame, there will be approximately 51,000 construction jobs created, and this will help keep the city's unemployment rate at or below the national average. Boston is also expected to generate $20 million annually in new revenue as a result of this entire process.

Getting in on the Ground Floor

In 15 years, Boston should have enough housing to meet the demand, but this does not mean that today's most highly desirable neighborhoods will suddenly be easy to get into. Instead, home buyers who wish to be in areas that are deemed more exclusive will most likely be even more enticed by the opportunity to live in affluent neighborhoods that do not have many openings. This means that real estate investors should still target these areas right now, and it is also a good idea to begin purchasing housing units in luxury developments that are currently under construction.

The reality is that middle and low-income residents will have a lot of options to choose from in 2030, but people with an income above $125,000 could find themselves struggling to find the perfect luxury property. Fortunately, investors and home owners who get in on the ground floor now by snagging up the properties that are currently available will have increasingly valuable units as the city continues to focus on less expensive developments. You can take advantage of this fantastic real estate investment opportunity by working with the professional team at Boston City Properties. Call us today at (617) 247-1933!

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