Saturday, August 31, 2002
Bubble or not: Can someone tell Hub Blog where the American Prospect's Robert Kuttner is headed with this piece on the real estate market? He raises an excellent question in the first sentence, then doesn’t deliver, unless you count the obvious what-goes-up-must-come-down cliche as compelling.
Kuttner uses Boston as an example of a city with high housing costs. "Boston, further, is an old city with little buildable land in its core areas," he writes. "And federal housing subsidies have virtually disappeared." Maybe that last sentence is the point: To bemoan the federal government's reduced role in housing. But Kuttner makes no mention that thousands of new private housing units have indeed been built in recent years on Boston's "little buildable land." And thousands of other private housing units are now on the drawing boards. There's an historic boom in real estate prices here, yes. But there's also an historic building boom without federal support. Why? Well, Boston is popular and vibrant. Demand for housing is high. The market is reacting. But could the building boom also be tied, at least partly, to the recent lifting of rent control in Boston, as many developers and experts have suggested? Could it be that Boston's current housing shortage is at least partly due to past, misguided government policies that stymied private construction? The bottom line is that Boston's housing market is wacky, dynamic and defies simple explanation. You wouldn't know that from Kuttner's throw-away, late-summer rumination.
Kuttner uses Boston as an example of a city with high housing costs. "Boston, further, is an old city with little buildable land in its core areas," he writes. "And federal housing subsidies have virtually disappeared." Maybe that last sentence is the point: To bemoan the federal government's reduced role in housing. But Kuttner makes no mention that thousands of new private housing units have indeed been built in recent years on Boston's "little buildable land." And thousands of other private housing units are now on the drawing boards. There's an historic boom in real estate prices here, yes. But there's also an historic building boom without federal support. Why? Well, Boston is popular and vibrant. Demand for housing is high. The market is reacting. But could the building boom also be tied, at least partly, to the recent lifting of rent control in Boston, as many developers and experts have suggested? Could it be that Boston's current housing shortage is at least partly due to past, misguided government policies that stymied private construction? The bottom line is that Boston's housing market is wacky, dynamic and defies simple explanation. You wouldn't know that from Kuttner's throw-away, late-summer rumination.
