Boston’s luxury housing is exacerbating inequality, IPS research shows — and racial income inequality in particular. Chuck Collins, director of the Program on Inequality and the Common Good, joined CBS Boston to discuss findings from his latest report, Towering Excess.
With an average price of $3 million, the 1,800 luxury units included in the study are obviously not intended to ease the affordable housing crisis that exists in Boston. Of those units, one-third were purchased by secretive LLCs — nearly 40 percent of which are incorporated in Delaware.
Businesses purchasing out-of-state property isn’t inherently problematic. But there are some red flags in the case of these particular Boston condos.
Collins referred to Delaware as the “premier secrecy jurisdiction” for hiding money and disguising illicit activity. And when you combine that with the fact that these Delaware based LLCs are purchasing $11 million condos in cash, that is reason enough to at least look into these transactions.
“In other parts of the country — if we were in New York or Miami — that would trigger federal oversight, but not in Boston,” said Collins.
Wealthy elites from all over the globe, Collins argues, are looking for places to “park their money.” As a result, “some of the demand” for new units “isn’t housing for people to live in,” said Collins. “It’s what we would call wealth storage units. It’s like a place to park money and hold value.”
The ripple effect extends far beyond where these new buildins are built; it inevitably prices people out of once-affordable neighborhoods — with racial as well as economic implications. “We already have an enormous racial wealth divide when it comes to ownership of assets, said Collins.
When you consider that these luxury condos lead to whole neighborhoods “where the properties are so overvalued and access to credit for people of color is harder to get,” said Collins, what you’re left with is a sort of “supercharged inequality.”
Collins acknowledged that an uptick in jobs and property taxes associated with these new luxury condos might be attractive for the city’s administration. “This is an enormous source of jobs. It is property tax revenue,” he said. “The city does a good job negotiating with developers to get some affordable housing out of each deal. I would just say we can do more.”
So, what would “more” look like in terms of policy and legislation?
“We could have a very high-end luxury real estate transfer tax, as they do in San Francisco and other cities, that would actually capture some of that revenue,” said Collins. “We could discourage vacancy with a vacancy tax. And we could require these property owners to disclose who the owners are. I think that would help deal with the risks of illicit funds coming in and buying some of these condos.”