Crapitalism

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(35)
560K of real estate
Boston.com

Happy Father's Day! Be good to your dad (assuming he's alive/you know who he is) and enjoy your kids (assuming you have any/know who they are).

A remarkable story crossed my monitor this week. From back in the sacred Motherland of Massachusetts. Apparently, a pair of tandem parking spaces were auctioned off behind a toney Commonwealth Ave (Boston) condo for a whopping 560K--they're shown in the photo. That's over a half a million dollars in prime real estate yer gazing at.

Bid up from a sort of reasonable 42K and sold to a party that allegedly owns three spaces there already, this is the kind of story that makes one's eyes glaze over in amazement. As primo as the location is, that tiny and stained bit of asphalt you're looking at is not worth that price under any circumstances.

As that part of Boston is tightly zoned, it isn't like it was bought to expand a brownstone. Nope, this is conspicuous consumption run completely amok or as a friend of mine back there put it, ''this could only have happened to people for whom money has no meaning". (I suspect that the purchase was made as a "business expense" for a corporation, more to be revealed).

For 560 grand, you can still buy a modest home in Boston's most desirable suburbs (all of which have better public schools than Boston and are cleaner and not plagued with unbearable traffic). And the property is but ten minutes on foot from downtown and the business district, cabs and car services are plentiful, therefore, why bother? As a possible long term investment? (Not a great idea as you will see).

This neighborhood, the Back Bay, was the first place I had my own digs. Adjusted for inflation, that apartment should go for about 420.00. It is now a million dollar and up condo and what was it? One gigantic room, likely the dining room of a three story home back in the 1800's. And I still have friends in that neighborhood. Tellingly, all of them have been there at least 25 years and they could never afford it now.

By pricing all but the top of the top out of what once was an artist friendly neighborhood, the same neighborhood has the ripple effect of driving real estate values in adjacent neighborhoods past reason. Boston and San Francisco--joined at the hip by being the satellite cities to America's twin powerhouses--are now unaffordable. 

A piece in the same paper that ran this story last year said it all. People aged 35-54 --which used to be an enormous demographic in Boston--no longer live there in large numbers. After university they just up and go because first jobs don't pay enough to raise the scratch for a down payment. When a slab of concrete not even big enough to be a bedroom in a rooming house goes for 560K, it says that "what the market will bear" is not applicable.

This isn't "free market capitalism", it's "crapitalism". The laws of supply and demand have been so perverted by so few having so much, they almost don't apply anymore. And my beautiful hometown--once a funky seaport with the best local music scene outside CB's/Max's--is now an overly exclusive playpen for folks that have brought back the Brahmin Age, only on 'roids. Same as in SF---two small peninsulas whose essential character is being clobbered by venal plutocrats. Crapitalism couldn't exist without tacit aid from the government--in SF, it's in the form of tax breaks, in Boston, tax free academia is swallowing their city whole, reducing the amount of living units and artificially raising land value. That isn't "supply and demand".

The utlimate irony of this ridiculous transaction is that the Back Bay, like the Marina, is atop a landfill. The Charles River already overflows its banks and floods the basements of these expensive edifices more than it used to--so the parking spaces in question may be useless a fair amount of the time (of course, crapitalism being what it is, MA taxpayers will surely be stuck for the bill of seawalls and the like).

Bailouts, cronyism, loopholes--instead of an economic boom, we have Marie Antoinette style madness in our major cities. Pretty pitiful.

 

Comments

1) You say "The laws of supply and demand have been so perverted by so few having so much" but if it really were just a "few" who had all the money, then only a "few" buildings would be over-priced.

But the reality is clearly that places Boston and SF have hundreds of thousands of homes that are "over-priced" so there clearly must be hundreds of thousands of people who can afford them.

Put another way, how can homes be "too expensive" when all of them are occupied. Every one of those homes is being afforded by someone. Just not you.

2) You say that those parking places aren't worth 560K but, by definition, they are worth that much because somebody just paid that for them. If the owner now saves $50 a day or more in car lot or meter fees as a result, then that is effectively a tax-free "rent" they are getting for those places. And then in a decade or two, they can sell them for a million. Boston isn't going out of fashion.

3) The real reason prices are this high is that Boston has a more educated populace than any other US city of comparable size, and has the high-paid knowledge jobs to go with it.

Boston did have the good sense to get rid of rent control, and that has helped bring on new supply and ensure greater availability of homes and mobility. But it still has strict land use regulations and, if you plot a graph between the strictness of land use rules and high RE prices, the correlation is stunning and undeniable.

NIMBY's and land use reg's cause high RE prices, and those are progressive policies. In SF you have to add on rent control which makes it even worse.

But hey, in the end it is that woman's money and she is free to spend it how she sees fit. Not only will she save on parking fees but she has a guaranteed parking place, and almost no amount of money will get you that.

If I were you, JAW, I'd worry about something else. Like how safe your new job is.

Posted by Guest on Jun. 16, 2013 @ 12:24 pm

"I like sacred Motherland of Massachusetts."

I so feel you. It is sacred to many of us.

Posted by Jane on Jun. 16, 2013 @ 1:59 pm

It's where our best WASP qualities derive. Wasn't Harvard a direct copy of Oxford?

I feel sure that is what JAW was trying to say, at least when he has the courage to overcome the political correctness that he feels has been unjustly foisted and conferred upon him of necessity.

Posted by Guest on Jun. 16, 2013 @ 2:25 pm

lol

^^^
has definitely never been to Massachusetts. Or maybe England.

Posted by Guest on Jun. 16, 2013 @ 4:25 pm

And why do we universally admire it, even while PC'ness demands that we do not?

Posted by Guest on Jun. 16, 2013 @ 5:13 pm

Fuck Massachusettes! My ancestors got off the boat running, Fuck that indentured servitude bullshit!

They headed for the hills, the Appalachians.

Fuck the Bay Colony! And those stuffed shirts in Jamestown!

Posted by pete moss on Jun. 17, 2013 @ 11:01 am

It's a fait accompli in the wake of Tim's departure - the only question now is how long.

I give him 3 weeks at the max.

Posted by Lucretia Snapples on Jun. 16, 2013 @ 5:51 pm

I think he'll be gone by Tuesday morning at the latest.

This may be his last post for the SFBG - a fitting example of his oeuvre.

Posted by Ted on Jun. 16, 2013 @ 6:52 pm

50 bux says 2 weeks max. Long as we betting how bout 50 on the Spurs?

Posted by pete moss on Jun. 17, 2013 @ 10:53 am

Well, maybe not *quite* universal. But you've just described what the powers that be would dearly love to happen in New Orleans. You know, now that so many of those pesky black people are trying to make the best of things in Houston.

Posted by Tom Carson on Jun. 16, 2013 @ 7:47 pm

Just a little bit of rat poison in an otherwise perfectly executed cake. Sonny Bono punk much?

Posted by lillipublicans on Jun. 17, 2013 @ 3:00 am

It's not SF exceptionalism. It's SF provincialism.

The rest of the piece was just the usual tedious SFBG envy shtick.

Posted by Guest on Jun. 17, 2013 @ 5:37 am

Johnny Angel is off to a good SFBG start

In this, his fourth week running, he still has the TROLLS chomping on their leashes.

Posted by Ginger on Jun. 17, 2013 @ 6:17 am

no commentary here at all. JAW's whines of envy would be echoing around an empty room.

Posted by Guest on Jun. 17, 2013 @ 7:32 am

First, this article has nothing to do with Father's Day. It would be nice if an SFBG author had simply written about the experience of being a father instead of producing yet another boring tirade against capitalism. Even the most die-hard socialist must find SFBG is getting rather repetitive and dull.

Second, is it too much to ask that the authors of SFBG articles try to employ a little bit of logic? Mr. Wendell writes, "The laws of supply and demand have been so perverted by so few having so much, they almost don't apply anymore." What a mess of a sentence! Laws and rules either apply or they do not apply to a specific situation. It is impossible for any rule or law to "almost not apply." What Mr. Wendell ends up saying, whether he meant to or not, is that the laws of supply and demand still do apply. Also, as the "Guest" commentator above pointed out, if prices continue to go up in Boston, then it means there are people who can afford to pay those prices, and there must be more than just a handful of them. If a house is overpriced, then it doesn't sell because there are not enough people willing or able to pay for it. If houses sell, and since they do not all sell to the same buyer, then there has to be enough individual buyers as there are houses to pay for them, which means they are not overpriced. This is not to say there is not a scarcity of housing affordable to lower income levels, but this is a result of a restricted supply. If Boston provided an adequate supply of housing, then affluent buyers would generally only buy the more expensive and luxurious housing units, and there would be plenty of comfortable housing units priced at levels accessible to the middle-class and working class. But, when supply is choked off, affluent buyers who want or need to live in Boston are forced to buy what is available and they end up purchasing units they would not have otherwise considered, which further reduces supply and drives up prices.

Finally, Mr. Wendell reveals in one sentence quite simply one of the main reasons that housing is so expensive in Boston: "As that part of Boston is tightly zoned, it isn't like it was bought to expand a brownstone." In that one sentence, Mr. Wendell neatly sums up how cities such as Boston and San Francisco have screwed themselves over by enacting overly restrictive zoning laws that reduce supply and drive up prices. In San Francisco, there is enough underutilized land that it would be possible to construct over 100,000 new units WITHOUT significantly changing the character of the city by covering it with high-rises. Also, some simple changes in neighborhood zoning rules to allow more basement, garage, or backyard in-law units might produce another 40,000 to 50,000 additional units, again without building a bunch of tall towers that will set off the NIMBY crew and leave them crying and wetting their pants. Unfortunately, these changes are unlikely to be made and San Francisco (and Boston) are most likely only going to continue to pass laws that restrict housing supply and further drive up home prices.

Posted by Chris on Jun. 17, 2013 @ 10:07 am

homes and the 50,000 in-law homes AND then built another 100,000 to 200,000 high-rise condo's? We'd actually have much more affordable housing, but of course the vested interest advocates and activists don't really want that at all.

And yes, of course, if prices are truly unaffordable then homes do not sell and remain vacant. That doesn't happen in Boston or SF, ergo, housing there is affordable to enough people. That's the whole point of the law of supply and demand.

Posted by Guest on Jun. 17, 2013 @ 10:29 am

Basement, garage and backyard in-law units have already fucked up the Richmond, and much of the Sunset. You have no clue what you are talking about.

Posted by Richmondman on Jun. 17, 2013 @ 12:44 pm

It can be a problem for the property owner, because that makes a SFH technically a 2-unit building, which means that rent control applies.

But as long as you can ensure turnover, maybe by AirBnb'ing the thing, it can be a nice little earner on the side.

Posted by Guest on Jun. 17, 2013 @ 2:06 pm

Double the number of cars, while simultaneously removing all of the off-street parking. That is what in-laws do. Increasing set-backs to allow in-law residences in backyards will increase concrete, remove trees and yards and will increase densities. Increasing set-backs reduces backyard space. Increasing height limits removes sunshine from gardens. Not everyone wants to live in a studio apartment with no yard. That is why we live in the Richmond and Sunset. So stop fucking up our neighborhoods by trying to make them more like the Mission.

Posted by Richmondman on Jun. 17, 2013 @ 2:43 pm

and if you cannot see enough trees from your house, with GG Park and the Presidio both close by, then plant some.

Should have known you were a tree-hugging NIMBY nutjob who doesn't care about affordable housing.

Posted by Guest on Jun. 17, 2013 @ 3:41 pm

First, Richmond, I have lived in both the Richmond and the Sunset, and neither neighborhood has been screwed up because of in-law units, nor would additional units ruin those neighborhoods. Also, I am not sure what you are smoking, but neither the Sunset nor the Richmond could ever be like the Mission, no matter how many in-law units they added.

Second, if the city provides adequate public transit, and transit policy does have to be adapted to any zoning changes, there should be no need to worry about providing extra parking. The truth is that in SF, most people should not need to have cars for day-to-day use. And, for the occasional out-of-town trips or for hauling things, those wonderful car-sharing services, such as Zip Car, adequately fulfill the need. Also, for car storage, the city can implement ideas like communal garages so that ever house does not need a garage or a dedicated street parking space.

Third, there is no need to provide additional setbacks for in-law units, nor does additional set-back mean you have to fill the open space with concrete (not sure where you got that from???). So, your comment about the danger of more concrete spreading in those neighborhoods makes zero sense. It makes even less sense considering how so many homeowners in the Sunset and Richmond have ALREADY voluntarily chosen to pave over their yards so they can avoid having to deal with a watering a lawn (even in violation of city rules), meaning there would be little room to add more concrete even if one wanted to do so.

Finally, curmudgeon, you will find that either you participate in change, or it happens to you. Eventually, housing prices will force SF to make changes like the ones I outlined above, and then you can either participate in the process or get swept out of the way--it is your choice.

Posted by Richmond on Jun. 18, 2013 @ 8:04 am

People complain about the unaffordability of single family homes (SFH). In-law conversions are the biggest reason single family homes have become unaffordable in SF.
When a SFH is converted to add an in-law apartment, the building effectively becomes commercial (income-generating) property. The pricing model is now changed, based on the Revenue potential per square foot. The value of commerical property is greater than non-commercial residential property. So all Richmond and Sunset property is now priced as Commercial property. Off-street parking is reduced, while the number of cars trying to park is simultaneously doubled, therby increasing congestion. Architecturally significant properties are demolished (via remodeling to avoid tax re-assessments), replaced by structures whose only criteria is to maximize the square footage of revenue producing property. That is what "Richmond Specials" are. They look like crap, are built like crap, and price out families by falsly raising prices. Now all of the houses are effetively apartments.
That is one way in-laws fuck up a neighborhood.

Posted by Richmondman on Jun. 18, 2013 @ 3:02 pm

you'd have to be a real special kind of stupid to do that, given that SFH's are immune from rent control under costa-Hawkins.

What does make sense is adding an in-law and selling it as a TIC, as a condo conversion immediately bypasses the condo lottery and the recent change in the law, meaning an instant uplift in value.

But overall this is a non issue

Posted by Guest on Jun. 18, 2013 @ 3:19 pm

You are wrong - This is from the SF Tenants Union Website.

San Francisco's rent control law covers most rental property in San Francisco. If you live in San Francisco, you are covered by rent control unless you fall into one of these major exceptions:

1. You live in a building constructed after June of 1979. Most homes in the Richmond and Sunset were built Prior to 1979.

2. You live in subsidized housing, such as HUD housing projects.

3. You live in a dormitory, monastery, nunnery, etc.

4. You live in a residential hotel and have less than 28 days of continuous tenancy.

Posted by Richmondman on Jun. 18, 2013 @ 3:53 pm

entire structure is exempt from RC.

But many homes in the Avenues were built in the 50's, 60's and 70's, and they are potentially under RC if (and only if) there is an added second unit, regardless of whether it is legal or not.

Posted by Guest on Jun. 18, 2013 @ 4:10 pm

All I can say is "huh??"

I think you tried to responded to my comment, but then started rambling about "Richmond Specials," which have nothing to do with in-laws. I half-expected you to make the claim that you are being monitored by UFOs.

I guess we will have to agree to disagree--even though I am not quite sure what point you are trying to make. I have no problem with in-laws and I think they are one, out of many other ways, to add affordable housing units to the city. That is my stance, and you are free to have your own point of view.

Posted by Chris on Jun. 24, 2013 @ 5:00 pm

he problem is more that the city says they are covered by rent control even while also saying that the unit doesn't exist.

Some consistency is needed. Not least because the owner can always evict the tenant anyway by simply owning up to the city about the illegal unit, whereupon the city issues a demolition notice, which is a just cause under the rent ordinance.

Posted by Guest on Jun. 24, 2013 @ 5:22 pm

Single family homes aren't anymore. Every SFH is a commercial, revenue producing multi-unit when they are converted to a multi-unit in-law. That changes the pricing structure, and forces families who want to buy to try to compete with Developers and Speculators, whose prices is based on rents. That is the problem.

Posted by Richmondman on Jun. 19, 2013 @ 5:21 am

otherwise it would be cheaper to rent out the home that you own, and then rent another one to live in.

Posted by Guest on Jun. 19, 2013 @ 6:02 am

She paid all that and didn't even get a garage enclosure for it? Dummy. Wonder how much she'll pay someone to shovel the snow off it.

Boston is no car city, never has been, same thing in some of the contiguous suburbs.Left there in the 80's, last time I visited there was nothing but reserved street parking from downtown/Back Bay all the way up to Chestnut Hill, no metered spaces anywhere. Never even learned to drive or had a driver's license until I left. It was becoming impossible for ordinary people to live there back then. And contrary to the ideas of some commenting here, plenty of Bostonians are paid low wages including those with college degrees. Glad I'm gone.

Posted by Jane on Jun. 23, 2013 @ 5:11 am

First you say it's becoming impossible to live in Boston, and then you say plenty of Bostonians are paid low wages.

Well if it's becoming impossible to afford Boston then plenty of low-paid people couldn't afford to be there. Yet they are.

And because you do not like the expense of Boston, you moved to "cheap" SF?

Posted by Guest on Jun. 23, 2013 @ 5:59 am

Once upon a time public transportation did worked and most people worked in a city center, that was once upon a time. Today it is bad, look at MUNI, most of the new workers work in vast office parks. See Google Shuttles or if they make enough money they will drive.

Did you read about the SF parking real estate in the SOMA.

People want to live in the city but want to own a car, have the suburban lifestyle in San Francisco but work in the SV.

Posted by Garrett on Jun. 24, 2013 @ 6:24 pm

North Beach. In much of the city, a car is essential because Muni is a nightmare.

Posted by Guest on Jun. 24, 2013 @ 7:06 pm

I want people to give me gold bricks too, but that doesn't seem to happen.

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