As the country enters a recession that could devastate the economy, Boston’s housing market will likely be hard hit. (Photo by Shira Laucharoen)
The coronavirus outbreak led to more than 10 million people nationally filing for unemployment during the second week of filing in what will likely be a growing number as the country remains in shutdown.
While it has not yet officially been stated that the country is in the midst of an economic recession, we are essentially already there, said Devin Michelle Bunten, a professor at MIT’s Department of Urban Studies and Planning. The housing market is certain to be affected by this decline, as housing prices and rents in the city will fall, and the impact of the recession will be felt across industries.
“One of many wild things about this recession is that usually the decline in GDP is driven by interest rate sensitive sectors. That means that housing is at the top of the list, as well as commercial real estate and industrial production, things that people buy with loans. That is not the case today,” said Bunten. “Housing did not lead us into this recession, but it is definitely going to follow us.…Mortgage demand declining means that home purchase demand is declining, which means sellers are not going to be able to get what they thought they would. It’s almost certain that we’re going to see some negative repercussions for housing prices. There’s a huge amount of uncertainty about what that endgame looks like.”
Prior to the spread of the coronavirus, Boston was still experiencing a housing crisis, said Bunten. The state of Massachusetts has no rent control, and neighborhoods had been rapidly gentrifying, she said. According to the Greater Boston Housing Report Card of 2019, Metropolitan Boston is one of the most expensive places in the country to buy a home, ranking as the fourth most expensive of the 25 largest metropolitan areas in the United States. The area experiences “insufficient housing supply, lack of housing affordability, and inequity in access to housing,” reads the Report Card. Ryan Boehm, spokesperson for the Executive Office of Housing and Economic Development, said that to keep up with demands in the market, Massachusetts needs more housing production, the lack of which has resulted in increased rents and home prices.
During the Great Recession of 2008, the nation saw a collapse of the value of housing and the mortgage industry, leading to dispossession, said Balakrishnan Rajagopal, a professor at MIT’s Department of Urban Studies and Planning. While Boston’s housing market was not as severely hit as other states, a series of smaller enclaves were impacted, he said, particularly as marginalized communities and economically oppressed populations experienced foreclosures.
Executive director of the Asian Community Development Corporation, Angie Liou, said that this recession is unprecedented because of the short time that it took to hit the country. Chinatown will be expected to feel the impact of a recession in its housing market right away, said Liou. Even though housing prices may come down as a result of the recession, sales and rentals will likely take a hit, as most people will be ill equipped to afford them.
“The backbone of the Chinatown economy is a lot of these small businesses, food, restaurants, bakeries, bubble tea shops,” Liou said. “We did an initial, quick survey among our residents, and not surprisingly, a big number of them were already experiencing loss of jobs or reduction of work hours.” She added, “That the immediate impact on housing is that people are worrying about how they’re going to make next month’s rent, because we don’t know when people can go back to work.”
Up until now, gentrification had continued to affect the neighborhood, said Liou, with Chinatown considered to be one of the most contested real estate markets in the city. Even before the recession, families had experienced the threat of displacement, mostly due to rent increases and difficulties with landlords, while developers had been changing the face of Chinatown.
According to the study “Forced from Home” produced by MIT’s Department of Urban Studies and the Chinese Progressive Association, close to half of residents in Chinatown spend more than 30 percent of their income on rent. A report from the Chinatown Community Land Trust indicated that from 2013-2017, only 48 percent of residents in Chinatown were Asian.
In recent years, the presence of new, high-rise luxury buildings, unaffordable to working families traditionally living in Chinatown, has been felt. Meanwhile, the historic row houses, long valued by community members, have undergone a transition, with their original tenants being evicted to make way for higher end housing.
Addressing the problem of gentrification will need a different way of approaching housing in Chinatown, said Karen Chen, executive director of the Chinese Progressive Association. Housing should not be awarded to the highest bidder, but should respond to the demand of the community. Chen said the city has to work to protect the working class core of neighborhoods.
The gentrification of neighborhoods in cities has become a national and international phenomenon, she said. “Housing has been used as a profit-making tool, and we have to change the narrative around that. It should be a human right. We need to have some formal form of rent stabilization. Whatever rent we’re paying should be proportionate to people’s income. There should be more tenant protection. There should be more funding for affordable housing. We should have development, but focus on development without displacement. We shouldn’t rely on market study. Let’s rely on human need.”
