JeffDowntown
Senior Member
- Joined
- May 28, 2007
- Messages
- 4,550
- Reaction score
- 3,158
It's not quite that straightforward. I'd argue that renters and purchasers of condos everywhere in the area bear the cost of the affordable housing subsidy, not just renters/owners in this project. And FRIT bears a significant portion (most) of the cost through lower profits.
I had a whole long explanation for this typed out, but it was needlessly complicated. Basically, changes to producer cost affect the quantity producers are willing and able to supply, and supply interacts with demand to determine market price. When units are traded freely, all consumers face market price. So if the market price for an Assembly Row condo is $800k, it will be $800k no matter how much FRIT payed to build it.
If affordable housing requirements cause developers to not build units they would otherwise then all consumers of housing pay the cost of this restrained supply, not just tenants/owners in units built by those specific developers.
It is certainly a stealth tax on all parts of the market. And it is largely there because we seem unwilling to bay broad based taxation for community benefits like affordable housing anymore.
At the mid-market, like Assembly, it likely constrains supply (obviously hurting prices for all mid-market residential customers). (Scary that Assembly pricing is mid-market for Boston!)
At the high end of the market, it probably doesn't constrain supply, it just raises the prices of the units. Hence all the luxury units in Boston. An extra $200,000 to cover the affordable units, on a $ 3 Million condo is less noticeable to the buyer. More pricing flexibility in the luxury market.