urban economics

Introduction

Boston, like many other cities and urban areas, is facing housing problems. The term housing in this context means affordable homes for low-income earners; in other words, affordability of homes regardless of the income level of individuals. Housing issues have been a major problem in urban areas as a result of several factors. Initially, the housing problem resulted from the migration to the urban areas, but currently, the causes of housing problems are different. Some years back, the high population of urban dwellers superseded the supply for housing, resulting in housing problems. It was a new housing issue, since it was not a matter of affordability, but rather availability. Today, the situation has changed, and there are enough buildings and apartments to accommodate the Boston population.

Nevertheless, these many apartments are unaffordable to the low-income people. As more buildings are under construction, more people are getting homeless. That is; urban development is leading to more homelessness rather than offering a solution. People living in the neighborhood of developments are being gentrified and left homeless and with no shelter. Developers are focusing their capital on constructing first-class offices and luxurious apartments, which will fetch high prices in the market. It is not the fault of the developers, but that of the economic forces. It is the forces of supply and demand that are guiding city development, alienating the homes to accommodate officers and high-cost apartments. Even though the economic forces determine the area at play, what is the societal contribution of this situation? In addition, is there any way the Boston housing authorities, as well as other Boston town authorities, can help stabilize the situation? Is there anything that common people can do to solve the problem? These are just but a few of the many questions that people are asking in relation to the housing problems in Boston. The housing problems in Boston are not juts as a result of economic forces, but also structural and policy problems. Thus, correcting the structural and policy deviation is a way of reducing the housing problems, as the forces of demand and supply will remain.

Structural Failures

Blight invested land from the 1960s was given a construction waiver to enhance the construction of affordable housing, yet the waiver is currently used for the construction of front-officers on land that has never known blight. Chapter 121A gives tax waivers to constructors in an attempt to support the construction of affordable housing. This waiver was to be on land that had suffered blight from the 1960s, when the Act was implemented. At that time, constructors followed it for the good of the low-income earns to get affordable houses. Ironically, the same waiver is enjoyed today by the constructors who build on fertile lands that have never seen blight. Interestingly, the authorities never follow up to know whether the waiver has yielded the construction of the affordable apartments. Knowing that authorities do not heed to follow the waiver, constructors have taken that advantage and are building moderate and expensive houses and officers with the waiver. This picture tells two misappropriations of the public estate at play; the acquirement of productive land through the waiver, and the construction of moderate and costly homes. The authorities in charge of overseeing gaining of the waiver and building of affordable houses have been dormant or exploiting the occasion. The irresponsibility and laxity of the authorities, as well as the selfish nature of individualism and capitalism, are among the major causes of housing problems in Boston.

Secondly, the mismanagement of public housing has seen the construction of low-quality apartments, leased at high prices. The Boston Housing Authority, which is responsible for the construction and maintenance of affordable housing, has failed in both roles. There are few or no constructions of affordable houses going on in Boston. Even in the few cases where construction is going on, the houses are hardly affordable. As much as houses should be affordable, their quality should be within the standards of consumption, which is not the case with the houses available in the public housing departments. The situation in the city is as follows; there is some limited constructing going on, of very low-quality, and upon completion, it is of medium affordability. The cost of the houses puts off most of the people. Although it is aimed at helping, the quality of the same sends away the few who can for it. As a result, the public housing department is overwhelmed by vacancy and non-occupation. Slowly, the department loses grip of what it should be doing, leaving the homeless on the streets.

Third, the failure of the construction regulatory body to observe construction standards for low-cost apartments increases the number of gentrified individual in Boston. Both the public housing department and the engineering authorities in Boston have failed to ensure that consumable houses are constructed. As much as people may be homeless, they do have a taste. Presenting low-quality apartments as affordable for the low- income earners makes most of them prefer to remain homeless. People who need housing need as good homes as those who can afford to construct or even mortgage homes. The fact that they have low-incomes does not disqualify them from human choice. If construction regulatory bodies ensured proper constructions of affordable houses, most of the gentrified and displaced people could own homes.

Additionally, there has been misplaced priority in the housing issue in Boston. Organizations and individuals, offering housing assistance, focus on sheltering rather than housing. Most non-governmental organizations and other charitable institutions have been offering shelter programs for the cold months of winter to the homeless. These programs have helped the homeless temporarily but did not solve the housing problem. Sheltering people during the coldest months of winter is a noble did. However, it is not a solution. It is just a way of preserving the persons alive to endure misery in the rest months and probably the future winters. In addition, the refuge programs are inadequate to satisfy all the homeless persons’ needs. Therefore, there are possibilities that those that get sheltered once will not get another chance. The resources that are channeled to sheltering could be offering housing for a few every year, rather than a shelter for a few. These sheltering programs are also a contributing factor to the housing problem to some extent. Low-income earners have been positively conditioned that they would get shelter when most needed, thus eliminating the urge to acquire homes. Sheltering is not solving the problems of the homeless, but making them persistent. Aid should come in a form that will lift an individual from dependency to economic self-reliance. Sheltering is not doing so, but housing would.

Policy Failures

High mortgage rates or foreclosures have made the dream of many to own homes a mere dream, never to be realized. Most low-income earners depend on their banks and financial institutions for mortgages to purchase their dream homes, however, cheap. When the interest return rates of the mortgages are so high, it becomes impossible for the low-income people to mortgage since they will not have enough to survive on with their families. More so, when mortgage rates are high, the lending conditions are also heightened, alienating low-income earners from feasibility. The policies do not state that low-income people should not mortgage, but the requirements set are unrealistic for the low-income people, thus an elimination method. In most cases, the low-income individuals already have loans from their banks to pay for their children’s education, such that they do not meet the prerequisites to qualify for mortgages. The high rates and bottle-neck prerequisites on mortgages have incapacitated many low-income people from owning homes. They are thus, condemned to homelessness and perpetual housing problems.

In 2006, house and property prices were on their pick. Inflation was the main cause of the high house and property prices, which, even after the inflation rate dropped, remained pitched so high. From the 1990s, the price for houses and property was increasing at a 0.4 percent rate per year while the income distribution was on an average of 2 percent per year. The increasing prices of property superseded the economic reach of many, classifying property ownership as a luxury. At such a high rate of inflation, few people could afford homes, or even to rent apartments. The peak, 2006, was a moment of economic surge in the housing business. The housing real estate industry experienced difficulties, which were characteristics of people’s inability to own homes and houses. Inflation was not a policy failure of the Boston authorities, but the resultants of the inflation in the US were policy failures at some point, or globally.

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Economic Forces

The demand for good houses and offices to serve downtown Boston is increasing every day. New companies are opening, which require offices; more people are climbing the economic ladder, requiring better houses. The demand for the good officers and apartments is far much higher than the available good houses and offices. This situation calls for investors to aggressively construct many better houses and officers to serve the high demand. The increased construction of modern buildings for front offices and apartments is in response to the high demand, which dictates that supply should increase. The high demand for moderate and expensive offices and houses is not only resulting in the construction of more new modern buildings, but also the increase in prices for the available moderate houses. When the demand for a commodity is higher than the supply, the price goes up to balance the equilibrium, which is the case for Boston. The prices for moderate houses have risen for equilibrium with the low supply of the same. Therefore, the forces of demand and supply are the reason as to why housing cost has gone up, as well as the high rate of construction of modern houses.

On the same note, the demand for low-income houses is decreasing continuously. As a result of difficult economic times, the poor in the society are finding it hard to own homes. Thus, there are few who want to purchase or lease low-income houses. The low demand for this commodity dictates a withdrawal in supply by the supplier, home-owners and constructors. The withdrawal of supply, in this case, is in the sense of non-construction of such houses, as well as negligence of the existing ones. Constructors do not want to invest in renovating old low-income houses, which could go without tenants or customers. Instead, they are refraining from investing in this commodity, which is not in demand, and prefer to invest in the commodity of high demand. However, low demand for affordable houses does not contribute to the low prices for the same, owing to other economic factors. For instance, the cost of building materials has gone up, labor has gone up, as well as other factors such as inflation. These economic features play an important part in determining the cost of a commodity, which translates to its price. Thus, the demand for affordable house is low, triggering low supply, yet the cost of construction and maintenance is high, triggering high prices. All these are market and economic forces at play, contributing to the housing issue in Boston.

Solutions

The housing problems in Boston are alarming, and they require an urgent response from the society. If the situation continues aggregating, it will come out of control, and the low-income earners will be out of the rich neighborhoods. Nobody wants this to happen. Therefore, the society must use the little resources and effort it has remaining to save the low-income earners from gentrification and displacement from Boston. To do so, the society has several tools such as land trusts, structural improvements, policy implementations, and cooperation with banks.

Thinking of land trusts, there are practical examples of land trusts which have worked in Boston. Land trusts are community-based groups, which claim ownership of a certain area and develop it in line with the interest of the community. Land trusts will ensure that the value of housing remains relatively low, since they regulate the rate of value increment per year. In addition, the land remains a property of the trust, and the home owner owns only the structure, thus cannot sell the home at an accumulative value of land and property. That way, trusts ensure affordable housing for the low-income earns.

Since structural failure has contributed considerably to the housing issues, improving the structural aspect of Boston would contribute to a solution. Boston Housing Authority, as well as other relevant authorities, should ensure that all constructors follow construction regulations of all areas and do not exploit the society. The tax waiver to assist in the construction of affordable housing should be implemented with discretion and accountability. The rule of law should apply to all construction scenarios. In addition, proper management of public housing could see less non-occupied public houses and even new tenants and leases.

Policy makers have a considerable role to play in the rectification of this problem. It is imperative to assign more funds to housing than to sheltering. As aforementioned, sheltering does not solve the housing issues, yet it consumers’ funds that could be used for housing purposes. Therefore, it would yield more to cut down the sheltering budget and increase the housing budget. Housing offers a permanent solution, while sheltering is very temporary. Policy makers should also implement a law that requires a third of all constructions to be affordable. As the Boston populace is divided into three groupings, each category should acquire an equivalent share of the constructions. Thus, a third that is inexpensive and eminent, a third that is average and a third that is comfy. That way, all people in Boston population will have houses that fit their economic strata. Moreover, strict laws should be in place to rehabilitate those found violating any of housing rules to ensure that greed does not supersede individualism and business spirit.

Lastly, it is important for the Boston authorities to work hand in hand with financial institutions to work out programs that will support the homeless to own homes. The aim of partnering with financial institutions is to avail mortgages and loans at convenient terms for the low-income earners. The federal and state governments seek to support the residents of Boston towards economic self-reliance. It is not possible to empower a person economically, through exclusive grants. Loans work better since they give a sense of responsibility and ownership. Therefore, empowering low-income earners to own homes should not only be focused through grants but also through enabling them to buy homes through their hard-earned money.

Solving the housing issues in Boston should be the focus of every leader since homeless people need homes more than anything else. The first step to helping the Boston low-income population towards self-reliance is providing them with homes.

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Conclusion

In conclusion, housing problems in Boston are as a result of both human actions as well as the economic forces of demand and supply. Since it is not in the ability of the economists to control the market forces, the situations cannot be subdued in totality. However, since the housing problems have partly been as a result of human actions, which can be rectified, the problem can be subdued to some extent. Housing issues are not currently resulting from the high population in Boston; thus, there is still room to accommodate the homeless completely. The greatest enemy of housing solutions in Boston is the human ambition. With the principle of capitalism and individualism at play, all human beings are striving to make more for themselves, multiplying their capitals with high yields. Consequently, regulations no longer play their role, nor do regulatory bodies. The laxity of regulatory bodies, and the individualistic nature of the society, has made the housing issue worsen every day. However, all is not lost. With responsible authorities and positions of power, it is possible to solve the housing problems in Boston. If policies function as they should, and authorities implement them accordingly, the housing problem will close gradually. Since the housing problem is aggregate and has been there for several years now, it is not possible to solve it overnight. Gradual actions can solve the problem in stages, and eventually, the housing problem will be a thing of the past.

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