Housing problems in cities like Springfield, Holyoke, can be blamed on suburban growth, job loss, MassInc. report says
By Jim Kinney
November 14, 2009, 2:00PM
For people living in Holyoke’s poorer neighborhoods, moving up means moving out, whether they like it or not.
“When people did work their way up the economic ladder, there was no place for them to go in the neighborhood to buy a home,” said Kathleen G. Anderson director of planning and development for the city of Holyoke. “And these are exactly the kind of people you need to improve a neighborhood.”
Benjamin K. Forman, a senior research fellow at Massachusetts Institute for a New Commonwealth, said last week that housing problems in Springfield, Holyoke and similar cities across the state can be blamed in part on suburban growth and job loss.
But Massachusetts’ housing policy is too focused on providing affordable housing opportunities in Boston and its immediate suburbs where housing prices have skyrocketed so fast, he said. The poor have had no where to go, Forman said.
Peter A. Gagliardi, executive director of HAP Housing in Springfield, said grant money limits developers to building units only for the poor or the elderly. Developments that would include market-rate housing or commercial space don’t qualify. “We don’t have the tools,” Gagliardi said.
He released his report, “Going for Growth: Promoting Residential Reinvestment in Massachusetts Gateway Cities” last week. Often called MassInc., the institute is a Boston-based nonpartisan think tank that focuses on the state’s middle class. The complete report is available at no charge online at www.massinc.org. You must register to read it, however.
Forman has long studied the state’s struggling manufacturing centers, called “Gateway Cities”: Springfield, Holyoke, Pittsfield, Brockton, Fall River, Fitchburg, Haverhill, Lawrence, Lowell, New Bedford and Worcester.
Demand for housing in city neighborhoods has fallen so far that residential space in Springfield sells for $115 a square foot – that’s a dollar a square foot less than it costs to build, not counting land costs, Forman said. In Holyoke it’s a little better, selling for $122 a square foot versus a construction cost of $116. But that’s still not much of a profit margin, Forman said.
Gagliardi said that disparity is one of the things that keeps the Court Square project in downtown Springfield from getting off the ground. Hypothetical condominiums in the Court Square building could cost $300,000 a unit to build, but would only sell for $180,000.
“Once you are talking about market rate housing, people have the options,” he said.
The state doesn’t give communities the tools to subsidize a project and end up with market rate housing, he said. And market-rate housing is what Springfield and Holyoke need to bring people, business and money downtown.
Forman said those cities often use affordable housing money because it’s the only money available to rehabilitate properties in some of these neighborhoods. But those projects also concentrate poverty in neighborhoods and discourage commercial investment and job creation.
Part of the problem, Forman said, is that apartments last a long time and don’t go away just because no one wants to buy them. The supply of housing can’t react to a falling market like other markets do.
“Housing is real durable, so when demand for housing changes, it sets off a cycle of disinvestment, because the supply doesn’t contract,” Forman said.
He wants to see a state tax credit for the preservation of owner-occupied buildings. Forman would also like to expand employer-assisted home buying plans such as those run by Baystate Health and MassMutual Financial Group and more initiatives such as the Buy Springfield Now program. He’s also calling for more investment in the amenities that draw middle-class people to city neighborhoods such as parks and good schools.
Some cities help homeowners buy insurance against declining property values.
Public safety is also an issue. Forman said national studies show that for every violent crime, a city loses one college-educated resident.
“People with options want to live someplace safe,” he said. “That’s what a lot of this is about, making these communities places of choice, not places of last resort.”
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