If you feel that the cost of housing in Boston has become unmanageable, you are not alone. Rent in Boston is the third highest in the country with an average price of a one bedroom costing $2,310, according to an April 2016 study released by rental listing site Zumber.
A recent article in the Boston Globe revealed that a significant portion of the apartments in Downtown Crossing’s new Millennium Tower have been bought by foreign investors, some of whom are only buying the properties as investments, not as places to live. This example is a microcosm of what is happening around the country.
The article points out that in 2015 foreign buyers spent $102.6 billion on residential properties. That is 50 percent more than in 2010. These foreign investors from countries like China and the Middle East are out pricing locals and raising the cost of real estate in cities like Boston.
“Housing prices have appreciated very dramatically in the last 20 years, and that is a chance for high returns on investment, and they are attractive particularly to international investors,” said Harvard Business School historian Nancy Koehn on Boston Public Radio Tuesday.
“This is a way to get your money out into what is regarded as a relatively stable environment where the chances of appreciation are good. It is like a safe deposit box,” she continued.
This surge in real estate prices could have debilitating consequences for the diversity and opportunities in American cities. “For more than 200 years, cities have been places where social and economic mobility was higher than outside the city. That is now reversing itself,” Koehn said.