Billionaires versus Boomers: Who Is to Blame for the Housing Crisis?

Billionaires versus Boomers: Who Is to Blame for the Housing Crisis?  It seems that the answer is boomers according to a March 13   Boston Globe article by housing reporter, Clarence Sperance titled “Banking on a Silver Tsunami of Baby Boomer Homes to Hit the Market You’ll be Waiting a While” HERE It may not be worth mentioning that the vast majority of Cambridge Baby Boomers (age 59-77) and the Silent Generation (age 78 up) worked incredibly hard to earn enough money to purchase homes in Cambridge, but taken together they account 48.2% (38.7 + 9.5 %) of Massachusetts home owners. We can all agree that is an awful lot of housing. And many Boomers  continue working at the top of their careers, while others live within their means on fixed incomes and/or other sources.
 
But are they to blame for the housing problems we face. No. A key factor according to the Metropolitan Area Planning Council report titled, “Homes for profit: Speculation and Investment in Greater Boston” notes that “A large and increasing share of homes are sold to large investors.” This, they note, “…prevents potential homebuyers from competing in the market, and raises rents for tenants.” As they point out “These investor-buyers then raise rents up to 70%, effectively evicting long-term renters, or simply evict them with no cause. The root cause:  “Individual families are out-bid by investors, who can pay cash with no conditions.”  This is all laid out in the letter to constituents by State Senator, Pat Jehlen HERE.
 
In the Globe article, instead, special attention was given to “empty nestors” the refusal of people age 55 and up who have no children at home not downsizing (moving elsewhere, or dying) because their property “has the potential to more than make up for the estimated 4.5 million unit national home shortage.” Then we read that there are simply “not enough of those older families” to make up the housing shortfall according to Zillow’s chief economist. They tend to own some 25% of the larger homes in the area (3 plus bedrooms), in contrast to millennials (ages 27-42) with families who only own 12.5% of the larger homes. What is not stated is that in the Boston area, many of the late 20s to mid-thirty-year-olds are in graduate school, post doc programs or internships and residencies. In short, their numbers likely are in part diminished by 1) a need to pay tuition and pay back student loans (decreasing the amount of money they have for down payment); 2) the fact that their residency here may be seen as shorter term as they look for long term full positions.
 
 In short, one size does not fit all. Boomers likely also are staying in their homes longer because their homes are their single greatest investment and to move elsewhere (even some place smaller) is likely to have diminished financial returns. Aging in place, as noted in the article, is an increasingly preferred outcome, particularly after the news about increased deaths in senior living complexes in Cambridge and elsewhere during COVID. That said we have only 14% empty nesters in Massachusetts compared with national statistics of 16%. Vacation homes are also being blamed as part of the problem, even though most such homes are far from where people need to be for work. But blaming the owners of vacation homes for the housing crisis in metropolitan Boston seems more like wealth and/or class envy. Governor Healy has blamed single-family-only zoning on the housing shortage (HERE), as the Harvard Gazette has noted “You’re going to have a hard time solving the affordability problem through zoning” (HERE).
“The solution is not to wait and hope for existing homes to come on the market. It’s to help the builders build more housing…. It means loosening some of these building restrictions in the metro area and allowing for more construction” according to Divounguy of Zillow.
To this we can say three things:

1. Cambridge has already loosened building restrictions on Feb. 10, removed single family zoning districts and allows developers to build with no design oversight or means of legal appeal.” The results are already coming in: we are already larger and far more expensive luxury homes, instead of more modest 1- 2- and 3-family homes. HERE.
2. We are not going to be able as Cambridge residents to make up for the huge costs of student loans, and long years of study of our millennial generation as they make forward, now far more difficult due to the massive federal cutbacks.
3. The larger problem, unmentioned in the Globe article is that control of the Cambridge housing market (and too often elsewhere) has been largely ceded to  investors – large housing investors especially. They are bidding against and repeatedly outbidding local buyers – millennials and boomers and others. Here too the billionaires are winning.

​And, increasingly, a lot of our housing is being sold off-market according to local realtors.This means that most individuals here interested in purchasing homes do not even see examples that come up for sale.

All this reconfirms what a recent study by economists Schuyler Louie et al. in the National Bureau of Economic Research (March 2025) are already saying that "...constrained housing supply is relatively unimportant in explaining differences in rising house prices among U.S. cities. These results challenge the prevailing view of local housing and labor markets and suggest that easing housing supply constraints may not yield the anticipated improvements in housing affordability." What does matter? Income level increases among other things. HERE  With the arrival of biotech  and infotech in Cambridge and the Metropolitan Boston area, we have seen an extraordinary rise in such income levels. In this context too, the reference to money as a key agent (very high salaried employees is not actual billionaires) can be seen to factor in as well.

Why is this perspective, and that of other economists such as Cameron Murray and urban planner Patric Condon, not taken up by local reporters? A key factor may reflect financial interests on the part of the newspaper. While The Boston Globes total annual revenues are estimated to be between $100 million and $500 million, a detailed breakdown of these revenues, including classified advertising, is not publicly disclosed. However nationally a significant amount of such advertising revenue is said to come from real estate and developer interests. It is likely to be the same here. While it is very important that this local paper and others continue to thrive, it is also critically important that their reporters address issues in a critical and thorough-going way.