Towering Excess: The Perils of the Luxury Real Estate Boom for Bostonians

Jim Hightower Author, Commentator, America’s Number One Populist

Boston is experiencing a luxury real estate boom, with thousands of new luxury residential and rental units in different stages of development. A decade from now, Boston’s skyline and population demographics will be fundamentally altered by decisions being made today.

This boom does have benefits, providing good jobs in the building trades and increasing property tax revenue for the city. But the boom is not helping address Boston’s acute affordable housing crisis. Bostonians today have a median household income of $58,500. Average Bostonians cannot afford the new luxury condos. They will, unfortunately, feel their impact. Boston’s luxury boom figures to push up land and housing costs and accelerate Boston’s already troubling disparities of income, wealth and opportunity.

Suffolk County, the jurisdiction where Boston resides, rates as the most unequal county in Massachusetts, our nation’s sixth most unequal state in terms of the gap between the wealthiest 1 percent and everyone else. And Boston’s racial wealth divide will only worsen if current trends continue. One marker of those trends: In 2015, not one single home mortgage loan was issued for African-American and Latino families in the Seaport District and the Fenway, two Boston neighborhoods with thousands of new luxury housing units.

City officials are failing to understand how such towers play a key role in the global hidden wealth infrastructure, a shadowy system that’s hiding wealth and masking ownership, all for the purpose of helping the holders of private fortunes avoid taxes and oversight of illicit activities. Many Boston luxury properties are functioning, in effect, as wealth storage lockers for global capital.

This report examines how Boston could better protect the public interest and, in the process, capture some of the current luxury real estate wealth flow to support affordable housing for Boston residents. We focus here on residential condominium ownership as a form of “wealth storage” and examine twelve of the highest-priced and presently occupied luxury housing developments constructed in Boston over the last decade.

  • These twelve projects, totaling 1,805 units, have an average condominium price of $3.02 million, a price 50 times higher than Boston’s median household income.
  • Over 35 percent of these units are owned by limited liability companies (LLCs) or trusts that obscure the real owners and beneficiaries. Almost 40 percent of the LLCs owning Boston luxury properties have organized themselves in the state of Delaware, the premiere secrecy jurisdiction in the United States. This Delaware connection shields the owners from public detection. • Of these 1,805 luxury units, 64 percent do not claim a residential exemption, a clear indication that the condo owners are not using their units as their primary residence.
  • Some of Boston’s new luxury buildings stand out as textbook “wealth storage” properties. The 51 condominium units above the Mandarin Oriental Hotel at the Prudential Center, for instance, sold for an average of $6.5 million. Over 56 percent of these units are owned by trusts, LLCs, and shell corporations, and fewer than 18 percent claim a residential exemption. The Millennium Tower has 443 units averaging $2.4 million in assessed value. Over 35 percent are owned by shell corporations and trusts, and almost 80 percent of the units do not claim the residential exemption. Half of the LLCs that own units at Millennium Towers are organized in Delaware.
  • This report’s authors have identified a number of “red flag” transactions that in other jurisdictions would likely trigger a Treasury Department FinCEN criminal investigation. These include a large number of properties purchased through cash transactions by shell corporations and international buyers. Cash transactions greatly increase the risk that the properties involved are being used to launder money from criminal activities and speed capital flight.

Boston’s past and current city administrations have permitted an explosion in luxury real estate property construction that is reshaping the city’s skyline and economic composition. With thousands of new luxury units either under construction or seeking permits, city officials ought to be seriously exploring the perils these units pose.

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be – consumers, working families, environmentalists, small businesses, and just-plain-folks. Twice elected Texas Agriculture Commissioner, Hightower believes that the true political spectrum is not right to left but top to bottom, and he has become a leading national voice for the 80 percent of the public who no longer find themselves within shouting distance of the Washington and Wall Street powers at the top. He publishes a populist political newsletter, “The Hightower Lowdown.” He is a New York Times best-selling author, and has written seven books including, Thieves In High Places: They’ve Stolen Our Country And It’s Time To Take It Back; If the Gods Had Meant Us To Vote They Would Have Given Us Candidates; and There’s Nothing In the Middle Of the Road But Yellow Stripes and Dead Armadillos. His newspaper column is distributed nationally by Creators Syndicate.

Stronger Together

Stronger Together