A new study suggests that sizable chunks of units in 12 of Boston’s most prominent luxury residential buildings are owned by people outside of the city either as second homes or as investments that owners can rent out or otherwise capitalize on.
The 12 projects analyzed include some of the city’s most prominent redoubts, including Millennium Tower, Millennium Place, the Mandarin Oriental, the Ritz Carlton Residences, and Twenty Two Liberty.
All totaled, the 12 projects include 1,805 units with an average condo price of $3.02 million, according to the study.
Limited liability companies, which can shield buyers’ identities, own more than 35 percent of these units. Also, nearly 40 percent of these LLCs are organized through Delaware, a state that affords especially opaque identity protection for such companies.
Of the units, too, 64 percent do not claim a residential tax exemption from the city, “a clear indication that the condo owners are not using their units as their primary residence,” according to the analysis from the Washington, D.C.-based Institute for Policy Studies.
It said that it conducted the analysis to highlight what it described as rampant wealth inequality in Boston and Massachusetts.
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.
In some buildings, the shares of LLCs and those units not claiming the residential exemption are particularly high, according to the study. For instance, 56 percent of the 51 units in the Mandarin Oriental at the Prudential Center “are owned by trusts, LLCs, and shell corporations, and fewer than 18 percent claim a residential exemption.”
At Downtown Crossing’s Millennium Tower, 35 percent of its 443 units “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.”
For their part, developers and brokers say such numbers do not tell the whole story. Such investment speaks well of Boston’s desirability, they say; and units rented out still bring in residents who in turn spend money at local businesses and on local services.
Plus, some developers say that an out-of-town buyer behind an LLC is not necessarily someone who lives outside of Massachusetts or the United States. That buyer can be an empty-nester in from the suburbs.
Still, Chuck Collins, who authored the study for the Institute for Policy Studies, said the high shares of LLC-shielded and out-of-town owners at these towers only contributes to Boston’s notoriously expensive housing market.
“It’s just another asset class for a segment of investors looking for an alternative to the stock market,” Collins told the Globe’s Tim Logan. “It’s not a home. It’s a wealth-storage unit.”
- Boston’s new luxury towers appear to house few Bostonians [Globe]
- Boston housing prices: Why they’re so high [Curbed Boston]