Article 33/34: New Multi-Family Does Not Necessarily Mean Attainable/Workforce Housing

[Matt]

Town Meeting Members,

It's important to keep in mind that even with the creation of new multi-family housing supply, we still have a long way to go on affordability. As a point of reference, the median price per square foot to purchase a new condo in a multi-family building built in 2021 in the general proximity of Lexington was around $815 per square foot finished living area.

Here is an example of one of the smallest new units available "near" Lexington:

https://www.redfin.com/MA/Somerville/240-Mystic-Ave-02144/unit-106/home/184898552

A 671 square-foot 1 bedroom 1 bath for $579,900.

If you assume a 30-year fixed mortgage and current interest rates and a 5% downpayment (around $29k), after property tax and mortgage insurance, this comes out to cost around $3,912 per month to own this condo.

In the Article 33 presentation there is a table of Lexington municipal salaries, the largest being $111,838 per year, which breaks down to about $9,319 per month before taxes and roughly $6,445 after taxes.

The U.S. Department of Housing and Urban Development generally says that a household should not spend more than 30% of their income on total housing costs. For the municipal salary above this would mean $1,934 and if you increased it to a more realistic 50% of income, it would be $3,223.

So a 671 SF 1 bedroom 1 bath unit is ~$3,900 a month and the highest paid Lexington municipal employee in that table after spending 50% of their after tax income could only afford ~$3,200 of housing.

We have work to do.

Very respectfully,

Matt Daggett
Precinct 2

[Umesh]

Here is a list of Lexington municipal salaries for 2021, starting with LPS School Superintendent: $290,000. The majority of the next 10 are police officers and firefighters. I stopped at #15 ($179K). Factor a second income, and it’s reasonable to assume an average household income of $300K - $350K. This is a conservative estimate when you consider benefits and near guaranteed job security. 

https://govsalaries.com/salaries/MA/town-of-lexington

At last night's meeting Wendy Manz pointed out that a family would need a household income of $284K to afford a home in Lexington at the current median price of $1.5MM. 

I hesitate to assume that Lexington’s municipal workers want to live in Lexington, given that many can certainly afford to do so. 

Best,

Umesh Shelat, TMM P7

--
You received this message because you are subscribed to the Google Groups "LexTMMA" group.
To unsubscribe from this group and stop receiving emails from it, send an email to lextmma+u...@googlegroups.com.
To view this discussion on the web visit https://groups.google.com/d/msgid/lextmma/2E2DD2E0-F8A4-47CE-A183-2DCCC82D9FE9%40mattdaggett.org.

[Jessica Steigerwald]

Thank you Matt.

I have been trying to understand what new units of housing that may be created will cost, and what - if any - new construction would be inclusionary, or semi affordable. The market will set the selling price, and demand remains very high.


To add information to the note you shared about municipal employees, the Department of Education (DOE) has a website with “School and District Profiles” and they provide the following:

Average teacher salaries in Lexington (2019-2020):

2019 $87,1451
2020 $92,678


- Jessie

Jessie Steigerwald, Precinct 8

[Bob Balaban]

Average? Or median? Makes a big difference! 

Bob Balaban pct 5

To view this discussion on the web visit https://groups.google.com/d/msgid/lextmma/20C1F724-3619-4BC7-BFE4-53CEFC611871%40shininghours.com.

[Jessica Steigerwald]

Umesh,

This seems like a good question to ask the Town HR experts, or union representatives for municipal or school employees, rather than guess.

Given the link you sent, I’d like to highlight information from the top of the document:

The information is drawn from 2,546 employees in Lexington.

Average annual salary was calculated as $54,276 and median salary was $52,261.

You note that you are drawing assumptions based on looking at the top 15 salaries.

 

Looking at the top 15 salaries and then drawing a conclusion about how many employees feel about housing affordability (or desirability) in Lexington doesn’t strike me as a way to accurately determine the need/desire for housing units. 

Speaking directly with more than 15 people who work here and would like to live here, but can’t afford it - or listening to representatives who speak for a larger group of employees - provides me with the sense that many people would like to live here, and can’t afford it.  Matt Daggett also offered a mathematical look at affordability based on salaries and per unit housing costs.

Also, I do not think it is fair to set policies based on an assumption of two-income households. 

There are many single-parent heads of household who need and desire housing, and we should not set formulas that expect people to have a financial partner for life or face ongoing housing insecurity.

- Jessie

To view this discussion on the web visit https://groups.google.com/d/msgid/lextmma/CAC3FGDYoD%3D562-TGfhy5H2u5mXF5uSs6Ch3m%2BcS_PEEitaXbmg%40mail.gmail.com.

[Jessica Steigerwald]

Yes, Bob. I agree.  The DOE reports average.

See Umesh’s link for a reporting of combined Town of Lexington employees that reports average and median, however I do not know whether the source is credible. It is listed as “gov” but the footnote language says it is not affiliated with the government. It appears to include part-time people. 

Hope that helps. 

- Jessie

Jessie Steigerwald, Precinct 8

To view this discussion on the web visit https://groups.google.com/d/msgid/lextmma/CAB0V1P%2B_9nXkDHg_Ks8GAr9f2H9CP5c%3DmBtiRAj2D%2B8r6Rh64Q%40mail.gmail.com.

[Umesh]

Jessie,

You are attributing conclusions to me that I did not make. I refer you to my original email. Second, the same data is available on WickedLocal.com (you may disagree with that source, as well, but it will cost a subscription fee). Third, I absolutely believe it is reasonable to factor two earner households when you consider the income required to currently buy into Lexington, not to  a purchase made 50 years ago - that is repeatedly referenced, specifically with respect to 2021 data, and the Manz comment (again, see original post). I think it would be reasonable to say that the bulk of home sales in the last two years fall in the $1.2MM - $1.8MM range indicating a household income of about $300K. To me, that is consistent with the combined salaries of two mid level software engineers, or one senior scientist and one junior scientist, or an engineering manager and a data scientist. The vast majority of people I know who have bought into Lexington recently have been two income households. Perhaps your experience is different.

Incidentally, the only conclusion I did make ws:

Factor a second income, and it’s reasonable to assume an average household income of $300K - $350K. This is a conservative estimate when you consider benefits and near guaranteed job security. 

This clearly refers to the previous sentence referencing the top 15 Lexington employee earners. 

Finally, I believe workforce housing should be allowed in specific situations involving essential employees. For example, public school teachers should not have to travel two hours, year after year, to work because they cannot reasonably afford to live closer to their school. This is not the case in Lexington - there are numerous affordable towns, even, within Middlesex county. To avoid an almost certain mischaracterization of this last statement (not by you, Jessie), I will say this is absolutely unrelated to my views on the Lexington teachers' salary negotiations. 

Best,

Umesh Shelat, P7

To view this discussion on the web visit https://groups.google.com/d/msgid/lextmma/641757DD-D54C-4818-A8B2-DA001365331B%40shininghours.com.