Home Buying

To some people moving here, Massachusetts is a bargain

Despite the high cost of housing in the Commonwealth and the shortage of starter homes, the state draws buyers. .

. Adobe/Globe staff

Anyone with a mortgage or rent to pay can tell you that the Boston area is very, very expensive. While local rents have taken a perhaps-overdue dive during the pandemic — down 16.8 percent in February compared with a year earlier, according to rental website Apartment List — the $1,741 it costs to rent a median-priced two-bedroom apartment around Boston was still well above the national average of $1,101 and third-highest among major metro areas. And at $563,700, the median price of an existing single-family home in Greater Boston was nearly double the national average of $299,900 in 2020, according to the National Association of Realtors.


The cost of housing is so high here, and the supply of affordable homes so scarce, that many experts have warned it could threaten our long-term economic growth. But we pay more for lots of other things, too: everything from electricity to haircuts to wine — which costs an average of $12.09 a bottle here, compared with $9.12 nationally, according to the Council for Community and Economic Research’s 2020 Cost of Living Index. That report ranked Boston as the ninth most expensive metro area in the country last year, just ahead of Southern California’s Orange County.

(From eggs to rent, here’s how much more — or less — you are paying than everyone else, Boston)

But to residents of the metro areas ranking above us on that list, Boston can feel like, well … something of a bargain.

“It is expensive to live here, but it’s still more affordable than some other parts of the country,’’ said Barbara Hirsch, director of operations and head Boston strategist for the relocation firm Suburban Jungle. Transplants from San Francisco and San Jose, in particular — where median home prices topped $1.1 million and $1.3 million, respectively, in 2020 — can actually find a measure of relief in our housing market. “A lot of people in the Bay Area want to buy, but they wind up having to rent because it’s so expensive,’’ Hirsch said. “They have great jobs and very stable incomes, but it’s just been very hard for them to kind of catch up with the prices there.’’


Boston was ranked as the ninth most expensive metro area in the country last year, just ahead of Southern California’s Orange County.

Wellesley homeowner Copeland Filoon experienced that dynamic himself. Filoon and his wife moved to San Francisco for a job opportunity in 2010, around the time they were expecting their first child. Between the great food and the surfing, hiking, and skiing, they loved the Bay Area. “It’s a great place to live, to be quite honest with you,’’ Filoon said. He didn’t miss Boston winters, either.

But in the seven years they lived in San Francisco, steady and severe rent increases left them farther and farther behind in their quest to save for a home as tech workers and money flooded into the area, bidding up prices. “If you weren’t in tech, your earning trajectory wasn’t the same,’’ Filoon said. By 2013, the family, now with two young children, was living in the city’s Presidio neighborhood, where Filoon said their already high rent rose 5 percent to 8 percent every year, with little warning and no room for negotiation. Friends had it even worse, he said. “No matter how hard you tried to save, the following year you had to take those savings and put it toward your rent,’’ Filoon said. “So it just became harder and harder to save for a home.’’


So in 2017, the couple decided to move back to the Boston area, where they both grew up. “Family brought us back, but also the school system,’’ he said. “We wanted our kids to be in public school, and the public school system in Massachusetts is fantastic, relative to the rest of the country.’’ And unlike the Bay Area, Filoon said, the geography of Greater Boston and its commuter rail system opened up more communities for them to choose from, too.

They ended up buying a house in Wellesley, where they love their children’s school and enjoy being a short train ride away from Boston and closer to family members, too. He acknowledges that Wellesley is a pricey community — which makes the trade-off that much more remarkable. Housing was just the beginning. “While it’s expensive, and maybe I’m not saving as much as I’d want, my mortgage and taxes are less than my rent was out there,’’ Filoon said, noting that gas was more expensive in California and his car insurance was nearly double what he pays now. “The math is just better here.’’

Hirsh said transplants are particularly drawn to the Boston area’s strong job market, health care options — and schools. “Massachusetts has just a great reputation — nationally — as having some of the best schools in the country,’’ she said.

And whether her clients are coming from the Bay Area or New York, they find they don’t have to sacrifice much on cultural, culinary, or outdoor amenities when they move to Greater Boston.


Thida Sam, one of Hirsch’s recent clients, was anxious about leaving Manhattan when her husband, a professor at New York University, accepted a job offer in Boston. The couple had been living in faculty housing in the heart of Greenwich Village, Sam said, but friends and colleagues who had spent time in Boston told her, “You’re going to love it — it’s New York but manageable, especially with small kids.’’

Their predictions proved true. The couple bought a Melrose Victorian near the Malden line two months ago, and Sam has fallen in love with her new neighborhood. “It reminds me of parts of Brooklyn and Queens, so it doesn’t really feel like a big jump,’’ she said. “There’s world-class cuisine here in Boston, and I love the diversity that I see here.’’

She’s also grateful for the extra space, after working in an apartment with two small children through the lockdown. “We moved from a 900-square-foot apartment to a 2,500-square-foot house — we don’t even know what to do with all this space,’’ Sam said. With Middlesex Fells Reservation so close by, getting the kids outdoors has been easier, too. “We would try to get the kids out hiking last summer, and it was impossible,’’ she said. “It was always like an hour, an hour and a half, just to get them out in the woods.’’


Buying in New York City was never going to be an option, Sam said; if anything, the couple had planned to keep renting and buy a summer home somewhere upstate. The move to Boston changed that calculus, though. Even though their faculty apartment in the Village was subsidized by the university at well below market rates, Sam said, “Our mortgage is still cheaper than our rent was.’’

To be sure, many more New Yorkers are moving to Florida instead, which presents a far bigger and warmer bargain than Boston. And with COVID putting a pause on international immigration, Massachusetts is losing residents itself. But while the possibility of permanent telecommuting has led some wealthy workers and vocal business owners to relocate from California and New York to low-tax states like Florida and Texas, the Commonwealth once known as “Taxachusetts’’ could position itself as a culturally comparable, surprisingly lower-tax alternative, said Matt Dolan, an agent with Sagan Harborside Sotheby’s International Realty in Marblehead. “When people are in flux, it’s a great opportunity for state and local governments to be thinking, how do we attract people?’’ he said.

“Our mortgage [here] is still cheaper than our rent was.” — THIDA SAM, New York transplant

Dolan said he had three buyers looking to leave California this winter, largely to escape the state’s high tax burden. “The California exodus is real, that’s no joke,’’ he said. “We don’t think of people coming here as a low-cost solution from California, but they are.’’


Indeed, one of Dolan’s clients told him that his tax savings alone could finance the purchase of his Bay State luxury home. That sounds fantastical, but some rough math bears it out. A couple who earned $2 million in 2020 would pay a flat 5 percent in state income tax in Massachusetts, or about $100,000. But in California, which has graduated tax rates, almost half of that income would be taxed at the top marginal rate of 13.3 percent, for a total state income tax bill of about $225,000. That’s a savings of more than $10,000 a month — enough to buy a $2 million house.

In fact, with fairly middling property and income tax rates, “Massachusetts doesn’t really have high taxes at all,’’ said Richard Auxier, senior research associate at the Tax Policy Center. In 2017, the latest data available, state and local tax revenues added up to 9.71 percent of personal income in Massachusetts, below the national average of 9.83 percent. That was the lowest in New England, but for New Hampshire. (At 8.37 percent, the Granite State had the lowest rate in the entire Northeast).

That doesn’t mean we don’t pay a lot in local taxes; a 1 percent property tax on a $500,000 home generates as much revenue as a $250,000 home taxed at double that rate. “The reason Massachusetts has relatively high tax revenues is because it just has so much wealth,’’ Auxier said. “It’s able to keep its rates and its tax burden relatively low and still generate a lot of revenue.’’


But compared with New York, where the highest marginal state income tax rate tops 8 percent, and where counties and localities commonly layer additional taxes on top of statewide levies, Massachusetts comes out favorably. It also illustrates the balance policymakers must strike in not driving away wealthy residents who comprise a big portion of the tax base.

Dolan said his California buyers were driven out of the Golden State by high taxes and what they saw as a dysfunctional government, but choosing the Boston area wasn’t purely a financial decision; he said they liked the lifestyle available on the North Shore. People tend to move between “like markets,’’ Dolan said, and the coastal and cultural atmosphere here rang familiar. There could also be some familial pull at play. “Anecdotally, I’m seeing people that grew up in Massachusetts are coming back here,’’ he said.

After all, family geography has an economics all its own. “For us to come see the grandparents, that used to be four tickets across the country,’’ explained Filoon. “If you just live next to them, it’s a short drive in the car.’’

Jon Gorey blogs about homes at HouseandHammer.com. Send comments to [email protected]. Follow him on Twitter at @jongorey. Subscribe to our free real estate newsletter at pages.email.bostonglobe.com/AddressSignUp. Follow us on Facebook, Instagram, and Twitter @globehomes.


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