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Why the Cambridge Housing Market Is Not Free

Aimee L. Smith

As election day rapidly approaches, many people are talking about Question 1 on the ballot in Cambridge and the effort to bring back rent control.

First, let me explain why the Cambridge housing market is anything but “free.” Because housing is a basic necessity, and I believe a human right, and because housing and land are finite in a densely populated city, zoning and development choices shape the housing market -- not idealized models of supply and demand. Further, because it is the residents of a city that make up the community fabric, idealizing tenants as interchangeable wallets of varying size fails to capture how a city sustains and protects itself -- through networks of people who participate in community at the neighborhood and citywide level and/or as part of religious or ethnic or cultural or interest community. Long-term residents have generally deeper roots, and are more central to enabling the functioning of various community networks. If exorbitant rents drive out too many of the long-term residents too quickly, the city is not able to function in basic ways such as keeping crime low and keeping the morale and effectiveness at the primary and secondary schools high. Universities like MIT understand this concept well. Whenever MIT wants to change a policy or defeat the momentum of student demands, they simply have to wait a few years. At my former university, a full contact self-defense class was funded for around five years. Then, once those who initiated the project had graduated and moved on, it hit the fiscal chopping block. I hope this is not going to be the fate of MIT’s commitment to include rape awareness education in new student orientation, but it is certainly a possibility.

The city is a little harder to push around. People who are lifelong residents have strong desires to preserve their neighborhoods, to keep their friends around, and to develop the city in a way that serves the residents of the city. Large universities like Harvard and MIT have other plans for the city. They want to generate research and development related industries that will synergize with their core mission: to carry out world class research. This development brings jobs to the area, but many of these jobs will be filled by people who move here from other cities. That puts pressure on an already tight housing market. The developer seeking a variance to make R&D space instead of the promised housing at 100 Landsdowne St. is a typical example. If MIT were to promote different development on its vast land holdings, the market would be affected quite differently.

Imagine if MIT built enough housing to house its graduate students and staff. Less than 40 percent of graduate students can be housed in Institute housing and many MIT staff and contract staff do not make enough to live in the area. That means they then need to commute from long distances, often in a car, increasing traffic, pollution, and parking pressure, and taking away precious time from their lives. Instead, MIT land is used to make more R&D space, the housing market becomes tighter, and then MIT uses this manipulated market to turn around and increase rents for students in Institute housing because that is what the “market” rate is. (In fact, MIT continues to increase rents as the “market” is leveling off due to the recession, but we will leave that for another time.) Well, the housing market in Cambridge is a market, but what is not discussed is this large role that MIT plays in manipulating that market.

If inflating the real estate and rental prices too quickly drives out long-term residents and destroys a city, won’t that cause the housing “market” to correct itself with a crash? Yes, that will happen. Meanwhile, neighborhoods and communities have been lost and small property owners whose homes were their retirement nest eggs will be hit hard. Large landowners like MIT and Harvard will be able to weather the storm, of course. And then they will be able to take over more land and further shape the city in their interests with much less interference from those pesky residents who think that everyone should be able to access the river, and that wetlands should be preserved.

Rent control is a mechanism to mediate this manipulation. It stabilizes the rental market and thereby the property market. It sets fair prices for rents so that renters can stay and landowners can recoup costs. “Affordable housing” subsidies in an unregulated market form a bottomless pit because the “affordable” rate is pegged to 80 percent of the median of the market -- that same manipulated market I have been describing. A few years ago an MIT postdoc wanted to move into an affordable housing unit, but found that her salary was too low to get in the door, the minimum at that time was $45,000 per year. The well-kept secret about “affordable housing” is that it isn’t affordable. Estimates are that one-third of the jobs in Cambridge do not pay enough to enable living in Cambridge. The fraction of housing slated as “affordable” is a tiny drop in this bucket.

People talk about democracy and how the will of the masses promotes selfish behavior. There is some truth to that, but what is more interesting is how masses of people can be tricked into going against their own interests. Rent control would benefit most students and employees at MIT, yet many students cling to abstractions over “free markets” and inapplicable models from Economics 101 rather than thinking about why their housing costs are so jacked up and about who is laughing all the way to the bank. Perhaps someone else is paying your housing bill? Or maybe you figure it is noise on your tremendous tuition debt. Or perhaps you figure you won’t be living here for too long, so it isn’t worth getting acquainted with the policies of the city. Whatever the reason, the whole point of democracy is to distribute the self-interest as broadly as possible so that the interests of a few are not attended to at the expense of the many; that means we all need to be paying attention and participating.

I hope you will vote Yes on Question 1 on Nov. 4. I also hope you will consider me for your vote for Cambridge City Council. And if you can’t vote or didn’t register, I hope you will consider getting involved in city politics one way or another. There is a lot to be learned from long-time residents of Cambridge about the city, struggle, and community.

Aimee Smith PhD ’02 is a candidate for Cambridge City Council.