June 23, 2024


Mad about real estate

Lawrence isn’t the housing bargain it used to be

They say a rising tide lifts all boats. In Lawrence, it’s also raising rents.

While this former industrial city used to represent an affordable alternative to renters priced out of Boston and Somerville, Lawrence has seen something of an upswing in recent years — and that rental discount is dwindling.

Back in 2015, a family renting a median-priced three-bedroom apartment could save $645 a month leasing in Lawrence instead of Boston, according to rental website Apartment List. But rents in Lawrence have climbed 21 percent in the past five years, compared with just 4 percent in Boston, slashing that savings to just $354 a month. In fact, that same family could find less expensive median rents in Lowell, Haverhill, and Salem, among other cities north of Boston, according to the website.

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There are a lot of forces driving up housing prices in Lawrence, said Jessica Andors, executive director of the nonprofit Lawrence Community Works. But one of the biggest is simple demand, particularly among Latinos, who make up 80 percent of the city. Newcomers want to start here, and first-, second-, and third-generation immigrants increasingly want to stay.

“This city is, and always has been, a magnet for immigration of all kinds, and over the last 40-plus years it’s been a magnet for Latino immigration,” Andors said. Now home to one of the largest Dominican communities in the United States, not to mention sizable Puerto Rican and Guatemalan populations, Lawrence has established itself as a Latino center of gravity in the region, its corner bodegas and Latino-owned businesses offering cultural comfort.

“You can go through your whole day and conduct all of your business in Spanish. You can send money and stuff back home, you can find the food that you want, there are faith-based networks and job networks here for people,” Andors said. “It just exerts this really powerful magnetism.”

In a city where the population is near a 70-year high, and where three-quarters of the households rent, the demand for apartments is fierce. “We don’t have any vacant properties right now,” said Esther Encarnación, owner and business manager at Saetas Enterprise, a property management company in Lawrence. “That’s one of the issues we’re having.”

Alberto Nuñez and his wife, Damarys, ran a body shop in Lawrence before they started investing in real estate in the 1990s. Now they and their two sons own and manage more than 100 residential units in the city, where they try to keep rents low and Nuñez said they have a long waiting list. “I’ve been doing this almost 28 years, and it’s changed a lot the last couple years,” he said. “It’s hard to find an apartment.”

An imbalance between housing demand and supply can often explain swiftly rising rents, said Chris Salviati, housing economist at Apartment List. But private and nonprofit developers in Lawrence have actually been extremely busy building to meet that demand. The same brick mills that once beckoned immigrants with factory jobs — and then sat largely abandoned or underutilized for decades — now entice tenants with redeveloped loft apartments that have high ceilings, views of the Merrimack River, and modern amenities.

By Andors’s count, mill conversions like Arlington Point and Washington Mills have added hundreds of units to the city’s housing supply in recent years — no small figure in a city of 80,000. And those kinds of compositional changes to a city’s housing stock can push rents higher. “A lot of times, new construction tends to hit at a higher price point,” Salviati said, and that can bring up the median price of the overall market.

Salviati, who grew up in the Merrimack Valley, said that between the trendy mill lofts and the city’s commuter rail access, it’s not surprising that Lawrence would capture young professionals priced out of the booming Boston area. “There are a lot of good reasons you’d expect to see Lawrence’s rent growth picking up quickly in recent years,” he said.

But, Andors noted, it’s not that the city is gentrifying, exactly. For one thing, a lot of those beautiful lofts in former mills are actually affordable housing units. Her organization and other community groups were proactive about shaping the context for those mill conversions, to ensure they would yield ample affordable housing. “So in many of the areas where the mill buildings are, there are zoning requirements and overlays set up that create an affordability mandate for any housing that gets developed,” she said.

Lawrence Community Works itself has redeveloped two former mills in the past decade, adding more than 130 affordable units to the city’s supply (with nearly 300 more planned). Meanwhile, bigger developers like WinnDevelopment and Trinity Financial also have converted old mills into hundreds of loft apartments, many of which are reserved for tenants making less than 30 percent, 60 percent, or 80 percent of the area median income ($20,600, $34,300, or $54,900, respectively, for a single person).

But the mills aren’t the only source of new quality housing in Lawrence. Among the ranks of the city’s growing Latino middle class, Andors said, there’s a handful of smaller developers “who know the community well and create some of the more naturally occurring affordable housing.”

Local developers Wendy Estrella and her husband, Jose, for example, immigrated to Lawrence more than 25 years ago. They’ve built or rehabbed more than 100 residential units in the city — including, most recently, a 24-unit ground-up construction project where the apartments include quartz counters, dishwashers, and central air. Rents for new two-bedroom units range from $1,200 to $1,500.

Estrella said there’s a growing demand for nicer housing among first-generation Lawrencians who want to remain in the city. “They’re becoming professionals, they’re looking for something affordable but at the same time more modern with more amenities,” she said.

And the mills aren’t enough to sate that demand on their own. “Even with the 700-plus units they’ve built in the last year or so, there’s still a need,” said Estrella. “We’re 100 percent booked, we have zero vacancy, and there’s still people looking for units.”

In response to the rising rents, some people are looking for less expensive housing elsewhere. “I have seen the Lawrence diaspora spread out to surrounding towns,” Andors said, particularly over the Lawrence line into Methuen. And among residents who attend her organization’s first-time home buyer classes, Andors added, many end up looking or buying in Lowell or Haverhill.

Homeownership is another avenue people are taking to escape rent hikes. “Rental prices have been increasing at such a high rate, for some people they can’t even keep up with it,” said Andres Castañeda, a realtor with the Fermin Group at Century 21 North East. “So they see a lot more security in having an asset with their name on it, where the price is fixed.”

Castañeda said about half of his clients intend to rent out part of their property to help pay the mortgage, whether it’s an extra bedroom in a single-family or the second unit in a duplex. “If you have a triple-decker, ideally it should completely offset your mortgage,” he said. “So a lot of people are looking to take that route as their first step into ownership.”

And still others, unable to find or afford a place of their own, are doubling or tripling up with friends, family members, or total strangers. It’s a matter of economic survival for many people, Andors said, but it can also lead to dangerous overcrowding.

“When you have so many people wanting to live here, you have people willing to rent rooms in houses, you have people willing to live in an attic that’s been divided up into seven or eight or nine rooms, sharing one bathroom because they just want to be able to live here and find some work and find a foothold,” Andors said. Such living arrangements not only present a fire hazard, they also create ideal conditions for COVID-19. “You can’t stop the spread of something like the coronavirus in that sort of environment.”

Speaking of the pandemic, Andors said the eviction moratorium has been absolutely crucial in maintaining housing stability for renters and families in Lawrence. “There’s so many studies that show that housing stability is really critical for other life outcomes,” she said. “It leads to better health outcomes for families, it absolutely leads to better academic outcomes for kids.”

But she worries, too, about owner-occupant landlords — the ones buying duplexes and threedeckers to offset their own housing costs — who may be losing rental income even as mortgage payments come due. “We also have to think about the small landlords and make sure that we’re not protecting people at one end and destabilizing them at the other end,” Andors said. She’s bracing her staff, some of whom counseled homeowners in 2008, for a potential foreclosure crisis, but hoping local lenders will have more leeway to work with borrowers this time around.

Andors has found it hard to watch the suffering and strain caused by the pandemic and resulting economic slowdown, “because the community was on such an upward trajectory prior to this, in a way that really has been driven more from the inside out,” she said. “The schools have been doing better, and more kids are going to college, and more local businesses are starting, and there’s slowly rising homeownership in the Latino community and more Latino families who are becoming these pillars of the community, building wealth themselves but also getting involved in more charitable efforts … I won’t deny that the pandemic has set some of that back.”

Still, she’s confident that the city will recover. “It’s an incredibly resilient and vibrant place, and I do think people will bounce back. There’s so much hustle here, people will reinvent themselves and find a way. But I wouldn’t downplay the struggle that people are having, either.”

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.