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The Changing Middle Class Along Route 128

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128 Business Council
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Sixth report in an ongoing series Rediscovering the Middle Class.

Route 128 on this day is packed with drivers heading north and south.

"I mean 128, it’s like a parking lot," said Linda, who says her commute between Boston and Lexington is worth it. "It is. It is great to live here. That’s why I’m still here."

Linda’s in her 60s — born in Lexington and raised in this modest canary-yellow clapboard house. An American flag hovers above the entrance. The paint is peeling. But its value has risen dramatically in the post-recession, she says, from about $300,000 to about $500,000, and that price rise has helped anchor Linda’s position in the middle class.

But one realtor believes Linda is undervaluing her property. He says if torn down, the house and yard could command upwards of $1 million. However, Linda saw her property taxes skyrocket 25 percent in Lexington over 30 years.

"Everything has increased," he said.

With no corresponding increase in salary over 10 years ("The salary has slowly increased," Linda said. "Five percent."), Linda still believes a middle class family such as hers can afford to move here.

"There are homes under $500,000 in Lexington," she said. "Small homes. Two or three people could live in a small home."

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Lexington, MA
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Actually there aren’t a whole lot of small houses left to buy in Lexington, and even these cost upwards of $800,000. WGBH News looked at more than 24 listings, and a majority hovered around $1.2 million. Imagine — with a 20 percent down payment of $260,000, a mortgage would cost you $5,000 per month over 30 years.

"It’s always been tough to buy the closer you get into Boston, but it’s reached new heights," said Scott Van Voorhis, who has been writing about real estate in Massachusetts for two decades. He says rapidly rising housing prices in Lexington and other towns along 128 are potentially bad news for the middle class.

"It’s much harder than it has ever been before to buy close to Boston to be in a position to have a shorter commute, to spend less time of the road, especially some of these houses on 128, they’re in some cases there are more million dollar homes on the market than there are homes below $500,000," Van Voorhis said.

What’s driving this trend?

"It all comes down to jobs," said Tim Warren, CEO of the Warren Group, which compiles data on New England real estate. "And where are the best-paying jobs that allow people to buy expensive homes?"

No surprise it’s along a 12-mile stretch of 128.

"Burlington, Lexington, Waltham, Weston, Needham, Newton," said Patrick Sullivan, outreach director for the 128 Business Council. He says the post-recession economy around this corridor is booming.

And while 128 in the 1970s and 1980s was known for the high tech industry — think personal computing and software — we’re now seeing 128 being known for life sciences and pharmaceutical industry.

That’s drawing in well-educated homebuyers from all over the country and from overseas.

"Anytime you have this number of well-paying jobs located in a relatively compacted area, that’s going to present areas for people to work and it’s going to make people want to live in the area to be close to work," Sullivan said.

And close to people of similar means. Increasingly, along 128 that means that some communities are now unaffordable, even to families making $150,000 a year. For example, the average home price for Wellesley is now $1.2 million, making it the most expensive real-estate market outside of California, according to the Warren Group. It’s hard to even find a middle-class home in Dover or Weston. One multi-bedroom there was recently selling for $24 million. And then there’s Needham, which has undergone a massive class transformation since the recession began.

"Needham, years ago, was more like a middle-income town and now it’s more like a Wellesley," Van Voorhis said. "Streets dotted with these large new houses."

Linda has noticed a similar trend in Lexington.

"We had what they call mansion-ization, where we have these big homes, put up in place of the older homes," she said. "A majority of the homes that were tear-downs were all under the same template."

Newton, another well-off, but traditionally mixed-income community along 128, has experienced a similar trend. A house purchased not long ago for $740,000 was demolished, and in its place, a home quadruple the size was built and sold for $2.1 million. Some Newton officials recently tried to impose a moratorium on tear-downs, but the proposal was rejected by aldermen as undemocratic. And, they argued, the proposal would have deprived the city of badly needed property taxes for schools and essential services.

The conundrum posed by growth — on one hand — and middle class survival on the other, is not just about housing. At a construction site in Waltham, a new mall is being built, and Sullivan says that means more middle-class jobs are being generated.

"Over the past couple of years employment is once again rising higher than what we saw pre-recession," Sullivan said. "We’re also seeing a growth in the retail sector as well. So I think that bodes well for folks on all levels of the income spectrum, including the middle class."

But not all jobs around 128 pay well. So middle-class dreams of moving to middle-class towns like Lexington are colliding with that sobering reality.

"I understand the appeal of a community like Lexington," Sullivan said. "There’s a tremendous amount of open space, great schools, access to public transportation, a great downtown. The downside of that is it seems as if there is very little room for someone making below the average income in Massachusetts to afford to live in a community like Lexington."

So where does the middle-class go from here on salaries that barely budge? They’re forced to look at towns much further from Boston along and beyond 495, Warren says.

"I was talking to someone today at my gym who wants to buy his first home," he said. "Even though he works in Cambridge, he’s looking in Attleboro because he thinks that’s where he can actually afford someplace."

But the I-495 middle class who bought at the peak are still finding their houses today deeply submerged underwater.

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