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The Greater Boston Housing Challenge
Barry Bluestone
Center for Urban and Regional PolicyNortheastern University
WBZ “Attaining the American Dream”October 27, 2005
How is Greater Boston doing … economically?
By the end of 2004, employment in Greater Boston was still down by more than 160,000 from its pre-recession peak
Real median household income dropped by 3.5% between 2000 and 2004
Employment Trend
United States
118.8117.7118.4
120.2
123.1124.9
126.7
129.6131.5
133.4
136.9136.9136.5137.7
139.3141.4
115
120
125
130
135
140
145
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
in M
illio
ns
Employment Trend
M assachusetts
3044
2875
2795 28152869
29502994
3083
31513200
3279
3371
3270
32113165
3190
2700
2800
2900
3000
3100
3200
3300
3400
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
in T
ho
us
an
ds
U.S. vs. Massachusetts
Employment Growth
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05
% C
han
ge
Sin
ce
Ye
ar
Earl
ier
U.S. Massachusetts
Source: Bureau of Labor Statistics, Payroll Employment
Greater Boston MSA Real Median Household Income 1969-1999 ($2004)
$45,496$47,371
$60,886$61,796
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
1969 1979 1989 1999
Greater BostonReal Median Household Income ($2004)
$60,784
$63,546 $63,496
$60,466
$61,333
$58,500
$59,000
$59,500
$60,000
$60,500
$61,000
$61,500
$62,000
$62,500
$63,000
$63,500
$64,000
in $
Do
llars
2000 2001 2002 2003 2004
How do the demographics look?
We are losing population to out-migration
The largest net losses in population were in the young prime age cohorts
Greater Boston Population 2000-2004
3310 3311 33043296
3275
3100
3150
3200
3250
3300
3350
in T
ho
us
an
ds
2000 2001 2002 2003 2004
Massachusetts Net Migration 2000-2004
32,268 32,244 31,555 31,535
-14,244
-28,074
-47,776
-58,910-70,000
-50,000
-30,000
-10,000
10,000
30,000
50,000
2000-01 2001-02 2002-03 2003-04
Figure 2.3
Population Change by Age Cohort Boston PMSA 2001-2003
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
Un
de
r 5
yea
rs
5 t
o 1
9ye
ars
20
to
24
yea
rs
25
to
34
yea
rs
35
to
54
yea
rs
55
to
64
yea
rs
65
ye
ars
+
Change 2001-2003
Where did they go?
TX
CA
MT
AZ
ID
NV
NM
CO
IL
OR
UT
KS
WY
IA
SD
NE
MN
ND
FL
OK
WI
MO
AL
WA
GA
AR
LA
MI
IN
NY
PA
NC
MS
TN
KYVA
OH
SC
ME
WV
MI VTNH
MD
NJ
MA
CT
DE
RI
Net Migration* Betweeen Massachusetts and Competitor States1990-2002
*Thicker line represents more migration
State Net Migration from State
Florida -99,082 New Hampshire -78,201 California -23,978 Arizona -11,033 North Carolina -8,983 Washington -4,516
What’s doing with the Cost of Living?
According to a new measure of living costs, Greater Boston has the highest cost of living of any metro area in the United States
A family of four needs $64,656 to pay for the costs of housing, transportation, day care, health care, and other basic necessities.
This is more than $3,000 higher than in Washington, D.C; $6,000 higher than in New York City; and $7.000 more than in San Francisco
Monthly housing costs are 40% higher than in Austin, Chicago, and Miami and 63% higher than in Raleigh-Durham-Chapel Hill
Figure 2.1Total Annual Family Budget for a Family of Four
Boston, MA vs. Competitor Regions
$64,656
$61,440
$58,656 $57,624
$54,948
$47,520
$44,124 $43,704 $43,584 $43,452
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
Re gion
Tota
l Ann
ual F
amily
Bud
get
A Tale of Two CitiesBasic Budget
2 Parents, 2 Children
Boston
Monthly Housing $1,266
Monthly Food $ 587
Monthly Child Care $1,298
Monthly Transportation $ 321
Monthly Health Care $ 592
Monthly Other Necessity $ 500
Monthly Taxes $ 824
Monthly Total $5,388
Annual Total $64,656
Raleigh-Durham-Chapel Hill
Monthly Housing $ 779
Monthly Food $ 587
Monthly Child Care $ 866
Monthly Transportation $ 358
Monthly Health Care $ 368
Monthly Other Necessity $ 369
Monthly Taxes $ 350
Monthly Total $3,677
Annual Total $44,124
Rents and Prices With a vacancy rate of 6%, average effective rents
remained relatively stable in 2004 (February 2005) after declining from peak rents in 2000
$1,748 for Class A Apartments (-5.1% since October 2002)
$1,187 for Class B Apartments (-3.7% since October 2002)
$967 for Class C Apartments (-4.0% since October 2002)
From May 2004 to February 2005, rents have remained largely unchanged
2005Class A Apartment Rents
$1
,95
3
$1
,82
5
$1
,74
5
$1
,68
6
$1
,67
7
$1
,63
2
$1
,57
9
$1
,52
6
$1
,51
7
$1
,46
6
$1
,43
9
$1
,32
5
$1
,31
6
$1
,24
1
$1
,15
5
$1
,11
1
$1
,04
3
$1
,01
8
$1
,01
2
$9
87
$0
$500
$1,000
$1,500
$2,000
$2,500
Source: Forbes Magazine
Affordability Problem Persists for Renters in Greater Boston
The number of cost burdened renters in 2003 increased to nearly 50% of all renter households -- from 43.3% in 2002
The number of severely cost burdened renter households (those paying over 50% of income for rent) swelled to nearly 25% -- from 21.5% in 2002
Despite softening in area rents over past 2 years, rent levels remain high throughout most of the region
Although there were 34,000 fewer renter households in the Boston PMSA than in 2000, 19,000 more faced severe cost burdens
$169$159
$152 $146 $148 $150 $154$161
$168
$186
$210
$245
$273
$313
$343
$376
$165 $168
$100
$150
$200
$250
$300
$350
$400
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
(in
$th
ou
san
ds)
Median Single Family Home Price 1987-2004
Owner Occupied Housing Affordability
By 2004, households earning the median income of their city or town could afford its median priced single family home in only 27 of the 161 towns and cities in the region, down from 77 in 2002 and 148 in 1998.
In only 1 town in Greater Boston could first time homebuyers earnings only 80% of municipal median income afford a home that sold for 80% of the median priced house … down from 17 in 2002 and 116 in 1998.
1998 2000 2001 2002 2003 2004
Below $100,000 4 0 0 0 0 0
$100,000 - $199,999 82 41 14 5 0 0
$200,000 - $299,999 50 68 74 62 43 19
$300,000 - $399,999 16 32 42 52 61 74
$400,000 - $499,999 4 10 12 22 30 33
$500,000 - $999,999 4 9 18 19 25 33
$1,000,000 and Above 0 0 0 0 1 1
# of Communities with Median Single Family Sales Price
1998 2000 2001 2002 2003 2004
Below $300,000 85.0% 68.1% 55.0% 41.9% 26.9% 11.9%
$300,000 - $499,999 12.5% 26.3% 33.8% 46.3% 56.9% 66.9%
$500,000 and Above 2.5% 5.6% 11.3% 11.9% 16.3% 21.3%
% of Communities with Median Single Family Sales Price
Is it any wonder then ….
That we are losing young people who can’t afford Greater Boston’s cost of living
That we are losing jobs because firms have difficulty in finding sufficient labor for their enterprises at nationally competitive wage rates
New Housing Production – Some Good News
Building permit issuance increased by 12% in 2004 to 13,556 after increasing by 22% in 2003.
For the first time since 1998, permits for single family units increased ... to 7,000 in 2004 from 6,020 in 2003
BUT, total permits remain well below peak years of the 1970s and 1980s when more than 20,000 units/year were permitted
And, single units permits are still well below the number issued each year from 1998 through 2000.
Figure 3.1Housing Units Permitted
Boston PMSA
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
5+ units 1-4 units
Year Total Units Permitted
Units in Single Family
Structures
Single Family
Units as % of Total
Units in 2-4 Unit
Structures
Units in 5+ Unit
Structures
1998 10,846 8,639 79.70% 574 1,633
1999 10,662 7,775 72.90% 746 2,141
2000 10,342 7,102 68.70% 701 2,539
2001 9,701 6,313 65.10% 686 2,702
2002 9,520 6,408 67.30% 764 2,348
2003 12,121 6,020 49.70% 1,093 5,003
2004 13,556 7,000 51.60% 994 5,562
Table 5.1Units Built Under Chapter 40B Comprehensive Permits
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2001 2002 2003 2004
Total Units in Developments Built Under 40B Comp Permits
Units that Count on Subsidized Housing Inventory
Estimated # of Units Restricted to Low Income Occupancy
Some Good News … but
Category Paradigm Target
Production
2002 2003 Change2002-03
2004 Change 2003-04
Market Rate 9,860 5,952 7,525 26% 9,259 +23%
% of Category Goal Met
60% 76% 94%
Subsidized New Construction
4,300 1,114 1,514 36% 1,678 +11%
% of Category Goal Met
26% 35% 39%
Student Housing
1,500 951 500 -47% 367 -27%
% of Category Goal Met
63% 33% 24%
Total 3 Categories
15,660 8,017 9,539 20% 11,304 +19%
% of Overall Goal Met
51% 61% 72%
Housing Production in the Boston PMSA vs. Housing Goals in the New Paradigm Report …
Conclusion Greater Boston now has the highest living costs of any
metro area in the United States …. led by high housing costs (as well as by high medical and day care costs)
It is not surprising then that Greater Boston and Massachusetts are losing population, especially among young working families, to other regions of the country
Housing production has improved in Greater Boston over the past three years, but total production in 2004 was still at only 72 percent of the level needed to slow housing price appreciation to normal levels
We still need to encourage more housing production as a “moral imperative” and as an “economic necessity”
5 Solutions for Housing Affordability
1. Zoning for Housing Affordability Comprehensive Permit Statute (Ch. 40B)
40% of all new production80% of all new affordable housing in suburbs
Smart Growth Housing Production (Ch. 40R)Upfront bonus paymentsSchool costs reimbursements
Inclusionary Zoning (10-15% of market rate developments)
2. Increased State Investments
Affordable Housing Trust Fund for new
production Preservation of Existing Subsidized Housing
(public housing and expiring use)
3. Business Community Involvement Investments in state tax credits (housing,
historic preservation, brownfields) Employer assisted housing to increase
homeownership Support for local housing proposals
4. Compact Between State and Municipalities
Increased support for community planning
Technical assistance for housing development (Community Preservation Act)
5. Greater Public Awareness and Education
Home@Last Campaign:
Educate community members about the benefits and importance of affordable housing
Video, posters, brochures, media and advertisements
Community presentations to civic groups, municipal officials, and others
Conclusion: Ingredients for Success
1. Partnership between the public and private sector
2. Leadership from the Governor and Legislature
3. Greater local support and involvement
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