Housing is one of the most basic of human needs. All cultures in the world, no matter how diverse in other respects, have invented ways to shelter their people. It is in homes that people create a foundation of family and friends, a sense of belonging in and to a place.  And if housing is not available, these most basic ties to family, place and community are put under tremendous stress.

Housing costs in Boston and the region have risen dramatically. Residents are divided into two camps: those who already own homes — particularly those who purchased them before the run up in prices — and those who do not and are being squeezed by rising rents or priced out of the housing market. Among the latter, some are moving to less expensive regions, some are living in overcrowded conditions, some are finding themselves homeless, and many are spending a growing percentage of their income on housing.

OVERVIEW

Metro Boston’s housing costs are among the highest in the nation — the fourth least affordable Metropolitan Statistical Area in the nation in 2002, according to the National Low Income Housing Coalition. Boston ranks third among large US cities in per-unit construction costs and last in the nation in new housing starts per capita. And vacancy rates for rental and owner-occupied housing in the region have fallen well below industry standards.

As documented by the Center for Urban and Regional Policy (CURP) at Northeastern University, the need for new housing in the Greater Boston region has never been greater.  The Center’s Greater Boston Housing Report Card 2002, funded by the Boston Foundation and the Citizens’ Housing and Planning Association, found that the Greater Boston region — 126 cities and towns in Eastern Massachusetts — added 129,265 households between 1990 and 2000 while creating only 91,561 additional housing units.  As a result, even with relatively slow population growth, the demand for housing units outstripped supply and fueled dramatic increases in housing costs.

The lack of housing that is affordable to even average-income households must be viewed as a critical regional concern. The combination of Metro Boston’s high cost of living with scarce and expensive housing is already forcing homegrown talent and prospective employees to consider living in other parts of the country.  And the region’s high-tech companies, hospitals, and financial services employers are already facing obstacles in recruiting or retaining talent. This trend portends significant danger for our future growth.

Building more housing units to increase supply and take some of the heat out of the housing market is the most economically logical way to restore rationality to purchase prices and rents.  Typically, when demand exceeds supply, producers rush into the market to take advantage of profitable opportunities. What then explains the slow pace of new housing starts in the Boston area?

One explanation gaining currency is the complex regulatory environment in Massachusetts.  A joint Rappaport Institute/Pioneer Institute report, published in February 2003, Getting Home – Overcoming Barriers to Housing in Greater Boston, concludes that “developers must meet local zoning laws, satisfy state building and specialty codes as well as local enforcement policies, and, almost necessarily, interact with state and local appeals boards.”  In addition to reducing new housing starts, according to the study, the permitting maze raises project costs. Some communities also leverage the tradition and practice of local control to erect barriers to new development. Another explanation is the scarcity of available land, and zoning laws that privilege single-family homes on large lots rather than the traditional cluster-style New England housing — fostering sprawl and high-end housing at the expense of multi-family and transit-oriented development.

Boston leads the state in the stock of affordable housing, with 49,000 units, or 20% of its housing stock preserved as affordable.  All told, Boston contains about 30% of the region’s stock of affordable housing. Planned residential development in the Seaport District, the Financial District and in the neighborhoods will increase Boston’s housing stock — including affordable units.

WHAT HAS CHANGED SINCE 2000?

The Legislature repelled a movement to discontinue funding for the Affordable Housing Trust Fund (AHTF) in the state FY 2003 budget.  However, the fund is subject to future funding cuts as the state budget deficit increases.  Created in 2000 and funded at $20 million per year for five years, it is designed to provide resources to create or preserve affordable housing throughout the state. However, it was cut by $7.5million in early 2003.

The State Housing Bond Bill, enacted in 2002, allows the state to issue $508.5 million in bond funds.  The funds will be used to create and preserve affordable housing in Massachusetts and will fund a variety of housing programs.

In 2002, mortgage rates hit the lowest level since 1965 — reducing monthly payments considerably for those who refinanced existing mortgages and monthly payments for those who could afford to purchase a home or condominium.

The Community Preservation Act, passed in 2000, encourages cities and towns to set aside land as open space, preserve historic properties, and develop affordable housing. It allows communities to levy a special tax, as much as 80% of which can be spent on any one of the three areas, although a minimum of 10% must be spent on each.  As of 2002, 58 communities statewide had voted for this measure, but most participating towns are using the CPA largely to preserve open space, with little effect on housing.

Zoning “build-outs” showed communities what amount of space their current zoning laws would allow, and what they can actually accommodate in terms of classroom space, water supplies and infrastructure. The build-outs, sponsored by the Executive Office of Environmental Affairs and performed by the Metropolitan Area Planning Council and other planning agencies, quantified the current zoning for potential new housing units and commercial development. Able to see the impact of a lack of planning for the future, communities can revise their zoning laws to redirect residential and commercial development in “smarter” ways.

The City of Boston created a three-year blueprint, Leading the Way,to increase affordable housing. Its goal is to build 7,500 new units of housing and to preserve 10,000 units of affordable rental and owner-occupied housing:  3,200 of these 7,500 new units will be in new affordable developments or in reclaimed public housing now vacant. The city is also contributing more than $30 million as well as city-owned land to achieve its goals.

Planners are addressing housing needs in coordination with transit routes, employment and land use plans. This coordination received a level of attention it never