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 had before with the Boston Society of Architects’ Civic Initiative for a Livable New England, launched in 2000, the kick-off for a new Regional Growth Strategy by the Metropolitan Area Planning Council — and, in 2002 , the race for Massachusetts’ governor, in which both major-party candidates placed smart development high on their list of priorities. Some large housing developments, such as one adjacent to Alewife station in North Cambridge, are being planned with transit-oriented development and smart growth principles in mind. More are in the planning stages in Boston.

CHALLENGES

State and federal housing funds continue to decline as the need increases.  State spending on housing in 1990 totaled $500 million in 2002 dollars but only $225 million in 2001. While housing advocates and community development organizations have devised creative plans for getting new units on line, these efforts alone cannot close the gap.   And almost as many affordable units are being lost as being built, as landlords opt for more lucrative rents.

Homelessness is increasing and affecting a broader population, including more children. The latest census of Boston’s homeless population, conducted in December 2002, found that the number of homeless individuals in shelters and on the streets had risen to more than 6,200. This was the highest number ever recorded. Over 300 families were living in hotels and motel rooms funded by the state Department of Transitional Assistance in 2002. Families tend to stay in homeless shelters longer than individuals and they have a harder time finding permanent housing, according to a report by the University of Massachusetts Center for Social Policy.

New forms of housing — such as “granny flats” and artists’ live/work spaces are needed to use available housing more efficiently. A number of older people continue to live in houses that are larger than they need — and present them with unaffordable taxes when they retire. Alternatives for the elderly, including assisted living care and high-rise condo developments, are often costly and unaffordable. Artists, too, are being priced out of suitable spaces. With more than 3,000 artists’studios in Boston, only 300 are secure in terms of their affordability. The Boston Redevelopment Authority is already working to create and preserve more artists’ housing units.

Housing that meets the specific needs of families and individuals with special needs are in short supply. Families with children who have special needs are hard-pressed to find rental units with at least two bedrooms, particularly in multi-family developments. Units designed for special needs populations are few and far between.

Construction costs continue to rise despite a weak economy.  New housing developments continue to suffer increased construction costs, especially “soft” costs.  Soft costs include expenses associated with the permitting process. For example, Cambridge-based Forest City Consulting recently reported that new rental developments — whether classified as luxury or affordable — now need to secure luxury-level rents in order to achieve economic viability simply as a result of high construction costs.

The loss of “expiring-use” contracts continues to be a major concern, putting at risk hundreds and perhaps thousands of affordable units. Landlords who received special subsidized mortgages years ago in order to build affordable housing are now choosing not to renew them. Hundreds of low-to-moderate income tenants in Boston and surrounding communities may be forced out of their now-affordable units. In some cases, residents have organized, with the assistance of groups such as City Life in Jamaica Plain, to fight rent hikes and evictions. The City of Boston has also stepped in at times to help negotiate new leases, as it did at the Forestdale Apartments in Jamaica Plain.

The region has lost 96% of its stock of single-room occupancy units – rooming houses – since the 1970s, according to the Massachusetts Housing and Shelter Alliance. With deinstitutionalization of the state’s mentally ill population and prisoners reentering communities without access to halfway houses, the impact of this loss is acute as there are few inexpensive transitional housing opportunities to help fragile people gain a foothold. Without that, their only option is a homeless shelter or the streets. A survey by the Massachusetts Housing and Shelter Alliance found that some 4,000 inmates who were about to leave custody had nowhere to go. They are being freed without having the experience of parole, which in the past might have required them to stay in halfway houses. State funding for these houses was cut from $6 million in 1993 to $710,000 in 2001.

INNOVATION

Certified Bay State builders are constructing Energy Star houses that are 30% more efficient than traditional houses. According to the Boston Herald, about 50 local builders, working with local architects and community development corporations, are using green building technologies to construct state-of-the-art high-comfort, high-efficiency homes.  Between 1998 and 2002, local builders constructed 5,000 Energy-Star certified homes – and have agreements to build more than 3,000 more.

­Boston’s new Three Decker Plus Program, introduced in 2002, helps first-time homebuyers with incomes 80% or less than the area’s median income.  The City’s Department of Neighborhood Development provides recipients with homeowner classes and then a $20,000 purchase subsidy.  New owners are required both to live in the three-decker and to preserve, via a 20-year deeded covenant, one unit rented at an affordable price.  An additional $2 million subsidy is provided by FleetBoston.

A new program launched by the Massachusetts Bay Transportation Authority, MassHousing and local banks encourages people to live near public transit lines, offering the incentive of a mortgage with no down payment. The program recognizes that the down payment is often the single biggest barrier to home ownership. Households earning an income up to 135% of area median income can qualify for the program. Participants must show they are regular and frequent users of public transit.

Boston’s Senior Homeowner Program subsidizes rehabilitation work for low-income seniors who own multi-family homes with vacant rental units. The Dedham Institution for Savings and the Boston Federal Savings Bank have joined forces and committed $1,000,000 in lines of credit to the participating CDCs: Neighborhood of Affordable Housing (NOAH) and Nuestra Comunidad Development Corporation.

Co-housing — not for everyone but attractive to some — has caught the attention of housing advocates who recognize its long-term potential to alleviate the housing crisis.  Residents have private living units but share kitchen, dining and other common space. The arrangement enables as many as a dozen families to live on parcels that would otherwise have room for one or two. Two co-housing developments have been completed in North Cambridge, and a third is underway in Jamaica Plain.

The Employer-Assisted Housing Initiative is a collaboration between the Greater Boston Chamber of Commerce, Citizens’ Housing and Planning Association and several financial institutions.  It offers homebuyer education and counseling, matched savings accounts, and rental and down payment assistance.

COMPETITION

In a 2002 survey by the Fannie Mae Foundation, 40% of people who lived in the Northeast saw housing costs as a problem, compared to 34% in the South and 29% in the Midwest. Boston’s attractions such as its higher wages, culture, and access to the ocean and mountains may not be sufficient to offset the negative impact of housing prices spiraling ever higher.  A survey conducted in 2002 by the National Association of Realtors found that people are much more likely to make affordability a priority than the length of their commute to work.

LINKS

Boston Redevelopment Authority
The City of Boston’s planning and economic development agency. Website provides pdf links to BRA research and publications and information on events, programs, and initiatives.

City of Boston
Official website of the City of Boston. See Boston’s Department of Neighborhood Development for a list of housing programs and other information.

Citizen's Housing and Planning Association (CHAPA)
The non-profit umbrella organization for affordable housing and community development activities throughout Massachusetts. Website provides pdf and ordering information for publications and reports, job bank, consultant directory, expiring use database, links, news, and information on programs and events.

CURP — Center for Urban and Regional Policy at Northeastern University
A nonpartisan think tank addressing a wide range of issues facing urban policy and planning with particular emphasis on the Greater Boston region. Website has a Greater Boston Database, news and report links, and list of books related to Boston.

Rappaport Institute for Greater Boston
The Rappaport Institute for Greater Boston is a new enterprise of the John F. Kennedy School of Government at Harvard University, working with universities, public agencies, and other organizations in the region to improve the governance of Greater Boston. Website includes pdf research, reports, and ordering information, and event and program information.

Pioneer Institute for Public Policy Research
A Massachusetts think tank that promotes deep research on public policy issues. Website provides pdf reports and studies and ordering information, links, and program and event information.

Metropolitan Area Planning Council
The MAPC is the regional planning agency representing 101 cities and towns in Eastern Massachusetts, including Boston. Their Online Metro Data Center offers a broad range of demographic and economic information on this region. Website also provides information on the MAPC’s programs and initiatives.

MassINC — Massachusetts Institute for a New Commonwealth
MassINC is a nonpartisan think tank and advocacy group to promote the growth and vitality of the state’s middle class. Website provides html links to articles from their quarterly Commonwealth magazine, pdf versions of their research publications (free registration required), and information on initiatives, forums and events.

Boston Housing Authority
The largest landlord in Boston and the largest public housing authority in New England. Website provides press releases, their newsletter, a database of their public housing holdings, and information on programs and events.

Knowledgeplex — powered by the Fannie Mae Foundation
News and information resource for the affordable housing and community development field.

US Department of Housing and Urban Development
HUD is the Federal agency responsible for addressing America's housing needs. Links to state HUD agencies, pdf and ordering information of related publications, Hud listservs, and information on events, programs, and initiatives.