While advocates and legislators at the local and state levels have introduced a variety of measures to address the housing crisis in the Boston area, the challenge remains as strong as ever, according to a new report out Tuesday.
The annual Greater Boston Housing Report Card, released by the Boston Foundation, shows that home and rent prices are high and getting higher, while the production of new housing to address the demand remains slow.
“When we released the housing report card last year ... there was a strange sense we might be on the precipice of a housing market turnaround,” Luc Schuster, executive director of Boston Indicators, the foundation’s research center, said. “Unfortunately, that hasn’t happened at all.”
According to the report, single-family and condo sale prices are up in 2023, although they saw a slight dip in August of this year.
At the same time, mortgage interest rates more than doubled between July 2021 and late 2022, going from just below 3% to more than 7%.
Similarly, rent prices have continued to rise, placing the Boston metro area third-highest in the country among the most populous cities, close behind Los Angeles (New York City is the most expensive). The rates of growth for both home prices and rents have slowed, but prices are still going up, the analysis concluded.
That’s put an almost unprecedented burden on renters and homeowners alike. For the first time in almost 20 years, more than half of renter households in Greater Boston were cost-burdened in 2022, meaning they spend more than 30% of their income on rent, according to the report.
This represents a 1.8% increase between 2021 and 2022, after a 2.6% increase between 2019 and 2021. For homeowners, about 25% are cost-burdened.
“It’s not just the prices that matter. It’s the incomes,” said Aja Kennedy, a research fellow at Boston Indicators. “They’re not keeping pace.”
At the same time, as pandemic-era eviction protections and financial support programs for renters have expired, eviction filing rates have gone up, nearly reaching pre-pandemic levels in 2023.
Foreclosure rates have also gone up over the last two years, but have remained below pre-pandemic levels, the report concluded.
The issue disproportionately affects Black and Latino households, according to the report.. Cost burden rates for Black and Latino renter households were at 55% and 57%, respectively, and about one third of Black and Latino homeowners were cost-burdened.
Boston is the 24th most racially segregated metropolitan area in the country, according to 2020 Census data, and statewide, more than 60% of the Black population lives in just 10 cities, and over half of the Latino population lives in 10 cities.
Municipalities with higher percentages of Black and Latino residents have lower median household incomes, while majority-white communities tend to have higher median household incomes.
Greater Boston’s overall population went down in 2022 for the second year in a row after years of growth, according to the report. Boston saw the greatest loss, losing about 21,000 people, or 3.1% of its population, between July 2020 and July 2022.
- Read More: You can read the full report here
Some areas have seen growth, mostly places far from the core Boston metro area: Plymouth, for example, grew by 3,251 residents, or 5.3% of its population. Medford saw the highest increase, growing by about 5,000 people or 8.3%.
According to the report, people leaving Greater Boston are largely moving to other areas of the country. About 49,000 people moved domestically in 2022, after about 51,700 did so in 2021.
At the same time, the region’s population decline has been slowed by international migration, with the net number of new international migrants settling in Greater Boston more than doubling between 2021 and 2022 from about 12,900 to 34,500.
Kennedy noted the state’s ongoing shelter crisis caused in part by the number of migrants entering Massachusetts in need of shelter.
The crisis prompted Gov. Maura Healey to announce earlier this month that the state, which is required by law to provide shelter to families with children who need it, would put a cap of 7,500 families on its shelter system to keep up with the demand. The cap was reached last week.
Despite the population decline, Greater Boston has a very low housing vacancy rate. Homeowner vacancy rates increased in 2022, but remained below 1%. The rental vacancy rate in 2022 was about 2%, the lowest of the 10 largest metropolitan areas in the country.
The report attributes the region’s astronomical home prices in large part to these vacancy rates and slow housing production. With supply low, demand gets higher and higher for both homeownership and rental housing.
“People across income levels are directly competing with each other for the very limited supply of homes that exist,” Jesse Kanson-Benanav, executive director of Abundant Housing Massachusetts, said during a panel discussion at the event.
“In that type of competition, when you have wealthier folks that are bidding for the same homes against working-class or low-income people, who is going to win in that competition? It’s going to be the wealthier folks. They’re bidding up the cost of housing,” Kanson-Benanav
While permits for new housing construction have increased between 2012 and 2022, with the highest numbers in core urban communities like Boston, Cambridge and Somerville, Massachusetts is behind other states, placing 43rd out of the 50 states and Washington, D.C. in housing permits per capita.
The municipalities that permitted the most new units between 2018 and 2022 were Boston (17,574), Medford (5,563) and Plymouth (3,313), while the municipalities that increased their housing stock the most in that time, based on the number of permits, were Medford (24% increase over the 2017 housing stock), Plymouth (12%) and Franklin (12%).
Urban areas saw a majority of multifamily housing with at least 5 units being permitted, while suburbs generally saw a majority of single-family homes.
While building permits are one indicator of housing production, the report notes that they are not the most accurate, in part because the data itself is not always complete and also because a project that has been permitted does not necessarily get finished.
High construction costs caused by supply chain issues during the pandemic have significantly delayed or even stopped many housing projects, and the researchers projected that multifamily housing production could slow even further in coming years.
As a possible way forward, the report’s authors suggested the establishment of community land trusts, nonprofits which purchase or acquire land to be leased out for the purpose of affordable housing, economic development, or other uses. There are more than 300 such land trusts in the United States, and seven in Greater Boston.
The land trusts use a hybrid ownership model where the community owns the land, but homeowners living there can still own their home. Because of this, the trusts can stipulate in lease agreements that housing built on their land will be affordable in perpetuity, even when homeowners eventually sell.
In this model, homeowners are generally allowed to sell for slightly higher than they purchased the home for, as a way to build wealth, but are still required to sell at a low price to keep the housing affordable.
Lydia Lowe, director of the Chinatown Community Land Trust, explained that the community trusts look at housing as “more than a commodity” or a source of wealth.
“We need to preserve both individual homeowner households’ wealth, but also whole communities,” she said. “If I merely focus on a single family, maximizing what they can get off of the market because they were a hardworking family and of course they deserve it, but then if that drives our community out of the Boston area, where is our future there?”