Report Card Shows Greater Boston Still Falls Short on Housing Production

Boston – Despite a sluggish economy, higher unemployment, and a slight decline in the number of households in Greater Boston, median housing prices in the region increased in 2003 by 9.3%, continuing a trend which has seen housing prices double for the typical single family home in the brief period since 1997.  In 2003, average rents dipped only slightly – less than 2 percent.  This was true despite an increase in multi-family housing production above 2001 and 2002 levels.  These findings and many others regarding the continuing housing crisis in the region are included in the latest annual housing analysis contained in The Greater Boston Housing Report Card 2003: An Assessment of Progress on Housing in the Greater Boston Area, and released at a forum today at the Boston Foundation along with an update of the progress being made by the Commonwealth Housing Task Force (CHTF) to revolutionize the way the Commonwealth encourages the production of housing in local communities throughout the state.

According to the new Housing Report Card, which covers 161 cities and towns in Greater Boston, the region can expect rents and home prices to increase again – perhaps sharply -- in 2004 and 2005, if and when the economy begins to recover.  Firms will continue to face problems retaining employees and attracting new ones to the region as a result of very steep housing costs.

“In light of these findings, we conclude that unless there is a concerted effort to increase housing production beyond even the improved level achieved in 2003, more and more households will be priced out of the market or will end up paying an exorbitant share of their incomes to cover rent or mortgage,” stated Barry Bluestone, Director of the Center for Urban and Regional Policy (CURP) at Northeastern University and one of the authors of the report.  “Ultimately, this trend might be self-correcting, if firms find it too difficult to recruit workers in such a costly market and the economy stagnates as a result.  But this is, of course, a socially costly way to ‘resolve’ the housing crisis.”

“If we ask ourselves how much more new housing we need to produce to avert this outcome, the math is quite simple.  Between now and 2010, we have to find a way to build more than 44,000 units above current production levels in order to assure a continued moderation in housing prices and rents,” said Bonnie Heudorfer who directed the new study, along with CURP research associate Stein Helmrich.  “Moreover, we will need to find a way to produce this new housing in the locations where people want to live and at prices they can afford.”

One bright spot is that multifamily housing production increased substantially in 2003 compared to previous years, primarily due to the state’s comprehensive permit law and the state affordable housing trust fund.  In 2003, there were 4,581 units permitted in buildings with five or more units, compared to 2,702 units in 2001.

This year’s Housing Report Card also probes the characteristics, as well as the level, of federal, state and local support for housing, and it takes a closer look at which communities within the region are taking steps to expand the supply and preserve and improve the existing inventory of affordable housing.  The report was funded by the Boston Foundation and the Citizens’ Housing and Planning Association (CHAPA).

The Greater Boston Housing Report Card 2003 follows a similar report completed eighteen months ago by CURP, in collaboration with the Boston Foundation and CHAPA.  The on-going Report Card was developed as a diagnostic tool to assess the progress Greater Boston is making toward providing housing opportunities for all of its citizens.

Housing production goals for the region were established three years earlier in A New Paradigm for Housing in Greater Boston, a CURP report commissioned by the Roman Catholic Archdiocese of Boston and the Greater Boston Chamber of Commerce.  Its authors warned that high housing costs and inadequate inventory were threatening the region’s economic competitiveness and they called for an ambitious social compact to increase the supply of housing by more than 80 percent over existing production levels.  The New Paradigm report projected that 15,660 units of housing were needed annually in this area to meet housing needs and moderate the escalation in rents and home prices.  Existing production was generating only about 8,500 units a year, of which an estimated 1,300 were designated for occupancy by low or moderate income households.

Today’s forum also provided an opportunity to hear an update on the progress of the Commonwealth Housing Task Force, a coalition of Boston leaders from a wide range of sectors who came together to develop a strategy to increase housing production throughout the state.  In November, the Task Force announced a comprehensive new approach to increasing the state’s supply of housing by encouraging towns and cities to produce new units of housing in “smart growth” areas.  The Task Force’s proposed legislative agenda has already earned positive reviews from state legislators and municipal officials, as well as from leaders from the business, labor, higher education, housing and environment, and real estate development sectors.

“The importance of solving Boston’s housing crisis cannot be overstated.  The human capital of this area – a unique and essential asset because of Boston’s high tech businesses and its educational, research, and medical institutions – is being compromised because young scientists, engineers, doctors, and business people find it difficult to afford, even with substantial salaries, the purchase price on homes that meet their family needs,” said Paul S. Grogan, President and CEO of the Boston Foundation and a convener of the Task Force.  “An increasing number choose not to come to Massachusetts, and seek jobs in other regions of the country.  Until we meet this challenge, the future economic expansion of the Commonwealth is at risk.”

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The Boston Foundation, one of the nation’s oldest and largest community foundations, has an endowment of more than $630 million, made grants of  $48 million to nonprofit organizations, and received gifts of $38 million last year. The Boston Foundation is made up of 750 separate charitable funds, which have been established by donors either for the general benefit of the community or for special purposes. The Boston Foundation also serves as a civic leader, convener, and sponsor of special initiatives designed to build community. For more information about the Boston Foundation and its grant making, visit www.tbf.org, or call 617-338-1700.

The Citizens’ Housing and Planning Association (CHAPA) is a statewide organization that represents the interests of all players in the housing field, including nonprofit and for profit developers, homeowners, tenants, bankers, real estate brokers, property managers, and government officials.  The organization is a sponsor of many research projects concerned with housing, and assisted in the funding and development of this report.

The Center for Urban and Regional Policy (CURP) was launched in 1999 at Northeastern University as a “think and do tank” – a center where faculty, staff, and students from the university pool their expertise, resources, and commitment to address a wide range of issues facing cities, towns, and suburbs with particular emphasis on the Greater Boston region.  CURP’s web site, www.curp.neu.edu, is a leading source of information for community leaders, public officials, urban researchers, and students.

Statement from Paul S. Grogan

President and CEO, The Boston Foundation

Convener of The Commonwealth Housing Task Force

“The importance of solving the Commonwealth’s housing crisis cannot be overstated.  It is absolutely crucial to the economic competitiveness of the state, and I congratulate the Senate for their bold initiative on this legislation and their willingness to take this issue on,” said Paul S. Grogan, President and CEO of The Boston Foundation.  “It almost goes without saying that the poor and working class families are being crushed by this state of affairs.  In addition, the human capital of this area – a unique and essential asset because of Boston’s high tech businesses and its educational, research, and medical institutions – is being compromised because young scientists, engineers, doctors, and business people find it difficult to afford, even with substantial salaries, the purchase price on homes that meet their family needs.  Right now, an increasing number are choosing not to come to Massachusetts, and seeking jobs in other regions of the country.  This legislation is a win-win scenario, aligning the economic development interests and housing needs of the Commonwealth with the fiscal needs and local concerns of individual municipalities.”

The Commonwealth Housing Task Force recommended that the state encourage communities to amend zoning rules to allow higher-density housing development – smart growth housing – as proposed in Chapter 40R.  The Task Force, a public advocacy group made up of Boston leaders from a wide range of sectors, came together to develop a strategy to increase housing production throughout the state.  Last November, the Task Force announced a comprehensive new approach to increasing the state’s supply of housing by encouraging towns and cities to produce new units of housing in “smart growth” areas.

The Commonwealth Housing Task Force was born of the conflict surrounding the campaigns for and against the Community Preservation Act in Boston.  It includes active participation by representatives from business, labor, higher education, the health care sector, housing advocacy and environmental groups, housing and real estate development companies, and many elected and appointed officials.  The Boston Foundation served as the convener of the task force.