Local housing costs are a major barrier to attracting and keeping workers and families in Greater Boston and the Commonwealth. The University of Massachusetts’ Donahue Institute found that the number of residents considering leaving Massachusetts due to the high cost of housing increased from 19% in December 2001 to 36% in December 2006. In addition, 66% of respondents were concerned about the cost of housing, up from 48% in 2005. The Greater Boston Housing Report Card 2005-2006 found that even with a softening real estate market, prices remain too high for middle-income families, and few of the new housing units produced are targeted to the “workforce housing” market.
Despite recent progress in increasing affordable housing in suburban communities, fewer than one in seven Massachusetts communities meets the state goal of 10%. Since 1969, a state law known as Chapter 40B has set a target of having each of Massachusetts’ 351 cities and towns ensure that 10% of its housing stock is affordable (defined as affordable to households earning 80% of the area’s median income). The law has been controversial because it provides that communities failing to meet this target cannot block certain affordable housing developments. While Chapter 40B has led to the creation of affordable housing in more than 200 communities, only 46 of Massachusetts 351 cities and towns have reached the 10% affordable threshold as of 2006, up from 23 communities in 1997, and 39 communities in 2004.
Housing development is slowed and sometimes stymied by local and state regulatory barriers, NIMBY (Not In My Back Yard) opposition, and large-lot zoning. An exhaustive study of local zoning regulations released in 2006 by the Pioneer Institute for Public Policy Research and Rappaport Institute for Greater Boston concluded that local regulations have effectively stopped development in many Greater Boston communities and created difficulties for development in others. Another barrier is the Not In My Back Yard (NIMBY) syndrome. Even in many urban neighborhoods, current residents are successfully slowing down or stopping proposed housing developments.
Despite the initial success of the 40R/40S Smart Growth initiative, its long-term success depends on permanent funding for 40S subsidies and on technical assistance for municipalities. “40S” provides funding to cities to offset additional school costs related to increased population. Currently these funds are coming from the proceeds from the sale of state owned land. This funding stream will be exhausted without a permanent source of financing. The Commonwealth Housing Task Force is committed to insuring adequate technical assistance is available for towns that wish to initiate a 40R district, but capacity to provide such assistance is limited.
Success in taking Smart Growth 40R and 40S zoning overlay districts to scale depends on improving and extending public transportation. While efforts are underway to establish Smart Growth districts along existing public transit corridors, further improvement and extensions of this network will be necessary if increased density is to become a reality. The recent Conservation Law Foundation legal victory has established a requirement for improvements such as the Green Line extension in Somerville and Medford and the Fairmount commuter line in Dorchester and Mattapan, but implementation of these plans is still years away and they are not the only improvements necessary.
Massachusetts has already lost almost 12,000 subsidized units and is at risk of losing 21,948 more by December 31, 2010 through “expiring use.” From the 1960s through the 1980s, affordable housing projects were often developed with subsidized mortgages that were originally intended to lock in affordability for up to 40 years, but which included provisions allowing the owner to pre-pay the mortgage after 20 years and end the restrictions on tenant’s income and rent. Unless steps are taken to preserve their affordability, these so-called "expiring use" projects are at risk of being removed from Greater Boston’s already limited stock of affordable housing. Regional efforts could match those in the City of Boston, where 5,093 units have been preserved since 2000 but in those years 554 units lost their long- term affordability. The City of Boston has identified approximately 1,600 units at risk in 2007/2008.
New forms of housing are needed to provide a range of options responsive to diverse needs and multiple stages of life. Ideally, Greater Boston’s housing market would expand across both housing types and quantity and innovate new forms of housing for artists, students, families with young children, single parents, young professionals, large and extended families, and empty nesters and elders. While housing opportunities are expanding for some of these groups, especially for students and housing restricted to those 55 and over, the Housing Report Card points out that the development of “workforce housing” and starter homes for young adults and families is not sufficient.
Few housing programs meet the needs of very low-income families and those already homeless. Few programs effectively address the housing needs of Boston’s poorest households. Most affordable housing production programs target families earning up to 80% of area median income, but the most difficult families to house are those that earn only 30-50% of median income, and most "affordable" units are too expensive for such families to buy or rent. Similarly, efforts are needed to prevent homelessness. In addition, existing resources for this population are at risk. As the State Auditor reported in 2006, state funded public housing is seriously under-funded and much of the stock is deteriorating physically.
State-funded housing programs are unable to expand due to state bond caps. The state cap on housing related bond issues was $121 million in FY2004 and $122 million in FY2005. Though the cap was increased to $131 million in FY2006, the Citizens Housing and Planning Association (CHAPA) and other broad-based housing organizations are advocating for an increase in this cap in order to fully fund housing programs that have been approved by the Legislature.
Nonprofit housing providers suffer from a lack of organizational and financial capacity. Nonprofits have been the training ground for Massachusetts’ housing infrastructure, but many of these agencies are unable to retain this talent due to shortages in funding, the ups-and-downs of the development cycle—and high housing and other costs that make it difficult for young professionals to set down roots in the region. And because nonprofits generally guarantee higher levels of affordability in their developments than for-profit affordable housing developers, they have fewer resources available for acquiring properties in the private market that can be converted or maintained as affordable.
The increase in foreclosures is a symptom of a deeper problem in the mortgage lending market. Despite efforts by Mayor Thomas M. Menino to address foreclosures in Boston, and former Attorney General Reilly’s effort to prosecute predatory mortgage brokers in cities such as Lawrence, a coordinated effort is needed to address the “wild west” character of today’s mortgage market. This would include providing more training to potential and existing homeowners on the risks of mortgage lending, insuring that appropriate mortgage products are available in urban neighborhoods and to people of color, and addressing the fall-out from foreclosures, both as they affect individual families and the stability of neighborhoods.
Housing disparities in terms of access to rental and homeownership between whites and people of color persist. The Massachusetts Community & Banking Council’s Fair Lending Task Force reported in late 2006 that mortgage denial rates for people of color continue to be two to three times the denial rate for whites. And a 2005 Harvard Civil Right Project survey on Metro Boston found that one in eight African American and Hispanic respondents experienced housing discrimination in their last housing search.
Housing-related costs such as energy and property taxes are escalating. Many low-, moderate-, and middle-income homeowners find it increasingly difficult to keep up with the rising costs of energy and taxes. The Department of Energy reports that home heating oil prices increased 28% from 2004 to 2005 and 12% from 2005 to 2006, and natural gas prices increased 15% from 2004 to 2005 and4% the following year. The Boston Globe reports that property taxes continue their upward spiral, increasing 12% over the last two years in Massachusetts, and 12% from FY2006 to FY2007 in Boston alone. Homeowners who have been in their homes for a long period and have a low mortgage payment are finding homeownership difficult to maintain. This increases the pressure on homeowners, especially those who are older, to downsize, move out of the area, or choose between food, medicine, and housing. These costs are also felt by renters who pay their utilities directly or feel it through rent increases. For public housing tenants, this is putting new pressure on already tight Federal funding. The Center on Budget and Policy Priorities reports that in 2005 and 2006, the US Department of Housing and Urban Development (HUD) did not seek additional funding to cover rising utility costs in public housing.
“Fault lines” within Greater Boston’s housing market undermine attempts to reach a consensus on housing development. Bostonians see housing issues very differently depending on their own needs and situations. Those who already own homes—particularly those who purchased them before the run up in prices—are better off than those who do not own, many of whom are being priced out of the housing market. High-income renters have many choices, while low-income renters are being squeezed out. Public housing tenants and some others have state or federal housing subsidies; others struggle to pay market rates without any assistance. Many are finding themselves homeless. Crafting housing policies to address disparate conditions and interests is a substantial challenge.
The massive size and looming decisions of the aging Baby Boom generation are changing the housing market. Baby Boomers are sitting on large amounts of home equity. What happens as these Boomers retire—whether they cash out and move to warmer climates, move into Boston and other city neighborhoods and town centers, or age in place in suburban homes—will have a profound effect on the region’s housing markets over the next decades.