Report: Massachusetts housing affordability problems worsening

By Chris Lisinski

OCT. 26, 2022…..By almost any metric — and researchers looked at more than a few in a new 122-page report — the region’s housing market remains in dire condition for renters and prospective homeowners.

Despite a modest uptick in production of new units, prices to rent and purchase homes in greater Boston continue to soar to some of the highest levels in the nation, while the rate of available housing lags toward the bottom of major American metropolitan areas, according to the latest annual Greater Boston Housing Report Card published Wednesday.

More families are growing burdened by housing costs, exacerbating inequality and stymying efforts to close racial wealth and homeownership gaps, the report found.

Many of the findings in the latest analysis produced by The Boston Foundation and Boston Indicators will be unsurprising to Bay Staters, who for years have faced notoriously high rents and home sale prices.

Boston Foundation President and CEO M. Lee Pelton called the report “a concerning and all-too-familiar story of high prices, low vacancy rates, and systems that make it difficult and often impossible for people, especially families of color, to navigate the complex rules and application requirements for subsidized housing.”

“The racial disparities in every housing metric that we can imagine would receive a failing grade,” Pelton said at an event Wednesday highlighting the findings.

After dipping during the early stretches of the COVID-19 pandemic, rent prices in the area are once again “setting historic records,” according to Boston Indicators Executive Director Luc Schuster.

About 45 percent of renters in the greater Boston area are cost-burdened, meaning they pay more than 30 percent of their monthly income on housing, and nearly one in four pay more than half their monthly income on housing, authors found.

Between 2000 and 2020, the share of greater Boston renter households deemed cost burdened climbed from 37 percent to 46 percent, and the increase was most pronounced for households with moderate incomes, according to the report. The cost-burdened share of renter households who earned less than $34,999 per year hovered around 80 percent every year between 2005 and 2019, while for those who earn $50,000 to $74,999, the cost-burdened share soared from a bit less than 30 percent in 2005 to 57 percent in 2019.

Oppressive costs are not limited to renters, either. With home sale prices steadily reaching new heights in Massachusetts, researchers found that the ability to afford a house is becoming increasingly out of reach.

During a livestreamed event, Schuster presented additional research the Boston Foundation plans to publish in a report next week charting a dramatic change in what Bay Staters can expect to pay for a mortgage over just the past two years.

Prevailing mortgage interest rates in that span more than doubled, Schuster said, while the cost of a “low-tier home” — whose value is between the 5th percentile and 35th percentile of market prices — increased by more than $100,000. Those hikes translate into a roughly $1,500 per month increase in housing costs for homeowners in that category between September 2020 and September 2022, which Schuster said in turn cuts the pool of renters who could afford “entry-level homeownership” in half.

“Huge reductions for every racial group, but especially large proportional decreases for Black and Hispanic decreases considering homeownership,” he said.

Slow production of new units continues to drive up prices. The report found statewide permitting just narrowly exceeds the pace needed to meet the Baker administration’s goal of building 135,000 new units statewide by 2025, but is barely half of the goal the Metro Mayors Coalition set to build 185,000 new units in their 15 municipalities by 2030.

Housing construction is also unfolding at different rates in different kinds of municipalities. Schuster said cities and towns in the metropolitan core have “really ramped up production,” particularly for multifamily housing, while many suburban communities have moved more slowly.

“We are a region that’s got a lot going for ourselves. We have a relatively healthy economy. People want to live and work in our region, and that’s a very good thing, but we’ve paired that with very low levels of housing construction,” Schuster said. “There have been some important increases in recent years, but they’re modest and still below what we were at in the late 1980s, when frankly there was less demand to live in the region.”

Meanwhile, the region’s vacancy rates — the share of homes available for rent or purchase at any given time — are among the lowest in American major metropolitan areas and well below the benchmark that defines a “healthy” market.

The latest annual report also examined the performance of eviction diversion efforts during the pandemic. With a massive injection of state and federal funding, Massachusetts dramatically expanded the number of households who received rental aid designed to stave off eviction, from several hundred per month in the first few months of the pandemic to as many as 27,700 in April 2022, the report found.

But those supports have narrowed since the spring as the available pot of aid dwindles and as the Baker administration imposes new eligibility limits.

“A key question for the Legislature in particular moving forward is what level of ongoing support are we going to settle into for these critical programs that have actually brought us to eviction filing rates that are below what they were before the pandemic. But are we going to be able to keep that up?” Schuster said

Another section of the report probed barriers to subsidized, affordable housing for residents who should qualify based on their income.

Researchers found that many subsidized units sit vacant and unused, stemming from a lack of consistent listing and application processes. Boston University political science professor Katherine Levine Einstein called on state government to ramp up centralized management and monitoring of subsidized housing and do more to enforce fair housing regulations.

“The state is failing to collect valuable systematic information about subsidized housing,” Einstein said. “This makes it harder for homeseekers to access that subsidized housing, and it also makes it all but impossible for us to effectively evaluate what policies work and what policies don’t.”