November 14, 2012 — This morning the Dukakis Center along with the Boston Foundation released the 2012 Greater Boston Housing Report Card.
This report marks the 10th anniversary of the annual Greater Boston Housing Report Card. Each year since 2002, we have probed Greater Boston’s housing landscape, keeping tabs on housing construction, home prices and rents. We have analyzed the relationship between the region’s economy, demography and housing, and we have kept track of federal, state and local government policies that affect the region’s housing market. Year by year, we have reported on this vital sector of the region’s economy, based on the belief that providing decent housing for all at prices they can afford is not only a moral responsibility, but an economic necessity if the region is to retain its talent pool.
This 2012 Greater Boston Housing Report Card is dedicated to understanding a new period in the region’s housing market and what it will take to meet the goal of affordable housing for all who need it. There are now even stronger signs than we saw in 2010 that the housing market is recovering. We may be at a new point in the housing cycle where housing demand—both in the homeowner market and in the rental market—will begin once again to outstrip supply, particularly given the lack of production since 2005, falling vacancy rates, and a stronger economy that is attracting new workers to the region.
But the changes we discern in demographics and consumer behavior require a new housing paradigm because the challenge we face is more than just the sheer amount of housing production. Fundamental structural changes in the age composition of the region’s population; in the income, wealth, and debt distribution of the region’s households; and in generational differences in consumer behavior will almost certainly alter the types of housing we will need over the next decade, as well as the places within the region where that housing will need to be located. If developers, communities, and state and local government respond proactively to these underlying changes, we will be in a better position to fulfill the moral responsibility of providing affordable housing to all who need it. Moreover, we will better meet the economic necessity of lowering the housing cost hurdles that make it difficult for young households to remain in Greater Boston, while simultaneously lowering the cost barrier to those who would like the opportunity to move here.
Before considering what this new paradigm would entail, it is helpful to examine what has happened in the region’s housing market over the past year. We see signs of recovery in the housing market along all of the standard measures we have tracked—sales, prices, rents, permits and foreclosures. Whether this is leading to a return to the normal patterns that have prevailed in past decades or, alternatively, whether it signals a major transformation of the Greater Boston housing market is the big question this time around.