As explained in the 2004 Greater Boston Housing Report Card, for the second year in a row, the region made modest progress toward increasing the production of housing. However, total production remains below what is ultimately needed to bring housing costs into line with household incomes.

The Greater Boston Housing Report Card 2004

Bonnie Heudorfer, Barry Bluestone

The Greater Boston Housing Report Card 2004 is the third in a series of annual assessments designed to measure the progress the region is making toward providing housing opportunities for all of its citizens. This report, like its predecessors, has been prepared by the Center for Urban and Regional Policy (CURP) at Northeastern University in collaboration with The Boston Foundation and Citizens’ Housing and Planning Association (CHAPA).

After housing prices and rents skyrocketed from 1995 through 2002, 2003 marked the first year Greater Boston experienced any significant increase in housing production with additional increases in production in 2004. However, rents have stabilized and prices of single family homes have continued to increase by 10%. Household income has yet to grow, the affordability of housing continued to erode.

GBHRC-2004_growth by municipality

 

Key Findings

Current Market Conditions

High housing costs add to the overall cost of living making Boston and the Metro region one of the highest in the country. Additionally, the region has continued to emerge from the 2003 recession with very little job growth. Median household income declined slightly in 2003 but may recover slightly in 2004. While foreign immigration added 31,000 residents per year since 2000, this was offset by a loss among native born residents. With continuing increases in the cost of living and slow growth in job opportunity, Greater Boston will be challenged to stem its declining population.

Housing Production in the Region

Building permits in 2004 reached their highest level since 1987. After posting a 28 percent increase in 2003, the number of housing units permitted in the 161 municipalities covered by the Report Card rose by 12 percent to 13,556 in 2004. For the first time since before 1998, both single family and multifamily production contributed to the increase.

Rents, Home Prices and Sales

Vacancy rates remained little changed from 2003. By year end 2004, the rental vacancy rate stood at 6.0 percent, up only slightly from 5.9 percent a year earlier. The homeowner vacancy rate was an almost negligible 0.5 percent, slightly lower than in 2003. Consistent with these vacancy rates, rents tended to stabilize in 2004 while housing prices continued to escalate with the median price of a single family house rising to Understanding Boston $376,000 in the Greater Boston region. The region’s rate of home price inflation slowed in 2004 relative to other parts of the country and, in fact, trailed the national rate of appreciation of 12.5 percent. Still, Massachusetts home prices have increased more over the past 25 years than any other state in the nation.


GBHRC-2004_housing type

Affordable Housing Production

In 2004, more communities were unaffordable even though there was continued improvement in the production of “affordable housing.” The increased production was due in large part to Chapter 40B. Nearly 2,000 new affordable housing units were added in 2004 (defined as units eligible for inclusion on the State’s Subsidized Housing Inventory and restricted to occupancy by households earning 80 percent or less of the area median income, $59,550 for a family of three).

Public Spending and the Support for Housing

In 2004, more communities were unaffordable even though there was continued improvement in the production of “affordable housing.” The increased production was due in large part to Chapter 40B. Nearly 2,000 new affordable housing units were added in 2004 (defined as units eligible for inclusion on the State’s Subsidized Housing Inventory and restricted to occupancy by households earning 80 percent or less of the area median income, $59,550 for a family of three).

The Road Ahead

In 2004, for the second year in a row, the region made modest progress toward increasing the production of housing. However, total production remains below what is ultimately needed to bring housing costs into line with household incomes. Moreover, the types of housing being produced – age-restricted housing, luxury condominiums and rentals, and single family housing for affluent households – do not address the shortage of moderately priced housing suitable to attract and retain a young workforce. Thus, much more is required to reduce barriers to housing production and to support the construction and preservation of housing that will contribute to the state’s economic competitiveness.

 

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