When we initiated the annual Greater Boston Housing Report Card series in 2002, home prices in the region had been rising for nearly seven years. The motivation behind that first report, and the five annual installments that followed, was to document how the region was coping with the issues of skyrocketing prices and housing affordability. As such, the content of those reports focused a great deal of attention on the amount of housing production in the region, the trend in prices and rents, and state and federal spending available to provide affordable housing in the Commonwealth.
Last year, we reported on the first significant bout of home price reductions and the rising tide of foreclosures. But that report came out only a few weeks after Lehman Brothers had declared bankruptcy and banks and mortgage companies were beginning to report multi-billion dollar losses. We were just beginning to recognize that the economic recession that had begun the previous December was not your ordinary garden-variety business cycle. What was happening in housing markets was indeed one of the proximate causes of the deepening economic crisis.
Now, a year later, we have a much better understanding of just how deep and prolonged the economic crisis has been and the catastrophic effects it has visited on so many sectors of the economy and our community. As such, the deepening national recession and the rash of foreclosures has shifted our focus in this current report to a different set of housing issues: declining home values, rising foreclosures, new measures of affordability, and the impact of government attempts to stem the tide of families losing their homes and vulnerable neighborhoods facing the potential ravages of boarded up, vacant buildings. In a nutshell, this report does contain some very good news, but also some surprisingly disturbing news about home affordability, rents, and foreclosures.
The good news is that we now have some fairly strong indications that the current economic recession is drawing to an end nationally and regionally, and that at least in Massachusetts we believe we have seen the last of any major losses in jobs. We have also seen the first signs of an uptick in the housing market, with sales beginning to perk up along with home prices.
The bad news is that while housing has become more affordable relative to household incomes in Greater Boston, the region is now less affordable than ever compared with virtually every metro area we compete with across the country. Moreover, despite the recession, rents in Greater Boston are now substantially higher than before the recession began, and we have not seen any letup in the number of families falling behind in their mortgage payments and therefore becoming subject to the initiation of foreclosure activity.
In short, Greater Boston’s “housing crisis” is far from over.