The Greater Boston Housing Report Card 2015 the Housing Cost Conundrum
Total Page:16
File Type:pdf, Size:1020Kb
UNDERSTANDING BOSTON The Greater Boston Housing Report Card 2015 The Housing Cost Conundrum Barry Bluestone James Huessy Eleanor White Charles Eisenberg Tim Davis with assistance from William Reyelt Prepared by The Kitty and Michael Dukakis Center for Urban and Regional Policy Northeastern University for The Boston Foundation Edited by Rebecca Koepnick Mary Jo Meisner Kathleen Clute The Boston Foundation November 2015 The Boston Foundation, Greater Boston’s community foundation, is one of the largest community foundations in the nation, with net assets of some $1 billion. In 2014, the Foundation and its donors made more than $112 million in grants to nonprofit organizations and received gifts of nearly $112 million. In celebration of its Centennial in 2015, the Boston Foundation has launched the Campaign for Boston to strengthen the Permanent Fund for Boston, the only endowment fund focused on the most pressing needs of Greater Boston. The Foundation is proud to be a partner in philanthropy, with more than 1,000 separate charitable funds established by donors either for the general benefit of the community or for special purposes. The Boston Foundation also serves as a major civic leader, think tank and advocacy organization, commissioning research into the most critical issues of our time and helping to shape public policy designed to advance opportunity for everyone in Greater Boston. The Philanthropic Initiative (TPI), an operating unit of the Foundation, designs and implements customized philanthropic strategies for families, foundations and corporations around the globe. For more information about the Boston Foundation and TPI, visit tbf.org or call 617-338-1700. The Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University conducts interdisciplinary research, in collaboration with civic leaders and scholars both within and beyond Northeastern University, to identify and implement real solutions to the critical challenges facing urban areas throughout Greater Boston, the Common- wealth of Massachusetts, and the nation. Founded in 1999 as a “think and do” tank, the Dukakis Center’s collaborative research and problem-solving model applies powerful data analysis, a bevy of multidisciplinary research and evaluation techniques, and a policy-driven perspective to address a wide range of issues facing cities and towns. These include affordable housing, local economic development, workforce development, transportation, public finance, and environ- mental sustainability. The staff of the Dukakis Center works to catalyze broad-based efforts to solve urban problems, acting as both a convener and a trusted and committed partner to local, state, and national agencies and organizations. The Center is housed within Northeastern University’s innovative School of Public Policy and Urban Affairs. The Warren Group collects public record data on real estate sales and ownership throughout New England and offers a range of real estate products, information services and printed publications, including the weekly newspapers Banker & Tradesman and The Commercial Record. The company also produces and organizes trade shows and events for a variety of industries, including bankers, mortgage brokers, credit unions and lawyers. Based in Boston, the company was estab- lished in 1872 and is now in its fourth generation of family ownership and management. UNDERSTANDING BOSTON is a series of forums, educational events and research sponsored by the Boston Foundation to provide information and insight into issues affecting Boston, its neighborhoods, and the region. By working in collaboration with a wide range of partners, the Boston Foundation provides opportunities for people to come together to explore challenges facing our constantly changing community and to develop an informed civic agenda. Visit www.tbf.org to learn more about Understanding Boston and the Boston Foundation. Design: Kate Canfield, Canfield Design Production: Mayerchak & Company Cover Photo: Richard Howard, Richard Howard Photography © 2015 by the Boston Foundation. All rights reserved. Contents Letter from Paul Grogan . 4 Executive Summary . 5 CHAPTER ONE Introduction . 11 CHAPTER TWO Home Sales, Housing Production and Foreclosures in Greater Boston . 17 CHAPTER THREE Home Prices and Rents in Greater Boston . 32 CHAPTER FOUR The Cost of Housing Development . 41 CHAPTER FIVE Public Policy and Public Spending on Housing in the Commonwealth . 56 CHAPTER SIX Toward New Housing Policy . 61 Endnotes . 65 LIST OF FIGURES AND TABLES FIGURE 1 .1 Growth in Real Output Massachusetts vs . U .S . 2009–2015 (Projected) . .. 12 FIGURE 1 .3 Massachusetts Civilian Unemployment Rate 2009–2015 (July) . 12 FIGURE 1 .2 Total Non-Farm Employment: Seasonally Adjusted Massachusetts 2009–2015 (July) . 12 FIGURE 1 .4 Five-County Greater Boston Total Non-Farm Employment 2008–2014 (December) . 12 FIGURE 1 .5 Real Average Weekly Wage, Private Industry, Massachusetts 2001–2014 (Real 2014 $) . 13 TABLE 1 .1 Demographic Profile of the Five-County Greater Boston Region . .. 15 TABLE 1 .2 Housing Cost Burden—Greater Boston . 16 FIGURE 2 .1 Annual Number of Sales of Single-Family Homes in Five-County Greater Boston Region, 2000–2015 . 18 FIGURE 2 .2 Homeownership Rate Boston Metro Area 2005–2015 (Q1 & Q2) . 18 FIGURE 2 .3 Annual Number of Sales of Condominiums in Five-County Greater Boston Region, 2000–2015 . 19 FIGURE 2 .4 Annual Number of Sales of Homes in Two-Unit and Three-Unit Structures in Five-County Greater Boston Region, 2000–2015 . 19 TABLE 2 .1A Municipal Leaders in Single-Home Sales in Greater Boston, 2010– 2015 (est .) . 20 TABLE 2 .1B Municipal Leaders in Sales of Homes in Three-Unit Structures in Greater Boston, 2010–2015 (est .) . 21 TABLE 2 .1C Municipal Leaders in Sales of Condominiums in Greater Boston, 2010–2015 (est .) . 21 FIGURE 2 .5 Total Housing Permits Issued in Five-County Greater Boston Region, 2000–2015 . 22 FIGURE 2 .6 Number of Housing Unit Permits in Five-County Greater Boston Region, by Structure Type 2000–2015 . 22 TABLE 2 .2 Single-Family and Multi-family Building Permits in Greater Boston 2000–2015 (est .) . 23 FIGURE 2 .7 5+ Unit Housing Unit Permits as a Percent of All Housing Permits Greater Boston, 2000–2015 . 24 TABLE 2 .3A Municipalities Adding the Most New Housing Units, 2011–2015 TABLE 2 .3B Municipalities Adding the Most New Single- Family Home Units, 2011–2015 . .. 26 TABLE 2 .3C Municipalities Adding the Most New Units in 5+ Structures, 2011–2015 . 26 TABLE 2 .3D Permitting by Housing Type for Five Greater Boston Counties, 2014–2015 . 27 TABLE 2 .4 Housing Units Constructed in Chapter 40R Smart-Growth Districts in Massachusetts . 28 FIGURE 2 .8 Annual Number of Foreclosure Petitions in Single-Family Homes in Five-County Greater Boston Region, 2000–2015 . 29 FIGURE 2 .9 Annual Number of Foreclosure Deeds in Single-Family Homes in Five-County Greater Boston Region, 2000–2015 . 29 TABLE 2 .5A Municipal Leaders in Foreclosures on Single Home Sales in Greater Boston, 2010–2015 (est .) . 30 TABLE 2 .5B Municipal Leaders in Foreclosures on Condominiums in Greater Boston, 2010–2015 (est .) . 30 FIGURE 3 .1 Annual Percent Change in Case-Shiller Home Price Index (Single Family), Greater Boston Metropolitan Area, 1987–2015 (est .) . 33 FIGURE 3 .2 Greater Boston Housing Cycles 1988–1997 vs . 2005–2015 Case-Shiller Home Price Index (Single Family) . .. 33 FIGURE 3 .3 Homeowner Vacancy Rates, Greater Boston vs . U .S . Metro Areas, 1990–2015 . .. 34 FIGURE 3 .4 Annual Median Price of Single-Family Homes in Five-County Greater Boston Region, 2000–2015 . 34 FIGURE 3 .5 Annual Median Price of Condominiums in Five-County Greater Boston Region, 2000–2015 . 35 TABLE 3 .1 Ratio of Single-Family Home Prices 2015: Q2 vs . 2005 . 36 FIGURE 3 .6 Ratio of Condominiums to Single-Family Home Prices in Five-County Greater Boston Region, 2000–2015 . 37 FIGURE 3 .7 Annual Median Price of Homes in Two- and Three-Unit Structures in Five-County Greater Boston Region, 2000–2015 . 38 FIGURE 3 .8 Boston Metro Area Rental Vacancy Rates, 2000–2015: Q2 . 39 FIGURE 3 .9 Monthly Rent for Boston-Area Apartments, 2-Bedroom Units 2009: Q3 – 2015: Q2 . .39 TABLE 4 .1 Dukakis Cost Analysis Communities . 43 FIGURE 4 .1 Total Housing Development Costs per Square Foot, Massachusetts vs . Out-of-State Urban vs . Suburban Projects, 2004–2008 vs . 2011–2015 . 44 FIGURE 4 .2 Total Housing Development Costs per Square Foot by Cost Component, Massachusetts Urban Projects, 2011–2015 . 45 2 Understanding Boston FIGURE 4 .3 Total Housing Development Costs per Square Foot by Cost Component, Massachusetts Suburban Projects, 2011–2015 . 45 FIGURE 4 .4 Development Costs vs . GDP Deflator Massachusetts Urban Housing Projects 2004–2008 vs . 2011–2015 . 46 FIGURE 4 .5 Development Costs vs . GDP Deflator Massachusetts Suburban Housing Projects 2004–2008 vs . 2011–2015 . 46 FIGURE 4 .6 Development Costs for Massachusetts Urban and Suburban Housing Projects, 2004–2008 . 47 FIGURE 4 .7 Development Costs for Massachusetts Urban and Suburban Housing Projects, 2011–2015 . 48 FIGURE 4 .8 Per-Square-Foot Breakdown by Ownership Type Massachusetts, 2011–2015 . 49 FIGURE 4 .9 Average Total Development Costs, per Square Foot by Number of Units in a Housing Development in Massachusetts . 49 FIGURE 4 .10A Housing Development Costs, Suburban Projects, Massachusetts vs . Out-of-State, 2004–2008 . 50 FIGURE 4 .10B Housing Development Costs, Suburban Projects, Massachusetts vs . Out-of-State, 2011–2015 . 50 FIGURE